Provision for Credit Losses - FINA645 - Financials - P12

INDEX

01. OVERVIEW

The routine FINA645 - PDD (provision for credit losses) constitutes the provision for bad debts.

Other names of this provision:

Allowance For Doubtful Accounts.
Provision for loan losses.
Bad Debt Expense.

This routine intends to cover probable losses upon receiving trade notes. Thus, once such provision is constituted, and if the company does not receive some trade notes, those trade notes were mandatorily posted in contrast to the Provision for credit losses.

For example: If, by the end of the year, the total of losses have not reached the Provision value, the exceeding were reverted, there is, were accounted as income, zeroing the old Provision, to subsequently execute a new Provision for the next year.

02. EXAMPLE OF USE

Constitution of the provision for credit losses

Macro Flowchart

Process Description

Pre-Requirement:
1. Create a PDD collection situation in the system through the registration routine FINA022 - Collection Situation. E.g.: A - PDD Portfolio)
2. Register the collection status:
  1. Use Bank (FRV_BANCO) = No.
  2. PDD Status (FRV_SITPDD) = Yes.
3. Access Financial / Miscellaneous / Accounting / PDD Provision.
4. Click on Constitution.
5. On the screen that appears, select the following provisioning criteria:
  1. Reference Date?
    1. The reference date for counting the bill arrear.
  2. Days in arrears?
    1. The number of days in arrears to consider the bills for provision.
  3. Transfer to Provision?
    Example: Days in arrears = 90.
    1. All Bills
      1. All the customer's overdue and due bills that are more than 90 days overdue (90+1) and are within the issue date range will be considered.
    2. Overdue bills
      1. Only the customer's overdue bills that are more than 90 days overdue (90+1) will be considered.
    3. Bills overdue after days in arrears.
      1. Only bills that are more than 90 days overdue (90+1) will be considered.
    4. From Customer?
      1. Select the initial customer for the bills you intend to filter.
    5. From Store?
      1. Select the initial customer store for the bills you intend to filter.
    6. To Customer?
      1. Select the final customer for the bills you intend to filter.
    7. To Store?
      1. Select the final customer for the bills you intend to filter.
    8. From Issue Date?
      1. Select the initial issue date for the bills you intend to filter.
    9. To Issue Date?
      1. Select the final issue date for the bills you intend to filter.
    10. Select Branch?
      1. Yes
        A branch selection screen will appear after confirming the questions.
        Records from the selected branches will be processed.
      2. No
        Only records from the current branch will be processed.
      3. PDD Collection Status?
        Enter the PDD collection status to which the bills will be transferred after activation.
      4. Consider Bills Posted by Negotiation?
        Yes
        If the bill is posted by the Settlement routine (FINA460) and its due date falls under the PDD criteria, it must be considered for the PDD constitution.
        For the parent bill to no longer be considered for the PDD, all the child bills must be posted.
        If multiple bills are settled in one negotiation, the due date of the oldest bill will be considered for the PDD criterion.
        No
        The negotiated bills will not be considered for PDD.
        
        After you confirm, the system selects the customers and bills according to the criteria you have parameterized, and displays the customer/bills selection screen.
        
        Select the customers or bills.
        
        Confirm, and the system saves the provision with Simulation
        
        Select the provision and click Activate to confirm the operation.
        In this step, the system:
        Transfers the selected bills for the PDD collection status.
        Runs the standard entry for Provision for credit losses.
        Saves the provision with the Activated

In this entry, the following tables are positioned to help set up the standard entry:

Customers (SA1)
Bills Receivable (SE1)
Nature (SED)

The system creates an accounting document per selected branch.

Important: If you include a customer's bill in PDD after the creation, the bill will be transferred to provision only the next time you run the routine.

The bill with the PDD status cannot be edited or deleted from the system.
The PDD collection status cannot be used by the transfer routines (FINA060 and FINA061).
The transfer routine cannot transfer bills in PDD.
The standard entry 54A will be added for accounting the entry. This entry will not be called by the CTBAFIN - Offline accounting routine.

Examples of use

Example: 001 - Selection of bills and customers

The selection of bills and customers will be based on information from the following table:

Customer	Prefix	Bills	Issue date	Due date	Posting	Due date	Amount	Note
A	001	000001	10/1/2017	10/31/2017		120	BRL 100.00	More than 90 days
A	001	000002	11/1/2017	12/11/2017		89	BRL 100.00	More than 61 to 90 days
A	001	000003	03/5/2018	04/16/2018		-45	BRL 100.00	Due
B	002	000004	11/1/2017	12/11/2017		79	BRL 120.00	More than 61 to 90 days
B	002	000005	02/2/2018	03/14/2018		-14	BRL 120.00	Due
C	003	000006	10/1/2017	11/10/2017	11/10/2017	0	BRL 90.00	paid
C	003	000007	01/2/2018	02/11/2018	02/11/2018	0	BRL 90.00	paid
D	004	000008	10/1/2017	10/31/2017		120	BRL 150.00	More than 90 days
D	004	000009	03/5/2018	04/16/2018		-45	BRL 150.00	Due

