Process Guide for EMD & SD transactions
PART-I............................................................................................................................3
1. Business Requirement.................................................................................................4
2. Process details.............................................................................................................4
3. Instrument Features.....................................................................................................5
4. Reporting requirement ................................................................................................6
5. FI Document Parking from Logistics .........................................................................6
6. Scope of EMD /SD program.......................................................................................7
7. Important Information.................................................................................................7
PART-II ..........................................................................................................................9
I. Earnest Money Deposit processing ...........................................................................10
A. Processing of EMD in case EMD instruments are other than BG and LC ..............10
(i) Receipt of EMD in the system .................................................................................10
(ii) Change of EMD receipt document: ........................................................................13
(vi) Reversal of Park Document: ..................................................................................17
(v) Printing of covering letter to submit EMD to Finance:...........................................17
(vi) Refund of EMD......................................................................................................18
a. Creation of EMD Refund Document: .......................................................................18
b. Submission of EMD Refund document to FI ...........................................................20
c. Printing the letter for Refund of EMD......................................................................20
(vii) EMD Forfeit Processing .......................................................................................21
a. Creation of EMD Forfeiture Document....................................................................21
b. Submission of EMD Forfeit document to FI ............................................................21
c. Printing the letter for EMD Forfeit ...........................................................................21
(viii) EMD-SD Conversion...........................................................................................22
(a) Creation of EMD-SD document..............................................................................22
(b) Posting of EMD to SD and Submission of EMD-SD conversion document to FI .23
c. Printing the letter for EMD Forfeit ...........................................................................24
B. Processing of EMD in case EMD instrument is BG ................................................24
(i) Receipt of EMD in the system .................................................................................24
(ii) Bank Confirmation: ................................................................................................24
(iii) Printing of letter to Bank to confirm the issuance of BG ......................................25
(iv) Post Confirmation: .................................................................................................26
(v) Amendment to BG: ................................................................................................27
(vi) Printing of letter to Vendor after Amendment of BG ............................................28
(vii) BG Sent to Finance: ..............................................................................................28
(viii) BG Accepted by Finance ...................................................................................29
(ix) Invoke of BG..........................................................................................................29
(ix) Return of BG:.........................................................................................................30
III. SECURITY DEPOSIT PROCESSING ..................................................................31
A. Processing of SD in case SD instruments are other than BG. .................................31
(i) Receipt of SD in the system.....................................................................................31
(ii) Change of SD receipt document: ...........................................................................31
(iii). Parking of Receipt Document...............................................................................31
(iv) Printing of covering letter to submit EMD to Finance: .........................................31
(v) Refund of SD...........................................................................................................31
a. Creation of SD Refund Document:...........................................................................31
b. Submission of SD Refund document to FI ...............................................................31
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c. Printing the letter for refund of SD ...........................................................................32
(vi) SD Forfeit Processing ............................................................................................32
a. Creation of SD Forfeiture Document:.......................................................................32
b. Submission of SD Forfeit document to FI ................................................................32
c. Printing the letter for SD Forfeit...............................................................................32
B. Processing of SD in case SD instrument is BG........................................................32
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PART-I
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Business requirements for development of EMD & SD transactions
1. Business Requirement
Presently in Bhilai Steel Plant (BSP), the receipt and refund and forfeit of EMD and Security Deposit
is entered in a register manually. This information is maintained with details like tender number,
vendor name, date of receipt, amount received and mode of payment etc. These are BSP specific
transactions and there is no standard process in SAP to maintain and track the above activities and
hence needs to be developed in system.
The objective of this development is to maintain all the above activities in SAP so that
receipt/refund/forfeit activities can be tracked and action regarding expiring bank guarantees can be
initiated. This program will be further extended to FI for posting the respective transactions of
Incoming/ Outgoing payment/ Bank guarantee. Based on the information captured by MM, FI
documents will be parked by MM for receipt of EMD/SD. These documents will physically be
moved to finance and will be posted by “Cash & Bank Section”.
