Letter of Credit – SAP

This article describes the Letter of Credit (LC) configuration and how to create a financial document.

Letter of Credit Configuration

IMG Path: Sales & Distribution >> Foreign Trade / Customs >> Documentary Payments >> Basic Settings 

1. Define Financial Document Type

The financial document type identifies, for example, the different types of documentary letters of credit. These include:

  • Document against payment
  • Document against acceptance

By default, 01 will be Letter of Credit

2. Define Bank Functions

The below functional will be available by default –

A Notifying bank
B Confirming bank
N Negotiating bank
O Opening bank
U Institute for guarantee

3. Define Texts for Financial documents

This is purely based on the requirement

4. Define Documents to be presented

A Export Billing Document
B Export packing list
C Certificate of origin

5. Define Reasons for change

1 Typing error
2 Amendment
3 Legal change

6. Define Indicators for Financial Documents

Configure as – 01 Letters of credit

7. Define Bank Indicators

1 Banks for confirmed letters of credit
2 Banks for unconfirmed letters of credit

End user Manual


Financial document should be generated for attaching the Letter of Credit (LC) with the sales order. This creates a document in Finance but does not do any postings in the ledger. This is purely used for the purpose of tracking and monitoring the letter of credit and does not affect the payments / collections.  This is attached to the sales order to ensure that the sales order value does not go above the LC value.

Transaction Code: VX11N

Path: SAP Easy Access Logistics à Sales & Distribution à Foreign Trade / Customs Payment Guarantee à Documentary Payments à Financial Document à Create

  1. Start the transaction using the menu path or transaction code
    Financial doc. cat.: R; Financial doc. type: 01; company Code: XXXX
  2. Press ‘Enter’ to create Financial document

Enter Customer, Ship-to party, Bank Country, Bank Key, Ext. FD number, Financial doc. value(this is imp), Lett.-of-credit crcy, Allowed overdraft %

3. Date/Delilvery Tab: Enter Request date, Date of receipt, Latest shipping date, Validity end date, Opening date, Last date ocean BOL, Presentation date, Number of days, Incoterms (Get it from SD team)

4. Documents tab: List of documents configured will be displayed.  Enter the number of originals & copies sent and mark the status as ‘Completed’

5. Banks & Text  tab: No mandatory information is required

6. Click the Correction Instruction icon.  If any correction instruction is required, it will be displayed.  If any, double click on the item and check its maintenance.

7. Click Save – Status A will be set

The Letter of Credit document generated will be used in SD module for linking into a Sales order.  Transaction code VX12N is for changing the Financial Document and VX13N for display.

Also See: SAP Down Payment Process an Overview

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