Routine parameterization to simulate the provision creation:

Reference Date?	02/28/2018
Days in arrears ?	90
Transfer to Provision ?	All Bills
From Customer?	A
From store?	01
To Customer?	D
To Store?	01
From Issue Date?	10/1/2017
To Issue Date?	01/7/2019
Select Branch?	1
PDD Collec. Stat ?	A
Select collec. stat. ?	Yes
Consider negotiated ?	Yes

The system displays the following bills according to the parameterizations:

Transfer to Provision = All Bills

Customer	Prefix	Bills	Issue date	Due date	Due date	Amount	Note
A	001	000001	10/1/2017	10/31/2017	120	BRL 100.00	More than 90 days
A	001	000002	11/1/2017	12/11/2017	89	BRL 100.00	More than 61 to 90 days
A	001	000003	03/5/2018	04/16/2018	-45	BRL 100.00	Due
D	004	000008	10/1/2017	10/31/2017	120	BRL 150.00	More than 90 days
D	004	000009	03/5/2018	04/16/2018	-45	BRL 150.00	Due

Transfer to Provision = Overdue bills

Customer	Prefix	Bills	Issue date	Due date	Due date	Amount	Note
A	001	000001	10/1/2017	10/31/2017	120	BRL 100.00	More than 90 days
A	001	000002	11/1/2017	12/11/2017	89	BRL 100.00	More than 61 to 90 days
D	004	000008	10/1/2017	10/31/2017	120	BRL 150.00	More than 90 days

Transfer to Provision = Overdue after Arrears

Customer	Prefix	Bills	Issue date	Due date	Posting	Due date	Amount	Note
A	001	000001	10/1/2017	10/31/2017		120	BRL 100.00	More than 90 days
D	004	000008	10/1/2017	10/31/2017		120	BRL 150.00	More than 90 days

Example: 002 - Selection of negotiated bills

Customer E has the following bills:

Customer	Prefix	Bills	Issue date	Due date	Due date	Amount	Note
E	005	000010	10/1/2017	10/31/2017	120	BRL 100.00	More than 90 days
E	005	000011	12/2/2017	01/11/2018	45	BRL 100.00	More than 30 to 60 days
E	005	000012	02/2/2018	03/14/2018	-14	BRL 100.00	Due
E	005	000013	03/5/2015	04/14/2018	-45	BRL 100.00	Due

Negotiation date: March 2018.

Bills: 000010, 000011, and 000012.

Installments: 2 X BRL 200.00 (150.00 + 50.00 interest).

Due date of each installment: 4/30/2018, 5/30/2018.

Customer	Prefix	Bills	Installment	Issue date	Due date	Posting	Due date	Amount	Increase	Note
E	005	000010		10/1/2017	10/31/2017	03/31/2018	120	R$ 100.00		More than 90 days
E	005	000011		12/2/2017	01/11/2018	03/31/2018	48	R$ 100.00		More than 30 to 60 days
E	005	000012		02/2/2018	03/14/2018	03/31/2018	-14	R$ 100.00		Due
E	005	000013		03/5/2015	04/14/2018		-48	R$ 100.00		Due
E	005	000014	001	03/31/2018	04/30/2018		-30	R$ 200.00	R$ 50.00	Due
E	005	000014	002	03/31/2018	05/30/2018		-60	R$ 200.00	R$ 50.00	Due

Routine parameterization to simulate the provision creation:

Reference Date?	03/31/2018
Days in arrears ?	90
Transfer to Provision ?	All Bills
From Customer?	E
From store?	01
To Customer?	E
To Store?	01
From Issue Date?	10/1/2017
To Issue Date?	01/7/2019
Select Branch?	1
PDD Collec. Stat ?	A
Select collec. stat. ?	Yes
Consider negotiated ?	Yes

The following bills are displayed:

Customer	Prefix	Bills	Installment	Issue date	Due date	Due date	Amount	Increase	Note
E	005	000013		03/5/2015	04/14/2018	-48	R$ 100.00		Due
E	005	000014	001	03/31/2018	04/30/2018	-30	R$ 200.00	R$ 50.00	Due
E	005	000014	002	03/31/2018	05/30/2018	-60	R$ 200.00	R$ 50.00	Due

Provision Reversal for Credit Losses

Macro Flowchart

Process Description

Process Description

1. Pre-Requirement:
  1. In order to reverse the PDD, a PDD creation must have been carried out first.
2. Access Financial / Miscellaneous / Accounting / PDD Provision.
3. Click on Reversal.
4. On the screen that appears, select the following provisioning criteria:
  1. Revert Provision?
    1. All Bills.
    2. Only posted bills.
      1. Reversal in this option also handles the following situations:
        Bill postings.
        Bill postponement.
      2. Open
        Only open bills are reverted.
      3. Customer From?
        Select the initial customer for the bills you intend to filter.
      4. Store From?
        Select the initial customer store for the bills you intend to filter.
      5. Customer To?
        Select the final customer for the bills you intend to filter.
      6. Store To?
        Select the final customer for the bills you intend to filter.
      7. Select Branch?
        Yes
        Records from the selected branches will be processed.
        No
        Only records from the current branch will be processed.
        
