Bank Accounting & Cash Accounting

Purpose
This component is used to handle accounting transactions that you process with your bank.

Features
It includes the management of bank master data, cash balance management (check and bill of exchange
management), and the creation and processing of incoming and outgoing payments. It is possible to
freely define all country-specific characteristics, such as the specifications for manual and electronic
payment procedures, payment forms, or data media.

Bank Master Data

Purpose

In the R/3 System, bank master data is stored centrally in the bank directory.

The following sections describe how you maintain bank master data and outline the factors you should
consider when transferring bank master data automatically. In addition to defining bank master data,
you also define your own bank details (house banks) and those for your business partner (entered in the
business partner's master record).

Bank Directory

The bank directory contains the addresses and valid control data (such as Swift code) of all
banks used in the SAP system.

The bank directory can be:

 Automatically imported, as long as the bank directory is available on diskette and an
import program exists for this data
 Manually create
If a bank is set up in the bank directory, its basic data can be accessed, for example, when
entering the bank information in a customer or vendor master record. You only have to enter
the country of the bank and the bank key. The system finds the name and address of the bank
in the Bank Directory table. If the bank is not yet in the Bank Directory, it can be entered
directly. It is then added to the Bank Directory, if it has been added to the customer and vendor
master record.

Bank Accounts
House banks are banks where we (the company code) have an account(s). When we created a
single check in the accounts payable unit, we used the Deutsche Bank. That house bank had the
house bank ID 1000.

Each house bank is represented in the SAP system by a house bank ID, and each account at that
bank is represented by an account ID. These IDs are codes of up to four characters, which can
be alphanumeric. The house bank ID and account ID is then entered in a G/L account master
record, which represents a bank account in the general ledger.
 Business Transactions in Bank Accounting

The cash journal is a tool for managing cash that was offered with R/3 release 4.6. It supports
posting cash receipts and payments.

With this tool you can:

 Create a separate cash journal for each currency
 Post to customer, vendor, and general ledger accounts
 Run several cash journals in each company code
 Choose a random number for cash journal identification (a four-digit alphanumeric key)

SAP offers cash journals to manage petty cash. You can create cash journals that are uniquely
identified by a four-character code.

Each cash journal must be assigned to one G/L account, which represents the petty cash journal
account in the general ledger. Cash transactions are saved separately in the cash journal and
are transferred periodically (for example, daily) to the general ledger.
To set up a new cash journal for a company code, you have to enter the appropriate values for
the following fields:

 The company code in which you want to use the cash journal
 The four digit cash journal identification and name
 The G/L accounts to which you want to post the cash journal business transactions
 The currency in which you want to run the cash journal
 The document types for:
o G/L account postings
o Outgoing payments to vendors
o Incoming payments from vendors
o Outgoing payments to customers
o Incoming payments from customers
 Business Transaction Types
Within the cash journal you process different transactions that you have to set up beforehand
using business transaction categories. Below are standard business transaction categories and
their postings:
 Expense (E): Expense/Cash desk
 Revenue (R): Cash desk/Revenue
 Cash transfer:
 From cash journal to bank (B): Bank/Cash desk
 From bank to cash journal (C): Cash desk/Bank
 Accounts receivable (D): Customer payment receipt Cash office / customer
Customer outgoing payment Customer / cash office
 Accounts payable (K): Vendor payment issue Vendor / cash office
Vendor incoming payment Cash journal/Vendor
There are two places where you can define new cash journal business transactions: in the cash
journal itself or in Customizing (IMG). When you give the business transaction a name, you can
base it on the type of business transaction. For example, for the business transaction for
creating postings to cash sales, you could assign the name “Cash Sale”.

To create a business transaction, make the following settings:

 The company code in which the business transaction should be created
 The type of business transaction (note: you cannot make an entry in the field G/L
account for accounting transaction types D and K.)
 Specify tax codes for the business transactions E (Expense) and R (Revenue)
 For business transaction categories E, R, C, and B, you can set and indicator to enable
the general ledger account for the business transaction to be changed when the
document is entered. In this case, the general ledger account is only a default value.
 For business transaction categories E and R, you can set and indicator to enable the tax
code for the business transaction to be changed when the document is entered. If no
tax code has been defined, you have to specify one (if required for the account) when
you create the document.
 Once saved, the business transaction is assigned a number automatically. During
document entry, the business transaction can be called up by its name or its number.
 You can set an indicator that blocks the business transaction for further postings

Cash Journal Transactions

The cash journal is one of the Enjoy business transactions that you can process on a single
screen. On this screen, you can enter, display, and change cash journal entries.

