Letter of Credit issue

Hi Friends,
I'm trying to iimplement Letter of credit for our customer.
I'm creating a sales order and giving the reference of the Letter of credit(U -irrevocable unconfirmed) at the line item level. LoC value is 10 lakhs INR and SO value is 60,000 INR. The order in this case is still going on credit block.
Is there anything missing here? I have made all the relevant settings for payment guarantee.
Can LoC be configured to work indepently of credit management.
Regards,
Saji

Hi,
In the customer master> Sales area Data> Billing tab, you have to mention payment guarantee procedure 0001 = Letters of credit.
In the sale order when the financial document is assigned ( created in VX11n ) the green light should be displayed when checked.
If you do not want credit management to be active for the customer for whom payment guarantee procedure is maintained, then remove credit control area from the customer master.
The reason being when LC is assigned, it is as good as payment received. so there will be no credit exposure for the customer.
Hope this helps.
Regards,
Sharan

Similar Messages

Letter of Credit Issue in Sale Order

Hi Gurus,
Please help me on this issue.
I have created a financial Document, Letter of credit with Terms of Payment xxxx, ie, due within 90 days.
But when I am creating a sale order and manually changing the Terms of Payment to yyyy, ie due within 30 days, the system is issuing a warning message and allowing to save the sale order.
I dont want to save the document if there is a change in the terms of payment from the LC document.
Is there any configuration setting where i can stop this.
Please help me on this issue.
Thanks,
Sam

Hi SAM,
u can run the tcode vx52 and at "Terms of Payment Tab" you can change the terms of pament to "2" and tick the check box near to "terms of payemnt tab"
or
check the " Define Payment Guarantee Schema Determination" in folowing menu path :---
Sales and Distribution--Foreign Trade/Customs documentry payment- risk management of financial documentdefine and assign guarantee schema.
check the above determination procedure in detail..
rewars points if useful..
regards
yogesh

Letter of Credit for Vendor Payments

Hi All,
We are implementing ECC 6.0 Version.
The client requirement is to create Letter of Credit for Vendors and to capture data relating issue of Letter of Credit, Terms of Payment and Expirition Date. Against a Single Letter of Credit issued to a vendor client may receive more than one Invoice till the Expiry period of the Letter of Credit and Value. Further, client may also amend the Old Letter of Credit by extending the validity period or the value of the LC.
I know that we can create letter of credit through Special GL indicator 'L'. But it is one Letter of Credit to One invoice for clearing. How to map one letter of credit to multiple invoices and how we can capture expirition date of LC.
Further same vendor can have multiple LC opened against them for different projects. Please let me know detailed configuration steps.
Best Regards,
Bhargav.
Edited by: Bhargava Ram on Oct 3, 2008 3:40 PM

Hi,
Sorry i guess my question is not clear. It is not to link any LC with PO
The client will raise a single LC against any import vendor. Since these are large CAPEX related purchases, the vendor will send multiple invoices. The bank will adjust the LC against the invoices. Post adjustment the bank will send th advice to the company.
My question was how we can adjust multiple invoices against a single LC
THanks
Sembian

Letter of credit check status not correct in VL01N

Hi, Gurus,
I activate both credit management and documentary payment. When I try to create delivery-VL01N with reference to a sales order, i assign an financial document with 100% depreciation. Suppse deliver amount exceeds this financial document, system should issue message and block this delivery. However, there were no such message and credit status is "A" when saving delivery.
In Vl02N, not changing any data, system issue the message showing that
the financial document value is exceeded, and delivery is blocked when I save the delivery.
I checked my configuration, and cannot think of anything related to this.
After debug, I found out that the reason is that SAP get delivery value from table S131, field OLIKW and compare it with financial document open value. However, S131-LOIKW is 0 when I create the delivery. After delivery is created, S131-OLIKW value is corect. Therefore, when i change delivery and try to save before exit, system will issue the message.
Does anyone know anything might be related to this weird issue?
Thanks,
Cicely

Hi Gopala,
The accounting document has already been released &accounting doc has been created. But the value of Financial Doc i.e Letter of Credit remains same.
Regards,
Mahendra