2. Process details
There are two major areas of transactions vis-à-vis Earnest Money Deposits and Security Deposit.
In case of “EMD” it is performed with reference to Tender (Request for Quotation) and in the case of
“SD” is performed with reference to either Supply order or Contract. Followings are details of
transactions performed in these areas -
Earnest Money Deposit
Earnest Money Deposit is received by Dealing Officer at the time of tender opening. This
transaction is required to be recorded in system, so that these collected EMD instruments will be
submitted to Finance for encashment / tracking & safe custody.
Features of EMD –
• EMD Receipts
• Change in receipt
• Delete EMD documents
• Refund EMD
• Forfeit of EMD
• Conversion of EMD to SD
• Display of EMD receipts / refund / Forfeit
• Parking of Document for Receipts
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• Instrument Types used are – Banker’s Cheque, Demand Draft, Bank Guarantee
• EMD is collected only for Tender (Request for Quotation)
Security Deposit
Security Deposit is received by Dealing Officer at the time of placing supply order. This transaction
is required to be recorded in system, so that these collected SD instruments will be submitted to
Finance for encashment / tracking & safe custody
Features of SD –
• SD Receipts
• Change in receipt
• Delete SD documents
• Refund SD
• Forfeit of SD
• Display of SD receipts
• Parking of Document Receipts
• Conversion of EMD to SD
• Instrument Types used are – Banker’s Cheque, Demand Draft & Bank Guarantee
• SD is collected only for PO and Contract
3. Instrument Features
• Demand Draft (DD) - Received Demand Draft will be submitted (documents will be parked)
to Finance for encashment. FI will post the document after encashment / at the time of
encashment. Expiry date / Validity tracking of DD are required along with details of Bank.
• Banker’s Cheque (BCH – Received BCH will be submitted (documents will be parked) to
Finance for encashment. FI will post the document after encashment / at the time of
encashment. Expiry date / Validity tracking of BCH are required along with details of Bank.
• Bank Guarantee (BG) –After receiving BG, Purchase Dept will obtain BG confirmation
from Bank. After receiving positive confirmation, the same will be submitted to Finance Dept
for safe custody and tracking. Further, for any changes in BG, Purchasing dept will submit
“Request for Amendment” to Supplier / Bank. After getting clearance of amendment, the
same will be updated in system. All the amendments are required to be tracked. BGs can
be invoked by FI as per business need (after request from Buyer)
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4. Reporting requirement
Reporting is required for
• Tracking expiry / validity dates of Instruments
• Total Instruments received against Vendor / RFQ / Collective (Tender) No / PO / Contract
• Parked Documents as on date
• Status (Received, Refund, Forfeit) of Documents (EMD, SD)
• Total Instruments received in a given period
• Total Instrument pending for refund (specifically for EMD / SD)
• Converted EMD to SD
• Currency required in reporting is as per instrument currency.
• Selection should be based on Vendor code, Purchasing Group, Purchasing Document,
Instrument, Validity date of instruments, Status, Tender (Collective) Number and for a given
Period
• Amendments in BG
5. FI Document Parking from Logistics
Parking of FI document by MM is required only when instruments are DD or Banker’s Cheque.
Following matrix explains requirements of FI document Parking in EMD/SD transactions -
Transaction EMD SD
Receipt Y Y
Refund N N
Forfeit N N
Convert Y Transaction doesn’t
exist
Instrument EMD SD
DD Y Single Doc Y Single Doc
BCH Y Single Doc Y Single Doc
BG N Not Required N Not Required
Receipts of EMD, SD require FI document parking from logistics (MM users) in the instruments are
DD or BCH.
Conversion of EMD to SD posts a document in FI, clearing already posted Special G/L accounts
However, for Refund of EMD & SD and Forfeit of EMD & SD , FI document parking is not required.
Conversion in case of SD does not exist in Business.
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6. Scope of EMD /SD program
• This program will allow functionality of EMD for Tenders (Request for Quotation) and
Security Deposit for Purchase Order / Contracts.
