Bill of Exchange in Sap

5/9/2019 SAP Bill of Exchange Tutorial - Free SAP FI Training
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SAP Bill of Exchange
Written by Harmeet and last updated on October 3, 2017.
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In this tutorial, as part of our free SAP FI training, we will define the SAP bill of exchange, walk through
its customization, then explain the bill of exchange process. Bills of exchange are short term financial
instruments which are used by an organization as an unconditional order by one party to another to pay
a certain sum of money within a stipulated timeframe. An SAP bill of exchange is usually created by the
accounts receivable or the accounts payable department of an organization. Thus, there are two types
of bill of exchange as we shall discuss in the following sections:
SAP Bill of Exchange Receivable
https://erproof.com/fi/free-training/sap-bill-of-exchange/ 1/28
SAP Bill of Exchange Payable
Bill of Exchange Receivable
SAP bill of exchange receivable can be defined as a commitment by a customer to pay a certain amount in the stipulated time upon the
presentation of the bill of exchange document. It acts as short term credit to the customer.
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For example, depending on payment terms, a customer may need to make the payment for sales in a month. For this you should issue
a bill of exchange which needs to be accepted by the customer. This acts as a legal document, binding the customer to pay the amount
in the stipulated time. Even though acceptance of the bill of exchange by the customer is used in place of payment, the outstanding
invoice cannot be cleared until the bill is effectively paid at maturity. Hence, post an SAP bill of exchange as a special G/L transaction.
Once the bill is accepted by the customer, it can be discounted with the bank. The bank then sends payment which is used to clear the
outstanding customer invoice. At that point, the recipient remains liable until the customer makes final payment to the bank. Discounted
bills of exchange are shown as contingent liability, which appears in the appendix of the balance sheet.
Bill of Exchange Payable
In some countries, a bill of exchange is used as a payment medium to the vendor. Normally, an SAP bill of exchange payable is posted
through the automatic payment program. All the subsequent postings, such as payment by the bank and cancellation of bill of exchange
liability, are done manually. When an SAP bill of exchange payable transaction is posted, the vendor open item is cleared by the
payment program and the bill of exchange payable is posted to the vendor account and to the special general ledger (G/L) account.
An SAP bill of exchange payable represents a liability on the bank which posts to a bank subaccount. This helps monitor when a bill is
due at which bank. After the due date of the bill is reached, the bank pays the vendor. Then, post the bill of exchange payment to clear
the payable on the vendor and special G/L account as well as the liability on the bank.
Configure SAP Bill of Exchange
For the sake of this tutorial, we shall describe the customization steps for SAP bill of exchange receivable and walk through the
process. The customization steps include:
1. Create New General Ledger Accounts: Customer Bill of Exchange Account & Bank Bill Discounting Account
2. Link Between Standard Reconciliation and Customer Bill of Exchange Accounts
3. Define Bank Subaccount
Create New General Ledger Accounts
Let’s create the two new G/L accounts to facilitate SAP bill of exchange.
Accounting – Financial Accounting – General Ledger – Master

Menu path
Records – G/L Accounts – Individual Processing – Centrally
Transaction code FS00 – Centrally
C U S TO M E R B I L L O F E XC H A N G E AC C O U N T
This account is created as a special G/L account under the asset account group to support bill of exchange transactions. It will be used
for automatic posting of bill of exchange transactions to a special G/L account. Enter the required fields, including the following
information:
1. Account texts should be similar to Customer Bill of Exchange

2. Account group Assets
Create G/L Account Initial Screen
Press Enter to check for errors then Save the G/L account .
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BANK BILL DISCOUNTING ACCOUNT
We also must create another account to record the amount received from the bank on discounting the bills of exchange. This amount
received from bank is the liability to the organization until the final payment is made by the customers. Enter the required fields,
including the following information:
1. Account texts should be similar to Bank Bill Discounting

