SAP Globalization Services

Letter of Credit and Bank Guarantee Localization Product

Ahmed Khalifa
Localization Product Manager - MENA R. 1610
Letter of Credit and Bank Guarantee MENA solution Workbench

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Outgoing LC/BG Process
PO/s Y
To be
LC/BG request A Change LC/BG req. WF Trigger WF
LC/BG Request

SO/s modified

Y N
Send to Bank approved A

N
A confirmation

Y
Accounting
N To be Bank
Y document
C modified B Enter LC/BG details Charges
1

Y Bank Y
Retention
LC/BG

Accounting
document Y Bank To be N
Charges LC/BG Amendment closed B
2
Y Bank Y Accounting
Retention
Bank Y document
Close LC/BG Charges 3

Bank Y
Retention

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Letter of Credit Key Functions
Import LC
q Manage the LC in import process - from application, create LC, amend LC to close LC.
q Linkage with the PO to create the LC
q Print out the LC application to be submitted to the issuing BANK.
q Trigger WF to get the approval for statuses (Submit the LC request, Creation of LC, Amendment of LC)
q Capture the essential dates in the LC to manage validity
q Manage amendments of the LC by adding or decrease the LC amount also extend the validity date
q Integrate with cash management by post FI documents while making any changes over the LC (create, amend and close)
q Calculate and post the bank charges.
q Calculate and post the bank margin/retention amount
q Record the required documents to be submitted to the bank
q Credit Line Usage/Facility New
New
q Assign G/L account to each bank charges type
New
q Maintain different Bank LC Formats
New
q Update the LC Closing FI posting
New
q Update the LC Cancelation FI posting

Export
q Capture the incoming LC for export process by refereeing to SO/s

2016 SAP SE or an SAP affiliate company. All rights reserved. Public 4

Outgoing Letter of Credit
No Letter of Credit
Purchase Letter of Credit
................................................ Good Receipt/s Vendor
Letter of Credit required Order/s Localization Invoice/s

Close LC Assign PO/s

Calculate Bank Charges Define the required documents

Close LC Create LC request
Return Bank retention LC Request
Post FI document Generate Bank application
Trigger WF

Amendment
Amend LC Bank
Liquidating Amend Request Send to Bank
Cancelation Amend LC details Approval
Approved by Bank
Calculate Bank Charges
Calculate Bank margin/retention
Post FI document
Create LC

Enter LC details
Calculate Bank Charges
Calculate Bank margin/retention
Post FI document

2016 SAP SE or an SAP affiliate company. All rights reserved. Public 5

 Automatically Posted from product

Outgoing LC Accounting Documents Manually Posted

Create LC Dr Cr Amend LC Dr Cr
100,000$ LC Asset A/C 5,000$ LC Asset A/C
Accounting Accounting
document 100,000$ LC Contingent Liability A/C document 5,000$ LC Contingent Liability A/C
1 1,000$ Bank Charges 2 50$ Bank Charges
1,000$ Bank A/C 50$ Bank A/C
10,000$ Bank Retention 500$ Bank Retention
10,000$ Bank A/C 500$ Bank A/C

Goods Dr Cr
Receive
105,000$ Store A/C
105,000$ Supplier A/C

Option 1 Option 2

Payments Dr Cr Payments Dr Cr
105,000$ LC Contingent Liability A/C 105,000$ Supplier A/C
105,000$ Bank A/C 105,000$ Bank A/C

Close LC Dr Cr Dr Cr
105,000$ Supplier A/C 105,000$ LC Contingent Liability A/C
Accounting
document 105,000$ LC Asset A/C 105,000$ LC Asset A/C
3 50$ Bank Charges 50$ Bank Charges
50$ Bank A/C 50$ Bank A/C
10,500$ Bank A/C 10,500$ Bank A/C
10,500$ Bank Retention A/C 10,500$ Bank Retention A/C

2016 SAP SE or an SAP affiliate company. All rights reserved. Public 6

Record the Incoming Letter of Credit
No Letter of Credit
Sales Order/s
Letter of Credit
................................................ Goods Delivery Customer
Letter of Credit required
Localization Invoice/s

