Scheme of Entries for vendor payment under EBS system

Question

Hello Friends,
I am setting below the scheme of entries as I think is appropriate for making a vendor payment. The scenario is that we will make a payment to the vendor where the payment will be released through BACS (we are working for a UK based client). After the payment run is made the payment is not actually made for some reasons and are returned. Then we make the payment again and this time the payment run goes through smoothly.
I would request you to please let me know if I am wrong in the scheme of entries and if yes, what would be the proper scheme.
1.
When Invoice is raised (FB60)
GR/IR a/c        Dr        100
VAT a/c          Dr          20
    To Vendor a/c Cr            120
At this point there is one open item that is created in the vendor account.
2.
When payment run is made (F110)
Vendor a/c                          Dr              120
      To Unclear BACS a/c     Cr                     120
At this point the entries in the vendor account are cleared by entry no 1 and 2 and there are no open items.
3.
When Bank returns the payment as unsuccessful and we clear the entry (F-03)
Return BACS a/c             Dr          120
    To Vendor A/c             Cr                     120
At this point there is one open item that is created in the vendor account
4.
When payment is once more made and this time successfully
Vendor a/c                       Dr             120
   To Unclear BACS a/c    Cr                       120
At this point entries 3 and 4 clears the open items in the vendor account and there remains no other open items.
Can someone please confirm if the sequence is correct or is there an additional step involved for resetting of any document after entry 2 when the payment run fails?
Regards,
Suvarghya Dutta

Answer 1

Hello,
When you have done step 2, immediately you will not come to know that your cheque is failed, only when you receive the bank statement.
In that case I would not expect you to post to a different account "Return BACS a/c". I do not see any reason for this account. I would expect you to debit to the same account "Unclear BACS a/c", which has been used in order to make the payment.
If you are using a different account for reversal, then you have to take two accounts for reconciliation purpose.
MIRO
GRIR Account Dr
  To Vendor Account
F110
Vendor Account Dr
  To Bank Sub-account (In your case Unclear BACS a/c)
FF67 or FF.5
If successfully paid
Bank Sub Account Dr
  To Bank Main Account
If returned or unsuccessful (*)
Bank Sub Account Dr
To Vendor Account
If you are posting the entry (*) through bank statement, then no need to use FBRA.
Use FBRA immediately once you run F110 and you know that you have paid the vendor erronously. But once it reached bank and bank has issued bank statement, I would not expect you to run FBRA, but I would like to use FF67 process.
Regards,
Ravi