• Cash receipt for EMD or SD is not a Business practice and hence not considered in this
program.
• As base of this program is Tender or Supply order / Contract which will be created in
system. However, this development will not support transaction / document created outside
system.
7. Important Information
I. Followings are few important fields with these details –
• Document Type: EMD ( Earnest Money Deposit), SDT ( Security Deposit)
• Transaction Type: Receipt, Refund, Forfeit, Convert, Invoke, Return
• Actions: Create, Change, Delete, Reset Delete, Display, Park, Post
• Status at Item Level: Created, Parked DD/BCH & for confirmation to Bank, Confirmed by
Bank, To be returned, Returned, Converted.
• Status at Header Level: Created, Deleted, Completely Submitted, Partially Submitted,
and Converted to SD.
• Reason Code at item Level: Reason codes are required for each transaction. This will
facilitate purpose of documents & reporting. In case of SD, reason codes like Performance
Bank Guaranty (PBG), Warranty, Advance Payment and Indemnity.
• Deletion Flag at Header Level
II. Following are important tips about the functionality of the program:
• Through authorization, system should be able to restrict various transactions within EMD &
SD
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• Multiple instruments of same currency as well as different currencies are possible for a
Purchasing document.
• Individual FI document parking is required in case of Banker’s Cheque and Demand Draft.
• Conversion is only possible from EMD to SD.
• User can enter
1. Multiple documents in case of multiple currencies i.e. one document per currency
instead of one document with multiple currencies.
2. Grouping of instruments can be done like
i. Group 1 consists of BCH, DD
ii. Group 2 consist of BG
This will facilitate parking of FI documents
• Deletion of Parked document will be done by FI on the request of MM users who have
created parking document.
• Through this program system will park the document. Further processing of parked
documents needs to be done from standard SAP transactions by FI.
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PART-II
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I. Earnest Money Deposit processing
A. Processing of EMD in case EMD instruments are other than BG and LC
(i) Receipt of EMD in the system
Pre-requisite for EMD processing: Creation of RFQ in the System
Go to transaction: ZMMEMD
Press create button
Give the following header level information:
1. Document Type : EMD : Earnest Money Deposit
2. RFQ No. : Enter RFQ No.
3. Company Code : Company code where EMD is collected
4. Currency : Enter Currency of EMD Instrument(s)
5. Vendor : Select Vendor Code from the list
Give the following Item level information:
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(1) Select : Type of Instrument
(i) DD (ii) Banker’s Cheque
1. Instrument No
2. Instrument Date
3. Instrument Validity: By default system will add 180 days from Instrument date and
put as Validity date. However, validity period can be manually changed.
4. Amount:
5. Reason Code : Select 201 – EMD
6. Business Area
7. Bank
8. Branch
9. Address1
10. Address2
If anymore instrument is to be added in the same document, use copy and paste
function. Select the line item and press copy button
Then press Paste button:
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All the data of selected line will be repeated in subsequent line. The required changes such
as Instrument no. etc will be changed by the user.
Note: System will not allow same instrument no. twice in a document.
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Save the document and the system will give 10 digit document numbers.
(ii) Change of EMD receipt document:
• Go to Transaction : ZMMEMD
• Press Change Button
• Give EMD receipt document No.
• Do the required changes. However the system will allow for change only if the
document is not parked. Once document is parked by MM, the document
cannot be changed.
(iii) Deletion of line items:
If line item is deleted, then the system will permanently erase the data from the
data base
Deletion of entire document:
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Reset deletion Indicator:
(iv) Parking of EMD Receipt Document
Enter Transaction: EMD – Earnest Money Deposit
Deposit/Refund : N
Document No :
Execute the program by pressing clock button.
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The screen as shown will appear. The required line items will be selected and the
button for Park Document will be pressed.
The system will automatically create FI Park document in back ground for each of line
items as shown under:
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(vi) Reversal of Park Document:
Park document cannot be reversed by MM logistics users as Park document is a
financial document, for which authorization would be given only to FI users. MM user
has to contact FI user to reverse the park document, if necessary.