Close LC Assign SO/s

Define the required documents
Enter LC information

Amend LC

Amend Request
Amend LC details

2016 SAP SE or an SAP affiliate company. All rights reserved. Public 7

Bank Guarantee Key Functions
Export BG
q Manage the BG in export process - from application, create BG, amend BG to close BG.
q Linkage with the SO to create the BG.
q Print out the BG application to be submitted to the issuing BANK.
q Trigger WF to get the approval for the following statuses (Submit the BG request, Creation of BG, Amendment of BG)
q Capture the essential dates in the BG to manage validity
q Manage amendments of the BG by adding or decrease the BG amount also extend the validity date
q Integrate with cash management by post FI documents while making any changes over the BG (create, amend and close)
q Calculate and post the bank charges.
q Calculate and post the bank margin/retention amount
q Record the required documents to be submitted to the bank
q Credit Line Usage/Facility New
New
q Assign G/L account to each bank charges type
New
q Maintain different Bank BG Formats
New
q Update the BG Closing FI posting
New
q Update the BG Cancelation FI posting
New
q Create Bank Guarantee without referring to SO (for purpose of Tender Bond)
Import
q Capture the incoming BG for import process by refereeing to PO/s

2016 SAP SE or an SAP affiliate company. All rights reserved. Public 8

Outgoing Bank Guarantee
No Bank Guarantee
Sales Order/s
Bank Guarantee
................................................ Goods Delivery Customer
Bank Guarantee required
Localization Invoice/s

Close BG Assign SO/s

Calculate Bank Charges Define the required documents

Close BG Create BG request
Return Bank retention BG Request
Post FI document Generate Bank application
Trigger WF

Amendment
Amend BG Bank
Liquidating Amend Request Send to Bank
Cancelation Amend BG details Approval
Approved by Bank
Calculate Bank Charges
Calculate Bank margin/retention
Post FI document
Create BG

Enter BG details
Calculate Bank Charges
Calculate Bank margin/retention
Post FI document

2016 SAP SE or an SAP affiliate company. All rights reserved. Public 9

 Automatically Posted from product

Outgoing BG Accounting Documents Manually Posted

Create LC Dr Cr Amend LC Dr Cr
100,000$ BG Asset A/C 5,000$ BG Asset A/C
Accounting Accounting
document 100,000$ BG Contingent Liability A/C document 5,000$ BG Contingent Liability A/C
1 1,000$ Bank Charges 2 50$ Bank Charges
1,000$ Bank A/C 50$ Bank A/C
10,000$ Bank Retention 500$ Bank Retention
10,000$ Bank A/C 500$ Bank A/C

Customer Dr Cr
Invoice
105,000$ Customer A/C
105,000$ Sales A/C

Option 1 Option 2

Payments Dr Cr Payments Dr Cr
105,000$ Bank A/C 105,000$ Bank A/C
105,000$ BG Asset A/C 105,000$ Customer A/C

Close LC Dr Cr Dr Cr
105,000$ BG Contingent Liability A/C 105,000$ BG Contingent Liability A/C
Accounting
document 105,000$ Customer A/C 105,000$ BG Asset A/C
3 50$ Bank Charges 50$ Bank Charges
50$ Bank A/C 50$ Bank A/C
10,500$ Bank A/C 10,500$ Bank A/C
10,500$ Bank Retention A/C 10,500$ Bank Retention A/C

2016 SAP SE or an SAP affiliate company. All rights reserved. Public 10

Record the Incoming Bank Guarantee
No Bank Guarantee
Purchase Bank Guarantee
................................................ Goods Receipt Vendor
Customer
Incoming BG is required Order/s Localization Invoice/s
Invoice/s

Close BG Assign PO/s

Define the required documents
Enter BG information

Amend LC

Amend Request
Amend BG details

2016 SAP SE or an SAP affiliate company. All rights reserved. Public 11

Technical Release Information and Prerequisites:
Prerequisites: perform an Add-on installation on SAP ERP 6.0 with Enhancement Package 6 or 7.
Software Package: MEEXIM and EXIM_CORE
Software component: LOCINLOG
Role: EXIM_MENA
Message Component: BC-UPG-ADDON & XX-CSC-OM-EI
It can be downloaded from SAP Software Download Center browsing to support Packages and Patches Browse our Download Catalog
Country Specific add-ons & Legal Changes SAP ERP LOCINEXIM SAP ERP LOCINEXIM 1.0 Comprised Software Component Versions
LOCINLOG 606 Support Packages

Releases
ERP EHP6 SP05 & S4HANA OP 1511 & SAP Notes 1733618 , 2105996, 2175309
ERP EHP6 SP06 & SAP Notes 2376595 New

There is a plan to add a price tag to this product, it is not yet done however it can be soon
Letter of Credit and Bank Guarantee

The product is developed as Localization for MENA countries in logistics side (i.e. not
treasury solution) that covers the incoming and outgoing LC and BG processes. The scope of
the product is very limited to cover the requirements in companies where they want to track
only the LC and BG operations in small and medium size and not in details same like GTS

2016 SAP SE or an SAP affiliate company. All rights reserved. Public 13

 Ahmed Khalifa
Thank you Localization Product Manager
Globalization Services
M +971 56 656 2575
E ahmed.khalifa@sap.com