Letter of Credit value to be updated

Hi Guys
I have created a Financial Document for my Letter of Credit (LC) value of Rs.100
I have assigned the same to the sales order for the value of Rs.80
I have one more Sales order against this LC for Rs.40
Now my customer have went to the banker and increased this from Rs.100 to Rs.120
If i create a sales order it will go for block, and the same can be relesed
But i have a issue with the above process, if i do the same it will not update my consumption in my LC financial document and in our case it will be still have Rs.20 as open value in the financial documents
To solve this issue, i am trying to have a supplement financial document for LC so that it will update my LC financial document as Rs.120 from Rs.100, and hence through this LC Open value will be Zero
Else, is it possible to update more than one LC financial document to a single sales order, hence in our example i will create a new LC financial document for Rs.20 and i can assign both the old LC financial document number for Rs.20 and for the new LC financial document number for Rs.20
Thanks guys
Bala

Hi
Yeah you can do that.
In your sales order enter the two line items ex
Line item 1 Material 1 20
Line item 2 Material 1 20
Now you can enter the 2 LC for these line items
regards
Prashanth

Letter of credit/payment guarantee

my customer is giving letter of credit, can somebody enlighten me to how to configure letter of credit.
please tell me configuration of letter of credit, and how to compensate the sales order with documentary payments
if possible can somebody send me any realtime examples of configuring the same
my id is [email protected]
thanks

hi rajan,
please check this :
Process Of Letter of Credit for Imports
1. The Clearing agent ask for amount, the person who receive the product will give Letter of Authority to Clearing Agent. The clearing agent move to bank and take check.
For this purpose, we just issue LA.
2. Prepare Purchase for the Vendor from whom we are going to receive the product. There may be 2 or more Vendors.
1. Product cost to be transferred to Vendor A
2. Freight or Other Charges to Vendor B
3. Customs Duty and Others to Vendor C
Tcode : Me21n
3. First We have to pay Customs Duty to Commissioner of Customs after LA issued.
Entry : Customs Clearing a/c   Dr
           Cess on Custom a/c    Dr
           CVD Clearing a/c       Dr
           Cess on CVD a/c       Dr
           Special CVD a/c        Dr
           Vendor C a/c             Cr.
T-code :MIRO or YMIROOTH
4. Cenvat credit for the product will be taken by person who handling Excise in that company
Entry : Cenvat Clearing a/c Cr.
            RG23A Part II   a/c Dr.
5. Clearing of Cenvat Credit
Entry : Cenvat Clearing a/c Dr.
            CVD clearing a/c    Cr.
            Cess on CVD a/c     Cr.
            Special CVD a/c     Cr.
6. After Bank payment they will transfter to us
Entry : Vendor a/c - Dr.
           Bank   a/c - Cr.
thanks
sadhu kishore

Letter of credit in Sales Order processing

The Problem is related to LC(Letter Of credit) attached to Sales order.
In some cases, when we raise a sales order and attach LC even if all the fields are matching in LC and sales order the value is not reflected in LC.
One more problem is When the order is attached with LC it should not go into credit check but it goes into credit check and blocks the order.
In Case, we are using revolving LC even if the payment is recieved from the customer the value is not getting update in the LC.
The above kind of problems are also persistant in all sorts of documentary payments i.e Bank gurantees and Lc etc
We are using documentary payments for foreign trade for special business trasactions where customer credit management should not be utilized.
Any suggetions on the issue or insight in foreign trade and documentary payments will be highly appreciating.

Hi sreedhar,
U just have to do a simple customization as follows,
Go to IMGSales and distributionbasic datacredit and risk mangement-forms of guarentee--assign form of guarentee with order type....
in this case, asssign your letter of credit guarentte (assuming that u have alrdy created the letter of credit as a form of guarentee) with sales oreder type OR..the u wont be having any problem
Thanks,
Krish

Letter of Credit mapping in SAP R/3

Hi all,
Scenario is:
Import PO is raised to a vendor
Based on the PO Letter of Credit is issued to the vendor for partial quantity.
Based on the Letter of Credit, the vendor will supply the goods for which the L/C is opened.
Then the Customs duty is paid and GR is done.
How to map this scenario in SAP? How to map the L/C in SAP. How to create link between L/C, PO, GR & customs duty.
Please give your inputs.
Regards,
Velumani

