What is Lockbox?
Lockbox is a service provided by multiple banks, wherein the payment for Customer invoices are received in mail and they are directed to a special post office box. This post office box is known as lockbox. The Post Office Box is obtained by the Bank. The Bank picks up the payments from the post office box and deposits them into company’s accounts. A separate notification is also sent by the bank to the company of the deposits made to it’s accounts.
Companies open Lockbox accounts with their Banks and inform the same to their customers. The customers than send their checks to the lockbox. The Bank collects the receipts and informs the company. There are several distinct advantage of this process when mapped in SAP:
1. Accelerates collection and deposit of checks to Bank Accounts
2. Internal processing costs are reduced
3. Greater automation of the Collection process
4. Easy Reconciliation of Payments from Customers
Lockbox Process in SAP
The process in SAP follows creation of a direct interface or an upload of an electronic file from the Bank into SAP. The Steps can be listed as under:
The configuration steps for Lock Box in SAP involve:
1. 1. Defining House Banks
The House Bank can be created from the customization path or through the transaction code FI12.
After the House Bank have been set up identifying each of the banking partners of the company, it is required to set up individual accounts with the Banking Partners in SAP. This is done through creation of Account ID for a specific House Bank. This is done in Transaction Code FI12.
1. 2. Define Lockbox Account – The next step for customizing for lockbox is to define the lockbox accounts. This is done in the below customizing path:
IM
IMG-Financial Accounting-Bank Accounting-Bank Accounts-Define Lockboxes for House Banks
The customizing transaction code for the same is OB10.
1. 3. Control Parameters – The next step for lock box customization is to define the format of the electronic file which would be received from the Bank. Only BAI and BAI2 files are supported by standard SAP. However, enhancement spots are available for other EDI Formats. The customizing path for the same is as under:
IMG-Financial Accounting-Bank Accounting-Business Transactions-Payment Transactions-Lockbox-Define Control Parameters
The customizing transaction code for the same is OBAY.
1. 4. Posting Data – There is an additional configuration node for maintaining the parameters for processing of lockbox data and generation of automatic postings. The same is maintained in the customizing path:
IMG-Financial Accounting-Bank Accounting-Business Transactions-Payment Transactions-Lockbox-Define Posting Data
The customizing Transaction code for the same is OBAX.
Lockbox File
The lockbox file is governed by standards of Bank Administrative Institute (BAI). BAI and BAI2 are the two standards supported by SAP, though BAI2 is the most widely used format. Two specific programs are used in SAP to process electronic files from Banks in these formats:
- RFEBLB00 for BAI Format
- RFEBLB30 for BAI2 Format
The lock box file in BAI2 format contain various record types. The various record types details are as under:
Record Type 1 – Header
Record Type 2 – Service
Record Type 5 – Detail Header Record
Record Type 6 – Detail Record
Record Type 4 – Overflow Record
Record Type 7 – Batch Total Record
Record Type 8 – Lockbox Total Record
Record Type 9 – Trailer Record
The lockbox file is processed in SAP using Transaction Code FLB2 (Program RFEBLB00). The file should contain all the required details to process the data successfully. The Key details include lockbox origin and Destination Number, date, lockbox no, invoice number and amount, customer account number etc. A typical Lockbox file would look like:
1. 5. Processing Lockbox Files – The lockbox file is fed into SAP using the Transaction code FLB2. In the transaction code, specify the path of the input file along with the checkbox for PC Upload.
Once the file has been processed successfully, the output will contain details like GL Document No, AR Document No, Status of lock box file and checks etc.
Every processing through Lockbox will update the posting area 1 & 2, which is the updation of the GL Document and the AR Document as well. Sometimes, it is required to post process the lock box files as well. This happens when the automatic clearing does not happen in cases such as multiple invoices of same amount, invoice details missing in the lockbox file etc. This activity of post processing happens through transaction code FLB1.