(v) Printing of covering letter to submit EMD to Finance:
Go To : ZMMEMD
Menu : Report
Select EMD/ SD Recpt
Fill up the input screen as shown:
Execute the program and take the output. Send the tender fee enclosed along with the
forwarding letter to attached finance.
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Address of Finance Address of department
Department to whom the sending the instrument
tender fee is forwarded
(vi) Refund of EMD
a. Creation of EMD Refund Document:
Press the button “RFC” (Refund/Forfeit/EMD-SD Conversion)
Press Create Button and fill up the following:
1. Document Category : Refund
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2. Document(Receipt) No : EMD refund is possible only against the EMD Receipt
document
Fill up the following:
1. Amount to be refunded.
2. Reason Code:
3. Remark such as “Refund of EMD” etc. as the case may be.
Save the document. System will give EMD refund document number.
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b. Submission of EMD Refund document to FI
c. Printing the letter for Refund of EMD
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Fill up the following:
1. Status : R (i.e. Refund)
2. Reason for Refund
3. Letter No.
4. Finance Address – to whom the refund letter has to be issued
5. Name & Designation – who is to send refund letter
6. Document No- Refund document no.
Execute the program and take the printout to send the same to finance with a copy to vendor.
(vii) EMD Forfeit Processing
a. Creation of EMD Forfeiture Document
Same as applicable for “Creation of “EMD Refund Document” with the following change:
Document Category: Forfeit
Reason Code : 201 (EMD)
b. Submission of EMD Forfeit document to FI
The procedure will be same as applicable for “Submission of EMD Refund document to FI”,
which may be referred for this functionality.
In case of EMD and SD forfeit also, the forfeit documents will not be parked by MM. It simply
changes the status of EMD forfeit document from “Creation” to “Document submitted to FI”
c. Printing the letter for EMD Forfeit
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Same as “Printing the letter for refund of EMD”
(viii) EMD-SD Conversion
(a) Creation of EMD-SD document
EMD submitted by the firm through DD/Banker’s cheque will be converted into SD.
Let us see how to create EMD – SD Conversion document:
• Press RFC button
• Press Create button
• Enter Document Category : EMD-SD CNV
• Enter EMD receipt Document No.
Enter the following:
1. PO No.
2. SD Amount which will be converted from EMD
3. Reason Code : 201
4. Remark, if any.
• System will check if the PO is against the RFQ and the Vendor.
• Save the transaction.
• System will generate 10digit ED-SD conversion document no.
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(b) Posting of EMD to SD and Submission of EMD-SD conversion document
to FI
Procedure is same as “Submission of EMD Refund document to FI”, which may please be referred
for submission of EMD-SD conversion document.
The changes in the input screen are as under:
Transaction : SDT
Deposit/Refund : “C”
Select the Document to be posted and click on Post to FI button as shown. The
document will be posted in FI by converting from EMD to Security Deposit Special GL.
After posting the document the document should be submitted to FI, for taking a print out
of the letter.
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c. Printing the letter for EMD Forfeit
Same as “Printing the letter for refund of EMD”
B. Processing of EMD in case EMD instrument is BG
(i) Receipt of EMD in the system
Follow the same procedure “A” above with the following change:
Instrument : BG
Reason Code : 200-EMD_BG
Further Processing of BG Document will be done as under:
(ii) Bank Confirmation:
Bank Guarantees received along with bids will have to be checked with issuing authority for its
genuineness. The following process will be followed:
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Press BG button
Enter EMD receipt document no.
Select the line item and press “Bank Confirmation” button as shown below:
The system will ask to confirm the action. Once it is confirmed by pressing button “Yes”, the status
of EMD receipt document will be changed to “Send for Bank Confirmation”.
(iii) Printing of letter to Bank to confirm the issuance of BG
Go to “Report” on the first screen and select “BG Conf. Letter” and furnish the details as shown
below:
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Execute the program and take the printout.
(iv) Post Confirmation:
Press BG button on the first Screen.
