House Bank Accounts in SAP FICO

House Bank Accounts (HBAs) in SAP are often configured incorrectly during an implementation. This improper configuration causes problems later when additional sub modules such as Electronic Bank Statement (EBS), Cash Forecasting, and Check Reconciliation are brought into scope. In this article, we explore how House Bank Accounts connect to physical bank accounts, some key settings, and common pitfalls to avoid.

House Bank Account Structure

House Bank Account

A house bank account represents a bank account that the company has opened with a bank. There should not be a house bank account for customer, vendor, or competitor bank accounts. HBAs should only be setup for a company’s own bank accounts. Second, each HBA should represent one single bank account and one bank account should only be represented by one HBA. If there are multiple house bank accounts with the same account number, check clearing and EBS operations will be negatively affected.

It’s also important to note that when a bank account is opened, it is opened by a single legal entity. So if a company with fifty legal entities opens a bank account, the account is still owned by one entity inside that company. We see this relationship in SAP in that a single company code is assigned to the HBA.

House Banks

If a house bank account represents a company’s bank account, then the House Bank (HB) represents the bank that the account is maintained at. So suppose a company has account 523552 at Bank of America with routing number 52389593, then the house bank account will be tied to account 523552 and the house bank will be tied to routing number 52389593. Let’s suppose that you have multiple Bank of America accounts with different routing numbers. Should you have a different HB for each routing number? Yes – SAP only enables one routing number per house bank.

Naming House Bank Accounts

SAP gives us four characters to name each House Bank and each House Bank Account. That of course means that we must be pithy and smart about our naming convention. Most companies only have one or small number of banks that they have accounts with. At the same time, there may be a few routing numbers for the same bank. Thus, multiple house banks may be required for the same bank. With that information, a sensible naming scheme for house banks seems to be AAA# where AAA is an abbreviation for the bank name – such as BOA for Bank of America or FTB for Fifth Third Bank – and # is a sequential number for each routing number at that bank.

Similarly, we must be careful about naming house bank accounts. Best treasury practices suggest that accounts should be segregated to only have one type of activity. So disbursements should be executed out of one account and collections should be in a separate account. Thus, a reasonable practice would be to use an abbreviation for the type of activity  and a sequential number. I would do AA## with AA being the short hand for the activity type and ## being a sequential number.

GL Accounts for House Bank Accounts

Most flows in bank accounting revolve around recording a companies cash activity and then reconciling against how the bank recorded that activity. As part of a monthly close operation, bank statements and internal accounting records should be reconciled against one another.

The standard recipe in SAP for cash accounting flows is that say when a payment is issued, a clearing account tied to the house bank account is credited and the vendor account is debited. Then, when the payment shows up on the bank statement, the clearing account is debited and the G/L tied to the HBA is debited credited. That means that the account tied to the HBA should always represent the reconciled activity (and match the balance per the last statement date), while the clearing accounts represent unreconciled activity.

Usually, there are more than one clearing accounts used depending on how much activity is flowing through the account. If the HBA GL account is 444440, then clearing accounts should be numbered 444441,444442,…,444449. If the account has low volumes, then only a clearing account for incomings and another for outgoings may be required. If the account has high volumes, then a separate account should be used for each type of activity (lockbox, ACH payments, check disbursements, etc).

House Bank Account GL Flow

Configuring House Bank Accounts

First, the house bank must be setup as a bank in FI01. The bank really is just used so that SAP is aware that the bank’s routing number is valid and to have a consistent address for the bank. Often times, a file is prepared and mass loaded with all of the known banks in a country to avoid having do to this step every time.

FI01 Create Bank  (1)FI01

Next, the house bank is setup in FI12. First, we’re prompted for the company code of the house bank. Next, a code is assigned to the house bank as previously detailed. The country should be denoted as well. If there is a need for additional payment settings, these can be entered under the DME section.FI12 Create House Bank  (2)FI12

Once the house bank is created, the house bank account should be configured. Key information here is the Account id, the description, the account number, the GL account, and the currency.

FI12 House Bank Account  (3)FI12

Once all of this information is saved, then the house bank account is ready for use in other cash flows such as lockbox, EBS, cash forecasting, and so on.

Questions? Comments? Please leave feedback!

T-Codes, Config Paths, etc   [ + ]

1. FI01
2, 3. FI12

26 Comments

sivaramakrishna. says:

Hi David,
You haven’t touched the concept of alternative account in the bank account which is used in EBS & IHC

David says:

Hello –

You’re absolutely correct. There are a couple items that I didn’t touch on due to length including the alternative account field in the HBA as well as the DME and EDI fields on the HB.

Sitansu Sekhar Das says:

Dear David, I have complited sap training on fico module. I am very much interest to work in fico module, since i am commerce graduate. Presently i am working in INGO sector, in which there is scope for implimentation of SAP.

Can you advice me how I will do the regular practice on fico module, so that i will get more & more knowledge.

Regards,
Sitansu

David says:

Hi Sitansu –

Thanks for reading and commenting. It’s tough to give you good information without knowing the details of your situation and your intended career path. In general, the key to SAP is working implementations and troubleshooting problems in SAP. The best way to learn is by doing I suppose. So if your company is considering an SAP implementation, that could be a really good opportunity for you to build up your skills. Additionally, formal training, reading blogs (such as mine!), and configuring in a sandbox are also good practices to help build up skills and knowledge.

I would also emphasize the importance of working on a problem on your own before reaching out for help. Often times, I discover quite a bit in SAP that is peripheral to the problem I’m working on. If I called someone before I investigated myself, I would lose those opportunities to discover and learn. Quite a few people disagree with me on that approach though.

