Big4Guy

I had a lot of requests coming from readers to cover the SAP R/3 lockbox processing cycle. Below, I am doing a high level overview of how Locbox processing works in SAP R/3. This short article might prove useful to anybody interested in the basic concepts of lockbox processing in ERPs.

Lockbox processing is a service provided by banks for orderly collection of incoming payments from customers. In a Lockbox scenario, customers directly send their payment to the banks central location which normally is a P.O. box. Banks in turn on receving the payments would collate the customer remittance information and deposit the checks in the account. Once receipts are uploaded, banks send a flat file detailing the entries. This enables the SAP client to update the account books.

The actual interface for Lockbox in SAP R/3 happens when bank collects the data and sends an ANSI 823 message to the R/3 user's EDI server. The EDI server translates the message using as standard EDI interface into an IDOC i.e. an intermediary document and sends it to the SAP server for processing. SAP R/3 stores the message received in a table called the FINSTA01 Lockbox table. In the background, SAP R/3 runs a program which generates payment advices for checks, matches invoice numbers, clears off customer accounts and stores check information received in bank statement tables. In effect, once this lockbox program is successfully executed, payment advices are cleared against customer open items. In case of exceptions, where checks have not been processed by the SAP R/3 Lockbox program, same can be reonciled and posted manually.

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