Hi,
After the PO has been created in SAP, from the finance side, they will post LC the functionality is similar to bill of exchange or as a noted item. While posting the transaction, in the reference field PO number will be maintained.
Once the Goods are received at port.
Customs duties has to be paid, for this you have to post an invoice through tcode: MIRO for the customs clearing agent with reference to your PO(For customs duties you have to maintain appropriate condition types in PO and against these condition types, custom clearing agents number(vendor number) has to be maintained. All these condition types are to be created with condition category 'delivery costs').
For imports PO -- GR based-IV should not be checked becoz before receiving the goods you have to clear the custom duties.
Then once the goods are received you will post the GR and the you will post the invoice for the material vendor.
Then from the finance side, they will clear, whenever they post the clearing transaction to the vendor, LC realted transaction gets reversed automatically. Bank account will be -ve and your vendor account will be +ve.
Note: Tracking of LC has to be done manually as the functionality is not complete in SAP.
Hope this clarifies.
Thanks,
Viswanath

Letter of Credit Updation

Hi,
I have an issue with Letter of Credit. I have created an LC using financial document and processed the order and PGI is done. Now the LC value is not getting updated. Even if the order value is greater than the LC value it is getting processed without any warning message.
Can anyone help me out in resolving this issue. I m working in ECC 6.
Thanks and regards,
Surya

Hi,
Whether the Credit Management settings are configured or not, the Risk Management settings shall be working.
Pl check:
1. In Financial document controls (in SPRO) , you have maintained the TICK MARKS against say, value / incoterms / other parameters that need to be checked
2. The assignment of Procedure to a combination of Sales order type / customer
3. Ensure that the procedure is assigned in the Payer master record
4. Check when you create a Sales order, the procedure is defaulted automatically. You can maintain this manually also.
5. You can maintain the procedure at the Header / item level
6. Once the procedure & the Financial document number is assigned, press "financial doc" button to check the results.
Hope this helps. Pl let me know if you still face issues.
thanks & regds
sriram

Letter Of Credit ( LC )?

is oracle payable and purchasing support LC? Is not What The Suggetion Work Around Must Go To Implemented?
Thanks

Just to give you an background, A Letter of Credit (LC) is a document issued by your bank that essentially acts as an irrevocable guarantee of payment to a beneficiary. This means that if you do not perform your obligations, your bank pays. The letter of credit can also be the source of repayment of the transaction meaning that the exporter will get paid with the redemption of the letter of credit.
Let me give you an example:
For simplicity sake lets imagine that your company imports Laptop from a Taiwan manufacturer called XYZ Computer, which banks at CitiBank Taiwan. Your company currently banks at OCBC Singapore
For the purpose of this example these will be the roles that the parties will play in the letter of credit transaction:
Your company : applicant
Taiwan manufacturer : beneficiary
OCBC Singapore : Issuing Bank
CitiBank Taiwan : Advising Bank
The example:
You want to buy $50,000 worth of desktop/Laptops from Taiwan Manufacturing, which agrees to gives you 60 days to pay it with the condition that you provide them with a 90 days letter of credit for the full amount. The steps to get the LC would be as follows:
1)You go to OCBC Singapore and request a $50,000 letter of credit with Taiwan Manufacturing as a beneficiary.
2)The bank goes through its underwriting process. Although the bank is not advancing money, they are extending credit on your behalf and are taking on a contingent liability. If your company qualifies from a credit standpoint the LC is issued.
3)Even if your company does not qualify for credit, you can still get an LC if you are willing to put cash collateral CD secured letters of credit are very common for small business specially in APAC region.
4)The bank sends a copy of the letter of credit to OCBC Singapore, which lets the vendor knows and the merchandise is shipped.
Take into consideration that the letter of credit itself might be the source of repayment of the transaction. It could be that Taiwan Manufacturing is interested in getting paid as soon as the stuff is shipped. Therefore, the letter of credit will indicate that payment shall be made as soon as Taiwan Manufacturing can present proof of shipping.

Letter of credit and credit Mgmt

hi experts i am working on this issue please through some light on this please,i am creating LC and when i create sales order i am using this LC document in billing tab financial documents,here my requirement is when customer have LC sales order or delivery should not block for the credit check.How it can be done please let me know.Thanks alot.

A Third party solution provider named Collabera,formerly IVL india Private Limited Trivandrum,
has an addon module for SAP like OptiSuite - Exports,imports,excise,forms etc , handlying Letter of credit seperately.
Check with the google for more details..
Cheers,
Edited by: Mukundan Ramanathan on Feb 10, 2009 7:22 AM

How to calculate Bill Discount, Letter of Credit, Deposits & Cheque amount!