        Reference Date?
        The reference date for counting the bill arrear.
        
        From creation date?
        Enter the initial creation date to select the bills.
        
        To creation date?
        Enter the final creation date to select the bills.
        
        After you confirm, the system selects the customers and bills according to the criteria you have parameterized, and displays the customer/bills selection screen.
        
        Select the customers or bills.
        
        Confirm, and the system saves the provision reversal with Simulation
        
        Select the provision and click Activate Reversal to confirm the operation.
        In this step, the system:
        Transfer the bills to the banks and statuses prior to the provision.
        Runs the standard entry for Reversal of provision for credit losses.
        Saves, in the provision tables, the reversal code of the reversed bills.
The system creates an accounting document per selected branch.

Important: In the reversal of PDD bills, even those already posted will be reverted by the new routine.
The standard entry 54B will be added for accounting the entry. This entry will not be called by the CTBAFIN - Offline accounting routine.

Provision for credit losses report (FINR645)

The Provision for credit losses report (FINR645) displays customers and bills that made up the provision.

The report was developed using TReport technology, which allows the inclusion of fields from the provision table, bills receivable (SE1), Customers (SA1), Customer Complement (AI0), Outgoing Invoice (SD2), Collection Status (FRV), Product (SB1), Product Complement (SBM), and
Accounts Receivable Reference (SK1).

Report Parameters:

Customer From?
1. Select the initial customer for the bills you intend to filter.
Store From?
1. Select the initial customer store for the bills you intend to filter.
Customer To?
1. Select the final customer for the bills you intend to filter.
Store To?
1. Select the final customer for the bills you intend to filter.
Allowance Code?
1. Enter the provision to be listed in the report. Parameter of range type that allows intervals using semicolon.
Starting Allowance Date?
1. Select the start date of the provision you want to filter.
Ending Allowance Date?
1. Select the end date of the provision you want to filter.
Demonstrate?
1. All
2. Constituted
3. Reversed
Select Branch
1. Yes
  1. Records from the selected branches will be processed.
2. No
  1. Only records from the current branch will be processed.
3. Collection Status
  1. Enter the collection statuses to be considered in the report.
4. Show Invoice Apportionment
  1. Set if the apportionment by item posted on the invoice will be shown.
5. Proc Status?
  1. All
  2. Simulated
  3. Activated
6. From Reference Date?
  1. Select the reference start date you want to filter.
7. To Reference Date?
  1. Select the reference end date you want to filter.

Accounting

The PDD creation and the creation reversal are accounted using the following standard entries:

Code	Description	Positioned tables
54A	PDD Creation	SA1 \| SE1 \| FJZ
54B	PDD Reversal	SA1 \| SE1 \| FJZ
54C	Accounting in PDD creation with Apportionment by Invoice Item	SA1 \| SE1 \| FJZ \|FWZ
54D	Accounting Reversal of PDD Creation with Apportionment by Invoice Item	SA1 \| SE1 \| FJZ \|FWZ
54E	PDD Creation with source bills on the PLS module	SA1 \| SE1 \| BM1
54F	PDD Reversal with source bills on the PLS module	SA1 \| SE1 \| BM1

03. PARAMETERS

Variable Name	MV_PDDREF
Type	Character
Description	Field to be considered in the PDD rule: 1= Actual Due Date (E1_VENCREA) 2 = Bill's due date (E1_VENCTO) 3 = Original Due Date (E1_VENCORI)
Default Value	1

Variable Name	MV_PDDRTNF
Type	Numeric
Description	Indicate if the PDD routine will apportion by item of the invoice that generated the bill. 1=Yes, 2=No
Default Value	2

Variable Name	MV_PDDACRE
Type	Character
Description	Select if the PDD's net balance will consider the bill's increase and decrease. 1=Yes, 2=No
Default Value	1

Variable Name	MV_BAIXPDD
Type	Logical
Description	Indicate if the PDD routine will also consider fully posted bills in arrears. .T. = It considers posted bills in arrears. .F. = It does not consider posted bills in arrears. Note: This parameter will be incorporated to the product from release 12.1.27. If you need to use it, you can add it using the Configurator Module.
Default Value	.F.

