Concept: Associating Sponsor Invoices with Letter of Credit Drawdowns

By default, Workday sets the

Amount to Draw

to match the

Available Draw Amount

, which is the total value of sponsor invoices not yet paid or applied to in-progress draws.

When you complete the

Letter of Credit Draw Down Event

business process without changing the

Amount to Draw

or

Amount Received

, Workday associates the drawdown lines with the sponsor invoices that form the

Available Draw Amount

.

When you change the

Amount to Draw

or

Amount Received

at any step in the business process, Workday reevaluates the sponsor invoices associated with the drawdown based on these factors:

Creation time (age) of all eligible sponsor invoices.
Invoices associated with the drawdown at the time of submission.
Whether you're increasing or decreasing the amount.

When you:

Decrease the amount, Workday applies a LIFO (Last-In, First-Out) rule, disassociating the newest sponsor invoices from the drawdown line first.
Increase the amount, Workday applies a FIFO (First-In, First-Out) rule when bringing in additional sponsor invoices, prioritizing invoices with the earliest creation dates before adding newer sponsor invoices or increasing amounts on previously associated ones.

When you record a payment, Workday refreshes the invoice association based on the final amount received and generates remittance advice for the associated sponsor invoices, regardless of when the drawdown was initiated or completed. Example: You record 2 letter of credit drawdowns, D1 and D2:

D1 was initiated first and associated with sponsor invoices S1 and S2.
D2 was created second and associated with sponsor invoice S3.

If you record payment for D2 first, Workday generates the remittance advice only for S3, not for S1 and S2, even though you initiated the drawdown for D1 first.

When a letter of credit drawdown is in progress, you can't manually edit, cancel, adjust, or write off any of the associated sponsor invoices. These invoices remain locked against modifications until they're no longer associated with a drawdown (for example, when you decrease the draw amount), or until the business process is complete or canceled. Workday also locks any new sponsor invoices added when you increase the draw amount.

When you specify a draw amount that only partially pays a sponsor invoice, the remaining amount on the sponsor invoice becomes available for later drawdowns.

For negative sponsor invoice adjustments to be associated with a drawdown, the negative invoices must be present at the start of the business process. Workday doesn't associate drawdowns with new negative invoices during subsequent refreshes of invoice association -- such as when you adjust the draw amount or received amount during the business process.

Example 1: A letter of credit drawdown is initially associated with 2 eligible sponsor invoices, each in the amount of 5,000 USD. Sponsor invoice S1 was created before sponsor invoice S2:

Sponsor invoice S1: 5,000 USD
Sponsor invoice S2: 5,000 USD
Default
Amount to Draw
=
Available Draw Amount
: 10,000 USD

When you don't change the draw amount or received amount, Workday associates the drawdown with S1 and S2, and applies the remittance advice to both sponsor invoices for 5,000 USD each.

When you decrease

Amount to Draw

to:

4,000 USD: Workday drops S2 from the drawdown line and associates 4,000 USD of the drawdown with S1, making 1,000 USD from S1 and the entire amount from S2 available for later drawdowns.
8,000 USD: Workday associates 5,000 USD of the drawdown line with S1 and 3,000 USD with S2, making 2,000 USD from S2 available for later drawdowns.

When you increase the

Amount to Draw

to an amount greater than 10,000 USD, Workday first searches for eligible new sponsor invoices to include in the drawdown. If eligible invoices are found, Workday recalculates the

Available Draw Amount

and associates the additional amount using the FIFO rule. If no new eligible invoices are found, or the

Amount to Draw

still exceeds the

Available Draw Amount

, Workday applies the drawdown only to the sponsor invoices that form the

Available Draw Amount

, leaving any remaining drawn funds in

Unapplied

status.

Example 2: Sponsor Invoices S1, S2, and S3 are created in successive order, each with 5,000 USD. You record 2 drawdowns, D1 and D2:

D1 is associated with S1, with
Amount to Draw
= 5,000 USD.
D2 is associated with S2 and partially S3, with
Amount to Draw
= 8,000 USD:
S2: 5,000 USD
S3: 3,000 USD

D1 is later canceled, making S1 available. When reviewing D2, you:

Increase the
Amount to Draw
from 8,000 USD to 10,000 USD. Workday preserves the original pool of associated sponsor invoices and amounts, and applies the additional amount to S1 instead of topping off S3 because S1 was created before S3:
D2 with
Amount to Draw
= 10,000 USD:
S1: 2,000 USD
S2: 5,000 USD
S3: 3,000 USD
Decrease the
Amount to Draw
from 8,000 USD to 6,000 USD. Workday preserves the original pool of associated sponsor invoices instead of bringing in S1:
D2 with
Amount to Draw
= 6,000 USD:
S2: 5,000 USD
S3: 1,000 USD

To view the sponsor invoices, currencies, and amounts associated with a letter of credit drawdown, you can access the

Letter of Credit Draw Down Lines and Linked Sponsor Invoices

report and view the subcolumns under the

Letter of Credit Draw Down Line Invoices

column.

You can also create or edit your own custom report using these reporting items:

Report data source:
Letter of Credit Drawdown Lines (Indexed)
Data source filter:
Letter of Credit Drawdown Lines for Company, Letter of Credit, and Letter of Credit Drawdown