Sales & Distribution Process

1. Engage in pre-sales activities

2. Create quotations and send to customers

3. Create sales orders

4. Schedule & deliver

5. Bill customer (by invoice)

6. Receive payment from customer

7. Handle sales order return

Notes:

During sales order processing, the system carries out basic functions, such as:

Monitoring sales transactions

Checking for availability

Transferring requirements to materials planning (MRP)

Delivery scheduling

Calculating pricing and taxes

Checking credit limits

Creating printed or electronically transmitted documents (confirmations and so on)

Depending on how your system is configured, these functions may be completely

automated or may also require some manual processing. The data that results from
these basic functions (for example, shipping dates, confirmed quantities, prices and
discounts) is stored in the sales document where it can be displayed and, in some
cases, changed manually during subsequent processing.
Notes:

In the Business Process Integration class we use the stool as a metaphor for the SAP
structure. There are four basic components needed to run execute SAP. Three of
these are the legs of the stool: org data, master data, and rules. These hold up
the transactions. Transactions cannot be run unless these are setup.

The legs are typically configured during the implementation process.

During BPI 1 we will setup the stool for Finance, Materials management and Sales
and Distribution.

Pen Incorporated Procure for Sales Order

 Sales Accounts
Pre- Delivery Billing
Order Receivable
Sales
Activit
yAvailabi Good
lity s to
Check Delive Inventory General
In Plant or
ry Postings Ledger
Invento YE Warehouse
ry S Accounts
N Goods from
O Purchase
Order Accounts
Purchas Purchas Goods Invoice
Payable
e e Order Receipt Receipt
Requisit
ion

Notes:

Can start out with a pre-sales activity

Then to Order processing

Became an order

Check inventory If not

Buy

Receive Goods

Assign to sales order

Send to customer

Bill customer

Pay Vendor

Account for all activities

General ledger either the balance sheet or income statement

Notes:

In the Business Process Integration class we use the stool as a metaphor for the SAP
structure. There are four basic components needed to run execute SAP. Three of
these are the legs of the stool: org data, master data, and rules. These hold up
the transactions. Transactions cannot be run unless these are setup.

The legs are typically configured during the implementation process.

During BPI 1 we will setup the stool for Finance, Materials management and Sales
and Distribution.

SAP Sales Order Process (Order-to-Cash)

Notes:

Not unlike the procure to pay process, this is completely configurable. You decide
how you want the order to cash process to work and configure the system
appropriately

May start with Sales Order

Check inventory

If you do not have inventory procurement process or production process

Pick materials: from inventory

Pack material: (optional) pack in box appropriate box or other

Post Goods Issue (Title transfer)

Invoice Customer Create Accounts Receivable

Collect Money

SAP SD Process

1. Engage in pre-sales activities

2. Create quotations and send to customers

3. Create sales orders, item proposal, or scheduling agreement

4. Schedule delivery and create delivery note

 5. Create/send invoice to customer (billing)

6. Receive/post payment from customer

7. Handle sales order return

Notes:

During sales order processing, the system carries out basic functions, such as:

Monitoring sales transactions

Checking for availability

Transferring requirements to materials planning (MRP)

Delivery scheduling

Calculating pricing and taxes

Checking credit limits

Creating printed or electronically transmitted documents (confirmations and so on)

Depending on how your system is configured, these functions may be completely

automated or may also require some manual processing. The data that results from
these basic functions (for example, shipping dates, confirmed quantities, prices and
discounts) is stored in the sales document where it can be displayed and, in some
cases, changed manually during subsequent processing.

SD3: Create Sales Order

A sales order contains all of the information needed to process customers

request. The process for creating a sales order has the following steps:

1. Pricing

2. Credit limit check

3. Availability Check

4. Delivering Schedule

5. Shipping point and route determination

6. Transfer of requirements to MRP

 7. foreign trade and license processing

SD3-1: Pricing

SAP can display pricing information at both the header and the line item level
for sales order.

It enables the user to program varied pricing procedures to meet individual

organizations needs.

The pricing is extendable; it can be attached, or extended to external pricing

programs or elements outside SAP for pricing.

It also allows Gross to Net pricing: This allows discounts and reductions from
the master price.

SD3-2: Credit Check

SAP provides an efficient means to implement credit management

It is integrated with Financial Accounting (FI), via credit control area

It automatically alerts when a credit check fails

A large number of outstanding receivables or bad debts can have a

considerable impact on company performance.