Hi,
I have a requirement where in I have to develop a report to display bank balance chart with the following details in the output.They are :
1. Posting Date
2. Bill Discount (BD)
3. Letter of Credit(LC)
4. Cheque Amount may be cheque issued.
5. Deposits.
Above are the information which i have to display based on Posting Date range , Company Code and Bank Key present in the selection-screen.
Below are my few observations:
1. To retrieve the Bill Discount, I am first fetching the data from BKPF table by checking the document types 'DZ' ,'KZ', Company code and Posting Date Range. Then using document number,company code present in these entries along with Posting key = 39 and special GL indicator = 'W' retrieving the data like DMBTR,WRBTR from BSEG.
2. Similarly for Letter of Credit amount retrieving the data in the same way as mentioned above except special GL indicator will be 'Y'.
Now please correct me if my approach is wrong. Request you all to throw some light as I am Technical Consultant and humbly looking forward to all your help.
Also, request to let me know the logic or process how one can calculate fourth point as well as Fifth point as mentioned above.
I am just looking for flow of data/process flow/standard transactions through which I can see these above mentioned things which can help me in building the logic. At least a general approach to this will be appreciated highly.
Regards,
Raghavendra Kulkarni.
Edited by: raghavendra kulkarni on Jul 8, 2010 2:31 PM

Hi,
I have a requirement where in I have to develop a report to display bank balance chart with the following details in the output.They are :
1. Posting Date
2. Bill Discount (BD)
3. Letter of Credit(LC)
4. Cheque Amount may be cheque issued.
5. Deposits.
Above are the information which i have to display based on Posting Date range , Company Code and Bank Key present in the selection-screen.
Below are my few observations:
1. To retrieve the Bill Discount, I am first fetching the data from BKPF table by checking the document types 'DZ' ,'KZ', Company code and Posting Date Range. Then using document number,company code present in these entries along with Posting key = 39 and special GL indicator = 'W' retrieving the data like DMBTR,WRBTR from BSEG.
2. Similarly for Letter of Credit amount retrieving the data in the same way as mentioned above except special GL indicator will be 'Y'.
Now please correct me if my approach is wrong. Request you all to throw some light as I am Technical Consultant and humbly looking forward to all your help.
Also, request to let me know the logic or process how one can calculate fourth point as well as Fifth point as mentioned above.
Edited by Raghavendra Kulkarni.
I am just looking for flow of data/process flow/standard transactions through which I can see these above mentioned things which can help me in building the logic. At least a general approach to this will be appreciated highly.
Regards,
Raghavendra Kulkarni.

Letter of Credit in FICO configuration

HI,
Plz guide me Letter of Crediti inFICO part configuration steps how to do sned me mail.
Mail Id:[email protected]
Advance Thanks,
abhijeet
Edited by: Abhijeet Walke on Feb 26, 2008 12:24 PM

hi
Hi,
After the PO has been created in SAP, from the finance side, they will post LC the functionality is similar to bill of exchange or as a noted item. While posting the transaction, in the reference field PO number will be maintained.
Once the Goods are received at port.
Customs duties has to be paid, for this you have to post an invoice through tcode: MIRO for the customs clearing agent with reference to your PO(For customs duties you have to maintain appropriate condition types in PO and against these condition types, custom clearing agents number(vendor number) has to be maintained. All these condition types are to be created with condition category 'delivery costs').
For imports PO -- GR based-IV should not be checked becoz before receiving the goods you have to clear the custom duties.
Then once the goods are received you will post the GR and the you will post the invoice for the material vendor.
Then from the finance side, they will clear, whenever they post the clearing transaction to the vendor, LC realted transaction gets reversed automatically. Bank account will be -ve and your vendor account will be +ve.
Note: Tracking of LC has to be done manually as the functionality is not complete in SAP.
Process Of Letter of Credit for Imports
1. The Clearing agent ask for amount, the person who receive the product will give Letter of Authority to Clearing Agent. The clearing agent move to bank and take check.
For this purpose, we just issue LA.
2. Prepare Purchase for the Vendor from whom we are going to receive the product. There may be 2 or more Vendors.
1. Product cost to be transferred to Vendor A
2. Freight or Other Charges to Vendor B
3. Customs Duty and Others to Vendor C
Tcode : Me21n
3. First We have to pay Customs Duty to Commissioner of Customs after LA issued.
Entry : Customs Clearing a/c   Dr
           Cess on Custom a/c    Dr
           CVD Clearing a/c       Dr
           Cess on CVD a/c       Dr
           Special CVD a/c        Dr
           Vendor C a/c             Cr.
T-code :MIRO
4. Cenvat credit for the product will be taken by person who handling Excise in that company
Entry : Cenvat Clearing a/c Cr.
            RG23A Part II   a/c Dr.
5. Clearing of Cenvat Credit
Entry : Cenvat Clearing a/c Dr.
            CVD clearing a/c    Cr.
            Cess on CVD a/c     Cr.
            Special CVD a/c     Cr.
6. After Bank payment they will transfter to us
Entry : Vendor a/c - Dr.
           Bank   a/c - Cr.
nagesh

