MyCIMA

Factoring using SAP ERP

Replies : 4
Keywords: AR, ERP, factor, factoring, SAP

Hi all

Hoping you can help with a query.  My company (large multinational running SAP ERP) is looking to implement a global accounts receivable factoring solution within SAP.   We will be selling the debt to the bank, then collecting the debt ourselves and passing this back to the bank (the customer will not see a difference from their point of view).  There doesn't seem to be an off-the-shelf solution for this from SAP.  I was wondering if anyone has any experience of doing something similar and if there are any solutions that they can share?

Thanks for your help

Tom

No Mods Required

I may well be missing something here. But would you not just carry on as normal.  Set up a liability to pay the bank (the money they have given you.) Receive the funds as normal from your customers, and then manually transfer against the liability and repay the bank. 

I do not see why any customisation is necessary, just some manual journaling.

Simply a loan secured on the book debts

What you've described goes under different names such as invoice discounting or confidential factoring.  You will just be using a different bank account for debtor receipts which will pay down the amount advanced.  I haven't used SAP or operated it on a global scale but the principle will be the same and shouldn't need any special modules.

Thanks

Hi guys

Thanks for your responses, much appreciated.  We're looking for an automated solution as we're talking about hundreds or even thousands of invoices on a monthly basis globally and given that we're operating this in different markets we'd like to standardise and automate as much as is possible to avoid local variation.  If the consensus is though that manual would be more straightforward then we will run with that!

Thanks

Tom 

In SAP its refered to as "pledging" rather than factoring

The pledging indicator is entered in the customer master. While posting an invoice (or another transaction) the pledging indicator is copied into the document (similar to payment terms....) But you can also enter or change the pledging indicator in an invoice.... If subrogate only single invoices....

The procedure is different depending whether you have still pledging or an open pledging.

Still pledging is easier. After issuing the invoices to your customer(s) a bank reimburses the money and keeps some deductions (i. e. safety amount, fees) up to the point the customer carries out his payment. After receiving the customers payment you have to inform the bank and they claim the money back. The customer is not informed about this procedure.

Open pledging means: The bank even reimburses the money to your company after issuing the invoice (even with some deductions) but you have to inform the customer about the pledging procedure. He has to pay the money not directly to the company, instead of this he has to pay to the assignment creditor (the bank). The bank cashes the payment and gives you information about incoming payments by using a special account for you (You are not the accountholder). Normally you have to print a special note on the forms, i. e. invoices "the amount of this invoice has been pledged to XXXXX, please pay directly to account......

Depending on the pledging contract it has some effects on dunning - and even the balance sheet display of receivables.

Automatic data transfer (i. e. for bank requests) of pledged items is not possible with sap standard reports. You have to define an on report depending on the requests of the file layout.

The Separation of open items into pledged / non pledged items can be obtained by using dynamic selections.

The pledging postings (Rec.-account Bank or pledging company debit / corr.-act receivables) and month-end postings have to be carried out manually. They depend on the pledging process (still or open)”

 

 

There are some discussion forums on scn.sap.com where some more detail is provided on how to set it up.

 

Good luck