2. Account group Liabilities
Create G/L Account Initial Screen
Press Enter to check for errors then Save the G/L account .
Link Between Standard Reconciliation and Customer Bill of Exchange Accounts
Next, we need to link the reconciliation account defined in the customer master data to the special G/L account. To create this link, use
transaction code OBYN or use the customizing path below in transaction code SPRO:
Financial Accounting – Bank Accounting – Business Transactions – Bill of Exchange Transactions – Bill of Exchange Receivable – Post
Bill of Exchange Receivable – Define Alternative Reconcil.Acct for Bills/Exch.Receivables
On the special G/L maintenance initial screen, double click on the line with special G/L transaction indicator W – Bill of exchange
receivable. Enter the relevant chart of accounts in the resulting pop-up screen and hit Enter.
Maintain Special G/L Initial Screen
Link the standard AR reconciliation account with the customer bill of exchange account number you created in the last step. In our
example, 200110 is the standard customer reconciliation account and 200111 is the bill of exchange receivable account.
Link Special G/L Account
Click the Save button .
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Define Bank Subaccount
Now, define the bank subaccount for discounting the SAP bill of exchange. This account is created as a liabilities account since
discounted bills are recorded as contingent liability in the balance sheet. To define the bank, use transaction code OBYK or use the
customizing path below in transaction code SPRO:
Financial Accounting – Bank Accounting – Business Transactions – Bill of Exchange Transactions – Bill of Exchange Receivable –
Present Bill of Exchange Receivable at Bank – Define Bank Subaccounts
Click the New Entries button and enter the following information as a line for each applicable company code:
1. Enter the bank account

2. Select Discounting in the usage field
3. Enter special G/L Indicator W
4. Specify the standard customer reconciliation account
5. Enter the bank bill discounting account you created in the first step
Define Bank Sub Account
Press Enter to check for errors then Save the definition .
Execute SAP Bill of Exchange
Not that we have configured SAP bill of exchange functionality, let’s see how it is used in SAP. We will walk through each of the below
steps in the following sections:
1. Post Sales Invoice

2. Bill of Exchange Payment
3. Bill of Exchange Discounting
4. Reverse Contingent liability
Post Sales Invoice
Accounting – Financial Accounting – Accounts Receivable –

Menu path
Document Entry – Invoice – General
Transaction code F-22 – Invoice – General
Enter the customer invoice as normal, as overviewed below:
Customer Invoice Overview
Bill of Exchange Payment
Now, process the SAP bill of exchange payment to transfer the outstanding amount from the normal vendor reconciliation account to
the bill of exchange special G/L account. When bills of exchange are received for an open item, the status of open item changes after
this transaction is performed.

Menu path
Document Entry – Bill of Exchange – Payment
Transaction code F-36 – Payment
In the header data of transaction code F-36 enter the following information:
1. Document and posting dates

2. Company code
3. Currency
4. Customer account number
5. Special G/L indicator W
Bill of Exchange Payment Header Data
Press Enter to proceed to the customer line item. Enter the following information:
1. Bill of exchange amount

2. Due date of vendor payment
3. Planned usage of Discount
Note that name of your company automatically appears in the Drawer field, while the customer name appears in the Drawee field.
Bill of Exchange Payment Customer Item
Click the Choose open items button .
Bill of Exchange Payment Select Open Items Screen
Click the Process open items button to proceed to the open items on the customer account. In the open items
selection screen, all open amounts remaining on the customer account will be displayed. Double click the amounts of the documents
you want to include in the bill of exchange payment. The amounts will turn blue and they will ultimately net to 0.00, as demonstrated
below:
Bill of Exchange Payment Process Open Items Screen
Click the Save button . Note down the document number.
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Bill of Exchange Discounting
If your company, as the holder of the bill of exchange, is in need of the money before the due date of the bill, approach the bank for
encashment of the bill by discounting it. The bank will likely charge a fee and/or interest for this. Once the money is received, discount
the invoice in SAP, deducting bank charges and interest.

Menu path
Document Entry – Bill of Exchange – Discounting
Transaction code F-33 – Discounting

2. Company code
3. Currency
4. Usage as Discounting
5. Bank account G/L
6. Business area if this is used (optional)
7. Amount to discount the bill, net of charges and interest
In our example below, we discount the bill at 495,000 INR with bank account G/L 200105.
Bill of Exchange Discounting Header Data
To post interest, enter the posting key 40 and the G/L account used for interest in the Other line items section. Press Enter to proceed
to create the interest line item and enter the following information:
1. Bank interest charge as Amount

2. Text to describe item
Bill of Exchange Discounting Interest Line Item
Click the Select bill of exch. button to proceed to enter the bill of exchange payments. Enter the document
number generated in the previous step when you created the bill of exchange payment. In our example, we generated document
number 500001 as shown below:
Enter Bills of Exchange Screen
Hit Enter to display the document overview. In our example, the bill is discounted for the the amount received from the bank (G/L
account 200105), as a debit at a value of 495,000 INR. The interest charge is 5,000 INR, and the bank subaccount which we created
initially as a liability account (G/L account 100302) is credited with the gross discount 500,000. This account is a contingent liability,
meaning the liability will become your company’s responsibility if the bills are not paid by the customer in the stipulated time.
Bill of Exchange Discounting Document Overview
Click the Save button .
Reverse Contingent liability
In the final step of the SAP bill of exchange process, we must reverse the contingent liability. Do this once the bills are paid by the
customer on the due date.