Hope that helps,
David

Satish says:

Hi David,

Thank you for the great info, just wanted to point to a typo you may have made.
It is stated that.
‘When, when the payment shows up on the bank statement, the clearing account is debited and the G/L tied to the HBA is debited’
i believe it should be the G/L tied to the HBA is Credited in this scenario of Vendor invoice and Vendor payment.

Thanks

David says:

Hi Satish –

Thanks for pointing that out to me. I’ve fixed the issue. The correction should show up in a few hours.

Thanks,
David

Prasad says:

Sir,
May be this question is not right here to ask, but I know you can solve my confusion. I am presently working in one company, using SAP from 2004. I am in FICO moudle, and would like to go for consultant level, like to teach FICO without certification course. After joining class, what should i do to get my career in SAP FICO, mine age is 42+ now. Kindly guide me.
Regards

shanmuga says:

how to do maintain a separate GL gor house bank for cheque issuse and deposit’s?

David says:

Hi Shanmuga –

Thanks for reading. Usually you would just create separate GL accounts. Many places will use a predefined numbering convention. So they’ll say that the account ending in 0 is for reconciled balance of the account, ending in 1 is for disbursed but unreconciled checks, and ending in 2 is for outgoing ACHs or something to that effect. Then in your EBS configuration you would setup your posting rules depending on the transaction type to hit the correct account.

David

Lucky says:

Dear Sir, our company has implemented SAP from 2011 and its almost settled. But i have query on Bank Reconciliation Statement and trading partner. In case of BRS, we are not able to post the BRS automatically (actually which should be post automatically). Can you tell us what would be the problem.
On the other hand, we are not able to activate trading partner.
If sir could guide us and help us in solving this issue.

Lucky

Lauri says:

Hi David, How would you setup a Housebank when there is only one bank account, but two different routing numbers? Our Bank of America account uses one ABA number for checks and ACH payments, and a separate ABA number for wires.

David says:

Hi Lauri –

Thanks for reading and for the question.

Usually in this scenario, you would need to setup two house banks and two house bank accounts for each routing number, but link them back to the same set of GL accounts

Thanks,
David

Lauri says:

Hi David,

Thanks for the quick reply.

Can you please clarify one item a little further? You say to setup two House Banks and two House Bank Accounts for each routing number, but can the two House Bank accounts be the same bank account number?

nadgouda says:

Hi,

My requirement is to print Bank account number with respect to business happens in bunsiness unit.
Currently the Bank Account is retrieved by the standard functionality / logic.
The Bank Account is retrieved by passing only Company Code and House Bank from T012K table.As there are two entries maintained in T012K table with same Company Code and House Bank, it will always fetch the first record.
To retrieve the appropriate Bank Account we need to pass Account ID or G/L Account. So please let me know how to retrieve Account ID or G/L Account or do we need to hard code it ?
Can you please help in from where can we pick the Account Id or G/L account?

Fetching data from T012K table but as SAP standard program fetches default apicking

mallik says:

Dear David,

our Bank requires nine digit transition code for canada country vendor payments,where we need tgo configure this both in vendor master or on bank master please suggest me they want to have this field in standard SAP.through IDOC it will have to generate.

please help me

Alan Gibson says:

Hi
sorry – new to SAP and have a client with >33000 bank accounts but the requirement is to have all bank accounts post to the same GL account. They carry out their recon & treasury externally.
Is this possible?
Thanks

david says:

Hi Alan –

Sorry for being slow in getting back to you. If the client has that many bank accounts, I’m guessing that they’re retail. Usually in that sort of scenario, the external software is pretty sophisticated. For the accounts where any SAP functionality is live – say payment runs via F110, I would want those accounts isolated just for the SAP activity. You can then reconcile them either in SAP or feed the activity to the external platform. If the SAP functionality is not live, I would just leave those accounts as is, with no house bank config, and just a sensible structure – possibly one – for the gl accounts.

Good luck

Anuj says:

Hi! david, Is it possible to have ERS work for a vendor with multiple currencies? What needs to be in place to accomplish ERS for a vendor that invoices and needs to get paid in multiple currencies tied to the currency of invoice?

david says:

Hi Anuj –

I’m actually not sure about this one 🙁 Sorry 🙁

vamsi says:

Hi David

Thanks the article. Being a HCM consultant i was not having much idea on these things. Now got a better clarity.

Regards
Vamsi

David says:

Thanks for reading Vamsi. I’m glad you enjoyed it.

Paul says:

can you tie multiple bank accounts to just 1 GL account?
if we don’t populate the house bank and bank id on the GL accounts what will that negatively affect?

Thanks

Vivian Geronga says:

Do we need to create house banks not only for payments but also for collection and investments? If we do, does each house banks should alsways have a bank key, house bank, GL and account ID?

santy says:

Hi David,

Really nice post! we have a requirement where we want to have Paying Company code of US and Sending Company code in UK. However standard SAP does not allow for this as both the company codes must be in same country and with same local and parallel currencies. However we were thinking of twisting the logic of SAP. We were planning to assign the US House Bank with all the configurations to UK Company Code in FI12 and the system accepts it without any error. What would be the implications with this settings. ideally all the company codes in US are using only one paying company code.

Ricci says:

Hi David,
Very informative thus far….
My question is SAP FICO’s ability to combine multiple payment types and settlement to multiple DDAs in a single file? There’s a piece of misinformation out there that maybe that’s not possible for ISO 20022.
Can you advise?

Imran Mohammed says:

Hi David,

Quick question on ACH Clearning, our requirement is for ACH Clearing with multiple currencies in SAP with XML file instead of BAI file.

Do you know how we can do automatic clearing in SAP.

Thanks – Imran

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