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Bill of Exchange

A bill of exchange (BOE) is a payment mechanism and financing tool with a due date. It allows a vendor to offer short-term credit to customers or discount the BOE before the due date if needed for cash flow. The BOE is created by the accounts receivable department and handled as a special general ledger transaction in SAP. There are three main types of BOEs: promissory notes, paper BOEs, and bank BOEs. The document outlines BOE scenarios and accounting entries for customer invoices, BOE payments, presentations to banks, and reversals of contingent liabilities. It also describes the main SAP customizing settings for BOE receivables.

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Rakesh Rai
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202 views7 pages

Bill of Exchange

A bill of exchange (BOE) is a payment mechanism and financing tool with a due date. It allows a vendor to offer short-term credit to customers or discount the BOE before the due date if needed for cash flow. The BOE is created by the accounts receivable department and handled as a special general ledger transaction in SAP. There are three main types of BOEs: promissory notes, paper BOEs, and bank BOEs. The document outlines BOE scenarios and accounting entries for customer invoices, BOE payments, presentations to banks, and reversals of contingent liabilities. It also describes the main SAP customizing settings for BOE receivables.

Uploaded by

Rakesh Rai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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 What is Bill of Exchange(BOE)?

1. Bill of exch. as payment medium with due date


2. Bill of exch. as short term credit for customer
3. Bill of exch. as flexible financing medium: Vendor can discount bill of exchange before due date dependent on financial
requirements.
4. The bill of exchange is usually created by the Accounts Payable/Accounts Receivable department of a company.
5. Bills of exchange are handled as “Special G/L transactions” in the SAP System and a “Special G/L indicator” is updated in the
respective bill of exchange line items, via which the special account determination is determined.

 Types of BOE:

1. Promissory note
The customer is the creator of the bill of exchange and at the same time the drawee of the bill of exchange. He sends the bill
of exchange to his business partner.
2. Paper BOE, BOE payment request 
The vendor sends a bill of exchange to his business partner to be signed. The customer sends it back on a certain date. The
vendor can request that the bill be sent back-> Draft paper bill.
3. Bank bill of exchange
here exists a general agreement between business partners. The vendor creates a bill of exchange, enters the customer as
beneficiary and sends this bill of exchange directly to the bank-à bank bill of exchange.

 Senarios for example 1:

     ① Posting customer invoice (T-cd:FB01、FB70)

          Customer   1,000,000    /   Revenue   1,000,000

     ② BOE payment (F-36 individual processing, F110-> mass processing)

          BOE for Customer 1,000,000   /   Customer   1,000,000

     ③ Incoming payment(T-cd:F-28)

          Bank   1,000,000   /   Customer(BOE)   1,000,000

 Senarios for example 2

     ①、 ② steps are the same with case 1.

     ③ BOE Presentation-> Bill of exchange presented to the bank(discounting or collection),Contingent liability
(commitment set up) to the bank is set up, because the house bank only requires the money back from the vendor if the bill
bounces.

          BOE bank subaccount 1,000,000 / BOE liability account 1,000,000

     ④ After bill due date, reversing contingent liability.

          BOE liability account 1,000,000 BOE for customer 1,000,000

     ⑤ Bank statement(import from FF.5)

          Bank account 1,000,000 BOE subaccount 1,000,000

     In case If bill of exchange bounced, update the failed payment transaction FBZG.

     Instead of mass processing in FBWE, individual process can be done in transaction codes T-cd:F-33/F-34/F-35=FBW3, F-
20=FBW4.

 Document display in SAP system for example 2:


①Customer invoice in T-code:FB70  
②BOE Payment in T-code:F-36
③BOE Presentation in T-code FBWE

④Reversing contingent liability in T-


code:F.72 

 Clearing BOE
Liabilities 
⑤Clearing bank subaccount manually or Via T-code FF.5

 Account diagram with typical posting steps for


customer 

 Main Customizing for customer’s BOE.


1.IMG: Financial accounting(NEW) ->Bank Accounting ->Business Transactions ->Bill of Exchange Transactions -> Bill of
Exchange Receivable
   - Present Bill of Post Bill of Exchange Receivable->Define Alternative Recon. Acct for Bills / Exch. Receivable(T-cd:OBYN).
   - Exchange Receivable at Bank-> Define Bank subaccounts(OBYK) 
   - Present Bill of Exchange Receivable at Bank-> Maintain house bank details (V_T012K_W-> Define the discount  account
and Collection account for a house bank
   - Present Bill of Exchange Receivable at Bank-> Enter Bank assignment(V_T045F)   

2.IMG: Financial accounting(NEW) ->Bank Accounting ->Business Transactions ->Bill of Exchange Transactions ->Bill of
Exchange Receivable
   - Present Bill of Exchange Receivable at Bank-> Define User-Specific Settings(V_TFBWE)
   - Present Bill of Exchange Receivable at Bank-> Assign Forms for Bill of Exchange Receivable(standard form
F_SAPMFBWE_J10) (OT63)
   - Bill of Exchange Receivable: Reverse Contingent Liability-> Define Bill of Exchange Payment Period (OB86)

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