04. ENTRY POINTS

DT_F645PERG_Enable custom question
DT_F645CLIF_Add condition to the query that filters customer
DT_F645CLIF_Add condition to the query that filters bills
DT_F645QYDT_Date treatment for bill selection
DT_F645SITP_Enter PDD collection status
FIN0057_Enter custom fields in table FJZ
FIN0057_Enter custom fields in table FWZ
DT_F645ALTS_Allow editing field FJZ_SITPDD
DT_F645QYABT_Date treatment for bill selection on discounts
DT_F645QYCLI_Date treatment for selecting customers

05. TABLES USED

Key	Name	Mode	PYME
FJX	PDD processing	C	S
FJY	Customers in PDD	C	S
FJZ	Provisioned bills	C	S
FWZ	Apportionment of PDD bills	C	S
FRV	Collection Status	C	S

06. AUTOMATIC EXECUTION- FINA645

For the correct execution of routine FINA645, you must enter the function parameters as below:

lAutomato = .T.

nOperation = Enter the operation to be performed.

Creation = 4
Activation = 4
Edit = 4
Reversal = 4
Deletion = 5
Reversal Activation = 4

aSitCob = This array must receive which are the Collection Statuses to be treated for the filter.

Example: Aadd(aSitCob, '0')
Aadd(aSitCob, '3')
Aadd(aSitCob, '4')
Aadd(aSitCob, '5')
Aadd(aSitCob, '6')
Aadd(aSitCob, '7')

cNroProc = Number of the process generated from table FJX.

aDdsAlt = This array should receive which key information will be searched for in table FJZ and which changes should be made. The lGrvOk variable will be used to select or deselect the bill, and the cSitCob variable will be used for changing the collection status.

Example: Aadd(aDdsChv, xFilial("FJZ") )
Aadd(aDdsChv, cNroProc )
Aadd(aDdsChv, cItemCliZ )
Aadd(aDdsChv, cItemZ )
Aadd(aDdsChv, cFilCliZ )
Aadd(aDdsChv, cPref )
Aadd(aDdsChv, cNum )
Aadd(aDdsChv, cParc )
Aadd(aDdsChv, cTipo )

lGrvOk := .F.

cSitCob := "2"

Aadd(aDdsAlt, { cSitCob, aDdsChv, lGrvOk } )

Implemented executions	Parameters to be configured
Creation	FINA645(lAutomato, nOperation, aSitCob )
Activation	FINA645(lAutomato, nOperation, aSitCob, cNroProc )
Edit	FINA645(lAutomato, nOperation, aSitCob, cNroProc )
Reversion	FINA645(lAutomato, nOperation, aSitCob, cNroProc )
Reversion Activation	FINA645(lAutomato, nOperation, , cNroProc, aDdsAlt )
Deletion	FINA645(lAutomato, nOperation, , cNroProc )

For the execution of the Creation, the corresponding Question and Answer Group (FINA645C) must be fed, as per the example below:

Question and Answer Group - FINA645C
Reference Date?	Reference Date	MV_PAR01
Number of Days in arrears?	Number of days in arrears	MV_PAR02
Transfer to Provision?	1=Yes, 2=No	MV_PAR03
Customer From?	Customer Code from	MV_PAR04
From customer store?	From Customer Store	MV_PAR05
To Customer?	Customer code to	MV_PAR06
From customer store?	From Customer Store	MV_PAR07
From Issue Date?	Bill's issue date from	MV_PAR08
To Issue Date?	Bill issue date To	MV_PAR09
Select Branch?	1=Yes, 2=No	MV_PAR10
PDD Collection Status?	Enter the Collection Status	MV_PAR11
Select collec. stat. ?	1=Yes, 2=No	MV_PAR12
Consider negotiated?	1=Yes, 2=No	MV_PAR13

For the execution of the Activation, Reversion Activation, and Edit, the corresponding Question and Answer Group (FINA645D) must be entered, as per the example below:

Question and Answer Group - FINA645D
Display Entry?	1=Yes, 2=No	MV_PAR01
Group Entries?	1=Yes, 2=No	MV_PAR02
Consider Transaction after process generation?	1=Yes, 2=No	MV_PAR03

For the execution of the Reversion, the corresponding Question and Answer Group (FINA645E) must be entered, as per the example below:

Question and Answer Group - FINA645E
Revert Provision?	1 = All / 2 = Posted bills / 3 = Open	MV_PAR01
Customer From?	Customer Code from	MV_PAR02
From customer store?	From Customer Store	MV_PAR03
To Customer?	Customer code to	MV_PAR04
From customer store?	From Customer Store	MV_PAR05
Select Branch?	1=Yes, 2=No	MV_PAR06
Reference Date	Reference Date	MV_PAR07
From Issue Date?	Bill's issue date from	MV_PAR08
To Issue Date?	Bill issue date To	MV_PAR09

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