You can save cash journal entries locally in the cash journal sub ledger, and copy or delete
them. The cash journal entries saved is posted to the general ledger, for example, at the end of
the working day.

You can also print the cash journal entries you have saved (receipts) as well as the cash journal
entries posted in the time period displayed. The print forms are selected in Customizing.

The follow-on documents that are posted as a result of cash journal entries are displayed. You
can also copy and delete cash journal entries saved and display the deleted cash journal entries.

There can be many concrete accounting transactions with specified bank clearing accounts,
revenue accounts and expense accounts, all with a descriptive text. One example for a business
transaction of the type Expense posting is cash purchase of office supplies. Here, the expense
account Office material is used. The accounting transactions are set up in customizing but can
also be created directly from the application, if a new accounting transaction is deemed
necessary during daily operations.

Check Management

You can only print checks in the SAP system if the system contains a payable, such as an invoice.
The payment process creates a payment document that records the payment of the payable
and clears the open invoice.

The check and payment document are created in two separate steps. When the check is
created, the check number, bank information, and the check recipient are printed on both the
payment document and the open invoice.

If errors are made, users must decide whether to reprint or void the check, or whether to void
and reverse the check and the payment document.

This information is entered on the payment document and the invoice when a check is created.
Checks can be voided before the print run in the following cases:
 Accidentally damaged
 Stolen
 Destroyed

Checks can be voided after the print run in the following cases:
 Not required because a cash payment is made instead
 Torn during printing
 Used for a test print

In each case, you have to decide whether the payment document needs to be reversed. The
system allows you to:
 Reverse the check
 Reverse the check then reverse the payment document separately
 Reverse the check and the payment document simultaneously
When you void a check, you have to specify a reason. The SAP system provides standard
reasons; however, you can also define your own. To do so, you have to specify whether the
void reason codes are used by the print program.

When you void a check, the payment document, original invoice, and check register are
updated. When you reverse a document, a new reversal document is created.

Bank Reconciliation in SAP (MT940)

Bank reconciliation in SAP can be done with the help of two kinds of bank statements; manual
and electronic. If it is a manual statement than you need to enter the details of the statement
manually into SAP, but if it is an electronic statement you can just upload the statement to SAP.

Bank reconciliation is a term that describes the process of reconciliation between the account
maintained by the bank and the account maintained by you. There may be some instances
when these accounts may not tally. There are a few reasons why this may happen and when it
does, the bank’s accountant is responsible for preparing a bank reconciliation statement and
presenting it to the management of the bank in order to find out the discrepancies that are
present in the accounts.

An MT940 is a standard structured SWIFT Customer Statement message. In short, it is an

electronic bank account statement which has been developed by SWIFT. It is a end of day
statement file which details all entries booked to an account.

Steps for Bank Reconciliation in SAP

1. Creating a general ledger accounts for the bank reconciliation statement. This may include
the following:

 Check wire transfer

 Check issued out or issuing a cheque to the vendor.
 Check received from the customers
 Check for other interim posting

The accounting entries for bank reconciliation in SAP are:

 For checking issued out, Vendor account debit to check issued out account
 The clearance of check issued out account debit to bank account

Both of these entries help in clearing the check issued account. Similarly, the other accounts
are also cleared after being entered at the time of preparing the bank reconciliation
statement.
2. For the configuration of the bank reconciliation statement you have to make the global
settings for the electronic bank statement after which you can enter your chart. Then you
need to create the account symbol as these will be assigned to general ledger account for
the purpose of posting when you are preparing the bank reconciliation statement. You
need to create account symbols for different accounts which include account, check issue,
check received, bank charges, wire transfer and other items.

3. Creating keys for posting rules is done to name the different accounts for posting in the
bank reconciliation statement. Then you have to define the posting rules for all the keys
that have been defined in the earlier steps.

4. Define posting rules for the keys to the new entries which includes credit posting key,
debit posting key, account symbol, posting type and document type to be used.

5. Create transaction type that is only required for the electronic bank reconciliation
statement where you can enter the transaction type that you want and save it.

6. Assign external transactions type to the posting rules- this is also required only for the
electronic bank reconciliation statement. Here you can enter your posting rule for the
external transactions that you have created and save it.

7. Assign account to transaction type- here you have to enter the key, transaction type,
account and company code.