TOLERANCE GROUPS FOR GL ACCOUNTS IN FICO

TOLERANCE GROUPS:  SAP has given 2 types of Tolerance Groups

1. General Ledger Account Tolerance                                      2. Employee Tolerance

General Ledger Account Tolerance is mandatory in SAP which is applicable in Receipts & Payments. Before understanding Tolerance Groups, we need to know about "Open Item Management".

OPEN ITEM MANAGEMENT: This is used for Vendors/Customers/Balance Sheet Items where Clearing is Required.

Suppose by the Month end 31.07.2009 we have to pay              Salaries             500000

                                                                                                       Wages                   400000

                                                                                                       Rent                       25000

Entry for Payable amounts:

Salaries A/c                                     500000

Wages  A/c                                     400000

Rent  A/c                                         25000

                     To Outstanding Expeneses A/c    925000

If we see the account in the Month End,we will have Number of Credit items and Number of Debit Items. We don’t know which item is pending and How much is Pending.  IN SAP, if we select Open Item Management, at the time of payment , system will ask against which item the payment is made.  When we specify the payment is made against Rent that item will be cleared upto the extent we paid.

If we paid 25000 against Rent A/c , We can see accounts in 3 ways.

A) Open Items             Payable Amounts                                 Salaries and Wages in Example

B) Cleared                   ItemsPaid Amounts                              Rent and Bank Accounts in Example

C) All Items                 Payable + Paid

Once we selected Open Item Management, we can see Bill Wise Payable of Vendors, Billwise Receivbales of Customers.

As discussed earlier, SAP has given Tolerance Groups. Tolerance means Pament Diffrence. It can be " Amount Tolerance" to "Percentage Tolerance".  It can be Debit or Credit

We create Tolerance for Tolerance Groups

Tolerance                        Amount                         Percentage

Group                                               Tolerance                       Tolerance

A                                     100

B                                                                          2%

C                                      0                                   0

1. Create Tolerance group and give the tolerance amount or Percentage or both

2. Tolerance group will be specified in General Ledger A/c.

                         Ex:       Salaries     500000

              Wages            400000         Outstanding Expneses as on 31.07.09

                                        Rent               25000

                                        Commission  100005

IN General Ledger a/c for Outstanding Expenses account we have specified Tolerance

Group " A". When we make payment of 100000 to Commission , System check

Howmuch is payable                             100005

Howmuch is Paid                                  100000

Difference                                                     5

If the difference amount is withing the Tolerance Group Amount ( 100 Rs for "A" Tolerance) The difference will be transferred to Sundry Balances Written off account and clear the
Item-Commission automatically.

Dis-advantages of Tolerance System:

1. Tolerance group is given at A/c Level and not at Transactions Level.

2. No Flexibility in Tolerance Groups.

If the Tolerance amount is within the Tolerence Group Limit, system will automatically transfer the Difference amount to Sundry Balances Written Off account. It should ask the end user before Transferring.  In Live Environment, we use Tolerance Group "C" in which Tolerance amount and Tolerance Percentage both are ZERO.

If we specify Tolerance Amount (or) Tolerance Percentage as ZERO, system will show the
balance "5" as Outstanding in Account.  It the Customer or Enduser decision to Pay or not
to Pay.

If we want to Pay Rs. 5------> we show 100000 paid as part payment and balance show as
outstanding amount.

If we don’t want to pay Rs.5 -----> Transfer this amount to Sundry Balances Written off A/c
and clear Tranaction.

Say we have 1000 General Ledger A/c , 1000 Vendors and 1000 Customers. In all Accounts we have to assaign Tolerance Group "C" which is highly difficult.  So we keep Tolerance Group as Blank and Amount "ZERO"

For Company             Tolerance                       Tolerance            Tolerance

Code                         Group                            Amount               Percentage

PSL                          Blank                               "0"                        "0"

When we create the account, Tolerance Group will be " Blank". System expects we have created Blank Tolerance Group and Assaigned in the Account.

PATH:    SPRO----->Financial Accounting----->General Ledger accounts---->Business

Transactions---->Open Item Clearing---->Clearing Differences---->Define Tolerance Group for GL A/c----> Select New Entries Button.

Company Code                               PSL

Tolerance Group                              Blank

Description                                     Tolerance Group for PSL

Debit Posting                                  "0"                      Debit %                    "0"

Credit Posting                                 "0"                      Credit %                   "0"

Select "Save"  (or)    CTRL+S     Prese Enter to Save in your Request.