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Credit Card Transactions

Financials (FI, CO, TR, EC)

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Credit Card Transactions

Postby Guest on Thu Aug 11, 2005 9:40 am

I posted it wrongly in SD before....
During normal customer payments:
The entries are:

Dr. Customer
Cr. Revenues

Dr.Clearing Account
Cr. Customer

Dr. GL a/c(GL account for lockbox)
Cr. Clearing Account.

What are entries for credit card transactions are the following correct???

Dr. Customer
Cr. Revenues

Dr.Credit card clearing Ac
Cr. Customer

Settlement:
Dr. GL receivable account for the card
Cr. Credit card clearing account


If an authorization fails:
Dr. Customer
Cr.GL receivable account for the card


Are there any more entries involved here??? Is the GL receivable account also called Bank settlement cash clearing account???If not what debit credit entries take place for bank settlement cash clearing account and when??How do we charge fees??

Thanks in advance....

Guest
 

Re: Credit Card Transactions

Postby ericbushman on Tue Aug 16, 2005 8:06 am

Anonymous wrote:What are entries for credit card transactions are the following correct???

Dr. Customer
Cr. Revenues

Dr.Credit card clearing Ac
Cr. Customer


This is correct, assuming you are billing the customer (order) then at time of billing the liability is instantly cleared by SAP from the Customer AR and shifted to a Credit Card Clearing Account as you've shown.

Anonymous wrote:Settlement:
Dr. GL receivable account for the card
Cr. Credit card clearing account


Again correct. I prefer to refer to the DEBIT account as a Bank Cash Settlement Clearing account, but you've expressed the concept correctly.

Anonymous wrote:If an authorization fails:
Dr. Customer
Cr.GL receivable account for the card


As Frank Lai mentioned correctly in his response, if the authorization fails at order save then any subsequent billing document will be blocked from posting to accounting anyway, so no postings are made until:

1) You obtain an authorization with that card or a new card
2) The order is released from credit hold thus allowing the posting to the Customer's AR - NOT to a Credit Card Clearing account
3) The credit card information is deleted from the order thus allowing the posting to the Customer's AR - NOT to a Credit Card Clearing account


Anonymous wrote:Are there any more entries involved here??? Is the GL receivable account also called Bank settlement cash clearing account???If not what debit credit entries take place for bank settlement cash clearing account and when??How do we charge fees??


The first interim account posted to when the invoice is posted to accounting is often referred to as a CREDIT CARD CLEARING account - it is an Open Item Managed Receivable account.

The second interim account posted to when the the SAP Settlement program is executed is often referred to as a BANK CASH SETTLEMENT CLEARING account - it is typically NOT an Open Item Managed Receivable account.

Once the settlement runs, SAP contains no additional automated functionality to take a feed from a clearinghouse to clear the open items in the BANK CASH SETTLEMENT CLEARING account. The clearing is typically done manually as follows:

CREDIT: BANK CASH SETTLEMENT CLEARING
DEBIT: CASH (revenue)

You can also perform the following postings to reflect fees:

CREDIT: CASH (revenue)
DEBIT: CREDIT CARD FEES

If your processor charges you fees on each batch you should do this every time you reconcile a desposit.

If your processor charges you fees on a periodic (ex: monthly) basis you should do this as you are billed those feed.
Eric Bushman
Vice President, Solutions Engineering
Paymetric
http://www.paymetric.com
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Posts: 217
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Location: Austin, TX

Postby Sam! on Tue Sep 12, 2006 10:41 pm

[quote]
The second interim account posted to when the the SAP Settlement program is executed is often referred to as a BANK CASH SETTLEMENT CLEARING account - it is typically NOT an Open Item Managed Receivable account.

Once the settlement runs, SAP contains no additional automated functionality to take a feed from a clearinghouse to clear the open items in the BANK CASH SETTLEMENT CLEARING account. The clearing is typically done manually as follows:

CREDIT: BANK CASH SETTLEMENT CLEARING
DEBIT: CASH (revenue)
[/quote]

Hi all,
Just wondering what exactly this settlement step (I assume transaction FCC1) is doing? Is this step required? Could this be replaced through the bank statement load or would this be another step coming after this?



Thanks,
Sam!
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Postby ericbushman on Wed Sep 13, 2006 10:38 am

Sam! wrote:Just wondering what exactly this settlement step (I assume transaction FCC1) is doing? Is this step required? Could this be replaced through the bank statement load or would this be another step coming after this?


Correct, FCC1 is the transaction and it posts a clearing document to move the funds from a CREDIT CARD CLEARING account to the BANK SETTLEMENT CLEARING account.

Once that posting is complete SAP will try to transmit the detail of the transactions in the batch out through the Payment Card Interface to the clearinghouse. This is essentially the request for deposit for the transactions.

You would then reconcile the deposit against the BANK SETTLEMENT CLEARING account and transfer the funds into CASH and FEES accounts.
Eric Bushman
Vice President, Solutions Engineering
Paymetric
http://www.paymetric.com
ericbushman
 
Posts: 217
Joined: Mon Apr 07, 2003 8:34 am
Location: Austin, TX

Postby Sam! on Wed Sep 13, 2006 4:35 pm

Thanks, Eric
I have the situation that the bank is also the clearig house. The authorisation is done with the bank and the authorisation process would deliver immediate approval/ disapproval.
The next day the transaction hits the bank statement.

[quote]Once that posting is complete SAP will try to transmit the detail of the transactions in the batch out through the Payment Card Interface to the clearinghouse. This is essentially the request for deposit for the transactions.
[/quote]

I wonder whether I would need to have this step in my case. The normal postings would be:

Dr. Customer
Cr. Revenues

Dr. Credit card clearing Ac
Cr. Customer

Dr. Bank account
Cr. Credit card clearing Ac

Do you agree?


Thanks again,
Sam![/list]
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Posts: 131
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Settlement flow

Postby ericbushman on Thu Sep 14, 2006 7:26 am

Sam! wrote:The next day the transaction hits the bank statement.


Does this mean that the transaction is charged to the customer simply because the authorization was received or is the transaction hitting the bank statement AFTER running FCC1 in SAP?

Sam! wrote:
Once that posting is complete SAP will try to transmit the detail of the transactions in the batch out through the Payment Card Interface to the clearinghouse. This is essentially the request for deposit for the transactions.


I wonder whether I would need to have this step in my case. The normal postings would be:

Dr. Customer
Cr. Revenues

Dr. Credit card clearing Ac
Cr. Customer

Dr. Bank account
Cr. Credit card clearing Ac

Do you agree?


SAP will perform the following postings every time an invoice is posted to accounting with a credit card:

Dr. Customer A/R
Cr. Revenues

Dr. Credit Card Clearing Account
Cr. Customer A/R


And then the FCC1 settlement program result is the following posting:

Dr. Bank Settlement Clearing Account (total of all items in CCC account)
Cr. Credit Card Clearing Account (for all items posted in the account)

Then, once you receive the deposit you would MANUALLY do the following:

Dr. Cash
Cr. Bank Settlement Clearing Account

And depending on when you are charged fees by your bank (daily or monthly) you would also do the following:

Dr. Credit Card Fees Account
Cr. Cash

I would think you'd want to run FCC1 to benefit from the automatic postings.
Eric Bushman
Vice President, Solutions Engineering
Paymetric
http://www.paymetric.com
ericbushman
 
Posts: 217
Joined: Mon Apr 07, 2003 8:34 am
Location: Austin, TX


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