Configure a letter of guarantee

  • 10 minutes

You must activate the letter of guarantee as a bank document before you can initiate transactions that involve letters of guarantee.

  1. Go to Cash and Bank Management > Setup > Cash and Bank Management parameters.
  2. Expand the Bank document FastTab.
  3. Set the Enable letter of guarantee option to Yes to activate the letter of guarantee.
  4. In the Transaction journal field, select the drop-down button to select the transaction journal name.
  5. Select the Number sequences tab, define a number sequence code for Letter of guarantee number and Letter of guarantee transaction references.
  6. Close the page to save your changes.

When the Bank document type field is set as Letter of guarantee, the sales order is displayed in the list of letters of guarantee in the Cash and bank management module.

Set up bank facilities and posting profiles for letters of guarantee

You need to create a Bank facility and posting profile that is necessary for processing a letter of guarantee.

Create a bank facility

  1. Go to Cash and bank management > Setup > Bank facilities.
  2. Select New.
  3. In the Facility group field, enter the bank facility group name for the letter of guarantee transaction.
  4. In the Description field, type a value.
  5. Select Save.
  6. Select the Facility types tab.
  7. Select New.
  8. In the Facility type field, enter the name of the bank facility type that is related to the bank facility agreement.
  9. In the Description field, type a value.
  10. In the Facility group field, select the drop-down button to open the lookup.
  11. In the list, find and select the desired record.
  12. In the Facility nature field, select an option.
  13. Select Save.
  14. Close the page.

Set up a bank posting profile

  1. Go to Cash and bank management > Setup > Bank documents posting profile.

    Screenshot of the Bank documents posting profile page.

  2. Select New.

  3. In the Account/Group number field, select the drop-down button to open the lookup.

  4. In the list, find and select the desired record.

  5. In the Settle account field, select the main account for settlement.

  6. In the Charges account field, select the account for expense transactions.

  7. In the Margin account field, select the account for the margin transaction.

  8. In the Liquidation account field, select the liquidation account for the letter of guarantee transaction.

  9. Select Save.

  10. Close the page.

Create a bank facility agreement

  1. Go to Cash and bank management > Letters of guarantee > Bank facility agreements.
  2. Select New.
  3. In the Agreement number field, enter the bank agreement number for the transaction.
  4. In the Bank account field, select the bank account number for which the letter of guarantee is open.
  5. In the list, click the link in the selected row.
  6. In the Start date field, enter a date and time.
  7. In the End date field, enter a date and time.
  8. Toggle the expansion of the General section.
  9. Select Add line.
  10. In the Facility type field, select the drop-down button to open the lookup.
  11. In the list, find and select the desired record.
  12. In the list, click the link in the selected row.
  13. In the Limit field, enter the amount negotiated with the bank.
  14. Select Save.
  15. Toggle the expansion of the Letter of guarantee section.
  16. In the Calculation method field, select an option. Enter the calculation method and percentage details for the Cash margin, Issuance commission, Extension commission, Increase value commission, or Decrease value commission, as appropriate.
  17. Select Save.

Extend a bank facility agreement

  1. Select Extend to open the drop-down dialog box.
  2. In the New agreement number field, type a value.
  3. In the End date field, enter a date and time.
  4. Select Extend.
  5. Select Save.
  6. Close the page.