Menu path
Document Entry – Bill of Exchange – Reverse Contingent Liability
Transaction code F-20 – Reverse Contingent Liability

2. Company code
3. Currency
4. Standard customer reconciliation account (200111 in our example)
5. Usage as Discounting
6. Due date
7. Customer account number
Reverse Liability Header Data
Click the Edit line items button . Enter + in the Command for edit field for each listed item that you want to activate.
Edit Posting Line Item
Click the Save button . Note down the document number.
Execute transaction code FB03 to display the document you just posted. We see that the debit we made to the customer account
3000001 in our first step by posting the customer invoice is now credited. The credit we made to the bank bill discounting account
100302 when we executed the bill of exchange discounting is now debited. Thus, we have effectively cleared both the customer
account and the bank bill discounting account.
Document Display
Did you like this tutorial? Have any questions or comments? We would love to hear your feedback in the comments section below. It’d
be a big help for us, and hopefully it’s something we can address for you in improvement of our free SAP FI tutorials.
Navigation Links
Go to next lesson: SAP Posting Key Configuration
Go to previous lesson: SAP Vendor Down Payment Process
Go to overview of the course: SAP FI Training
4 thoughts on “SAP Bill of Exchange”
Oanh Pham
January 4, 2019 at 12:32 pm
This tutorial is very helpful. Very appreciated. Hope this page will have more tutorial like this
Monica Mikhael
January 20, 2019 at 1:13 pm
Hello,
What about the steps present to vendor ?
Anurag Sharma
March 6, 2019 at 7:48 pm
What if customer does not pay? What process we have to follow?
Ram Ampe
April 29, 2019 at 7:55 am
Contingent liability will become actual liability the entry will be
Customer Account Dr
to Bank account
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5/9/2019 SAP Bill of Exchange Tutorial - Free SAP FI Training

Home » SAP FI » SAP FI Training » SAP Bill of Exchange

SAP Bill of Exchange

Written by Harmeet and last updated on October 3, 2017.

SAP Bill of Exchange Receivable

SAP Bill of Exchange Payable

Bill of Exchange Receivable

Bill of Exchange Payable

Configure SAP Bill of Exchange

Create New General Ledger Accounts

Accounting – Financial Accounting – General Ledger – Master

Transaction code FS00 – Centrally

1. Account texts should be similar to Customer Bill of Exchange

Create G/L Account Initial Screen

BANK BILL DISCOUNTING ACCOUNT

1. Account texts should be similar to Bank Bill Discounting

Create G/L Account Initial Screen

Link Between Standard Reconciliation and Customer Bill of Exchange Accounts

Maintain Special G/L Initial Screen

Link Special G/L Account

Click the Save button .

Define Bank Subaccount

1. Enter the bank account

Define Bank Sub Account

Press Enter to check for errors then Save the definition .

Execute SAP Bill of Exchange

1. Post Sales Invoice

Post Sales Invoice

Accounting – Financial Accounting – Accounts Receivable –

Transaction code F-22 – Invoice – General

Enter the customer invoice as normal, as overviewed below:

Customer Invoice Overview

Bill of Exchange Payment

Accounting – Financial Accounting – Accounts Receivable –

Transaction code F-36 – Payment

1. Document and posting dates

Bill of Exchange Payment Header Data

1. Bill of exchange amount

Bill of Exchange Payment Customer Item

Click the Choose open items button .

Bill of Exchange Payment Select Open Items Screen

Bill of Exchange Payment Process Open Items Screen

Click the Save button . Note down the document number.

Bill of Exchange Discounting

Accounting – Financial Accounting – Accounts Receivable –

Transaction code F-33 – Discounting

1. Document and posting dates

Bill of Exchange Discounting Header Data

1. Bank interest charge as Amount

Bill of Exchange Discounting Interest Line Item

Enter Bills of Exchange Screen

Bill of Exchange Discounting Document Overview

Click the Save button .

Reverse Contingent liability

Accounting – Financial Accounting – Accounts Receivable –

Transaction code F-20 – Reverse Contingent Liability

1. Document and posting dates

Reverse Liability Header Data

Edit Posting Line Item

Click the Save button . Note down the document number.

Go to next lesson: SAP Posting Key Configuration

Go to previous lesson: SAP Vendor Down Payment Process

Go to overview of the course: SAP FI Training