Use of Letter of Credit in Sales cycle

Hi Guru's
Can any one send me or explain me of the letter of credit work process in SAP or sales cycle?
Please Suggest any documentation on it
thanx In advcnce.

HI Prashant,
here is the overview or payment cards
   1. When you create a sales order, you can enter credit card data manually, or copy it from the payer master record. You can enter one card in the sales order overview screen. You are able to enter multiple cards, or multiple authorizations on one card, in the payment card plan in the sales order header. The system automatically authorizes the sales order when you save it.
At a later time, you create the delivery. The authorization may have expired in the meantime, so the system checks to ensure that it is still valid. If the authorization is no longer valid, the system tells you to reinitiate authorization in the sales order. You complete and save the delivery. When all the items are picked, packed, and goods issue is posted,
you create a billing document. Here, payment card data is copied from the sales order, or uploaded directly into the billing document from an external system, as in the case of point of sale. The system uses the authorizations in the payment card plan to calculate billing amounts. You process the billing document and release it to Financial Accounting.
PAYMENT CARD MASTER DATA
To quickly and efficiently process sales orders with payment cards, you can store card data in the payer master record. When you create a sales order, you simply call up a list of cards for the customer using the matchcode on the payment card number field. The system automatically copies the card data into the sales order for the card or cards that you choose from this list.
The one-time customer record is a collective account, in the master record, for a group of unrelated customers. For this reason, you cannot maintain payment card data for one-time customers.
Features
You can enter the following card information in the payer master record:
Card type, for example VISA, MC, or AMEX
Card number
      The system checks the card numbers you enter to ensure that they correspond to the numbering standards of the relevant payment card company (for example, checking to make sure that a Visa card number begins with "4").This reduces the risk of having to go through a lengthy authorization process in the sales order with an incorrect card number.
      The system also checks to ensure that a payment card belongs to only one customer. You cannot enter one payment card in two different master records.
Expiration date
Cardholder or company name as it appears on the card
Card category, such as credit card, customer card, or purchasing card
Blocking reason
If required, you can block the payment card by entering a reason, for example 01 for "card stolen". You maintain blocking reasons in Customizing for payment cards in the Billing section of the IMG.
Note
A block is for a particular payment card only. If one of the customer's payment cards is blocked, he or she may use another.
Also, a block does not effect sales documents that have already been created with the card. You can, however, run a standard search to determine all documents in which the card number is used.
Card valid-from date
Default card
You can assign a default card if there is more than one card for a customer. When you call up a list of cards for the customer in the sales order, this card is highlighted.
Hope this will be helpful...
Request you to reward points if helpful.
Thanks & regards
Abhishek Swarup

Letter of Credit in Sales return process/

Hi All,
This issue is related to Letter of Credit, I created a sales order and maintained Financial document in Billing Tab (Letter of Credit) & saved the sales order and the balance of LOC is updated, i created Delivery & Invoice also . Later stage the customer returned the materials and we Created the return sales order but the letter of Credit open value is not increasing or not Crediting.
Please let us know in case of return process weather the LOC or Financial document will credit or not?
Regards

Hi
Letter of Credit is used in credit management as one of the tool for Risk management. In case of return process LOC or financial document wont get credited as LOC is for intimation to the customer if the risk level has come to high.Also run the t.code VXDG.
Please check the below link which may help you
http://help.sap.com/printdocu/core/Print46c/en/data/pdf/SDFTLOC/SDFTLOC.pdf
Regards
Srinath

Letter of Credit issue

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