Enter EMD receipt document no.
Select the line item and press “Post Confirmation” button as shown below:
User has to select any of the options:
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If “Accepted by bank” is selected, then only system will allow for further processing such as “Return”
or “Send to FI” or “Invoke”. Also when “Accepted by bank” is selected, there will be screen for
entering the BG Confirmation Reference Number which is received from the Bank.
(v) Amendment to BG:
Amendment will be possible in the system only after “Post Confirmation” activity in case of BG.
The following two fields can be amended:
1. Validity
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2. Amount
Go to first screen and select the button “Amendment”
Enter document no. and change the validity or amount as the case may be .Then save the
transaction.
(vi) Printing of letter to Vendor after Amendment of BG
Go to “Report” on the first screen and select “BG Amend. Letter” and furnish the details and
print the letter.
(vii) BG Sent to Finance:
• Go to first screen.
• Select the button “BG”
• Enter document no.
• Select the line item and press “Sent to FI” button as shown under:
Save the document.
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(viii) BG Accepted by Finance
This transaction will be done by FI once they receive the original BG in their department.
The procedure for this transaction will be same as “BG sent to FI” except that the button “Accepted
by FI” will be pressed.
(ix) Invoke of BG
• Go to first screen.
• Select the button “BG”
• Enter document no.
• Select the line item and press “Invoke” button as shown under:
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(ix) Return of BG:
The following transaction is to be done in the system for return of BG.
Select the line item and press button “Return” which is in the right most corner of
application tool bar.
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III. SECURITY DEPOSIT PROCESSING
A. Processing of SD in case SD instruments are other than BG.
(i) Receipt of SD in the system
Pre-requisite for SD processing: Creation of PO in the System
The procedure for creation of SD receipt document is the same as that of “Creation of EMD receipt
document” as explained above with the following changes:
• Document Type : STD
• The system will not ask for place of collecting SD as it is always “Base Location by the
respective purchase group”
• Reason Code (at item level) : 300 – SDT_SUB-CONTRACT
(ii) Change of SD receipt document:
Same as applicable for “Change of EMD receipt document”
(iii). Parking of Receipt Document
Same as applicable for “Parking of EMD Receipt Document” with the following change:
Transaction: STD
(iv) Printing of covering letter to submit EMD to Finance:
Same as applicable for “Printing of covering letter to submit EMD to Finance”
(v) Refund of SD
a. Creation of SD Refund Document:
Same as applicable for “Creation of EMD Refund Document” with the following change:
Document Category: Refund
Reason Code : 300
b. Submission of SD Refund document to FI
In case of EMD and SD refund, the refund documents will not be parked by MM. The procedure for
SD refund is same as EMD refund.
Here it can be seen that the system is not generating Park document. It simply changes the status
of SD refund document from “Creation” to “Document submitted to FI”
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c. Printing the letter for refund of SD
Same as “Printing the letter for refund of EMD”
(vi) SD Forfeit Processing
a. Creation of SD Forfeiture Document:
Same as applicable for “Creation of EMD Refund Document” with the following change:
Reason Code : 300
b. Submission of SD Forfeit document to FI
The procedure will be same as applicable for “Submission of EMD Forfeit document to FI”, which
may be referred for this functionality.
In case of EMD and SD forfeit also, the forfeit documents will not be parked by MM. It simply
changes the status of SD forfeit document from “Creation” to “Document submitted to FI”
c. Printing the letter for SD Forfeit
Same as “Printing the letter for refund/forfeit of EMD”
B. Processing of SD in case SD instrument is BG
(i) Receipt of SD in the system
Follow the same procedure “A” above with the following change:
Instrument: BG
Reason Code: 301-SDT-Performance Bank Guarantee
Further Processing of Performance Bank Guarantee Receipt Document such as Bank Confirmation,
Confirmation letter, Post Confirmation, Amendment, Invoking of SD, Return of PBG, printing of
receipt letter, printing of Invoking/return letters etc. will be as applicable for BG (EMD).
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