The user may minimize credit risk by defining a credit limit for customers by
using Credit Management.

This is especially important if a company does business with customers in

financially unstable sectors or countries, or trade with countries that are
politically unstable or that adopt a restrictive exchange rate policy.

Notes:

A large number of outstanding receivables or bad debts can have a not

inconsiderable impact on company performance. Using Credit Management, you
can minimize your credit risk by defining a credit limit for your customers. This is
especially important if you do business with customers in financially unstable
sectors or countries, or trade with countries that are politically unstable or that
adopt a restrictive exchange rate policy.
Integration

If you implement the Accounts Receivable (FI-AR) application component to manage

your receivables, but a non-SAP system for sales and distribution processing, Credit
Management enables you to assign a credit limit to each customer. When you post
an invoice (in FI-AR) the system then checks whether the amount exceeds the
credit limit. Facilities like the credit master sheet or early warning list help you
monitor the customers credit situation.

If you implement both the Accounts Receivable (FI-AR) and Sales and Distribution
(SD) application components, you can specify in Customizing when (at the point of
order, delivery, goods issue and so on) and to what extent a check on the
customers credit limit is to take place.

You can define automatic credit limit checks according to a range of criteria and in
line with your companys requirements You can also define at what point the
system carries out these checks (order, delivery, goods issue, and so on).

The credit representative is automatically alerted to a customers critical credit

situation as soon as order processing starts.

The relevant employees can be automatically notified of critical credit situations via
internal mail.

Your credit representatives are able to check a customers credit situation quickly
and reliably, and, in line with the appropriate credit policy, to decide whether the
customer should be granted credit.

Using Credit Management you can work in distributed systems. A distributed

system is one with central financial accounting and non-central sales and
distribution on several sales and distribution computers.

Credit and risk management takes place in the credit control area. According to
your corporate requirements, you can implement credit management that is
centralized, decentralized, or somewhere in between.

For example, if your credit management is centralized, you can define one credit
control area for all of your company codes.

If, on the other hand, your credit policy requires decentralized credit management,
you can define credit control areas for each company code or each group of
company codes.

Credit limits and credit exposure are managed at both credit control area and
customer level. Credit and risk management takes place in the credit control area.
According to your corporate requirements, you can implement credit management
that is centralized, decentralized, or somewhere in between.
For example, if your credit management is centralized, you can define one credit
control area for all of your company codes.

If, on the other hand, your credit policy requires decentralized credit management,
you can define credit control areas for each company code or each group of
company codes.

Credit limits and credit exposure are managed at both credit control area and
customer level.

SD3-3: Availability Check

Availability Check

Determines the material availability date

Considers all inward and outward inventory movements

Allow for 3 methods of delivery

One-time delivery ( on- time one-time delivery)

Complete delivery (possibly delayed one-time delivery)

Delayed proposal (allows partial delivery schedule)

SD3-3: Availability Check

In determining the material availability the following elements can be

included in the availability check

Safety stock

Stock in transfer

Quality inspection stock

Blocked stock

Restricted use stock

All movements of stock

Inward/Outward movement of goods

purchase orders

purchase requisitions

planned orders

production orders

reservations

dependent reservations

dependent requirements

sales requirements

delivery requirements

One-time delivery

Deliver on the requested delivery date

 In this section, SAP checks whether the requested delivery date can be
kept to. If stock of the material is available to make a delivery on the
requested delivery date, the stock quantity is confirmed here.

If there is no stock available, confirmed quantity zero is displayed.

Complete delivery

In this section, SAP checks whether there will be sufficient stock for complete
delivery at a later date:

If there is sufficient stock available at a later date to cover the required

quantity in the sales document, the system proposes the date here.

If the system determines that complete delivery cannot be made at a

later date, no date is proposed in this section.

Delayed proposal

In this section, SAP checks whether and for which dates partial deliveries can
be made. Partial deliveries are displayed for different dates. These dates are
based on the planned inward and outward movements of stock.

During an availability check which takes replenishment lead time into

account, the date on which replenishment lead time ends is displayed if
insufficient stock means that no partial deliveries can be made before
replenishment lead time ends.

Notes:

The following elements can be included in the availability check:

Stock

safety stock

stock in transfer

quality inspection

blocked stock

Inward/Outward movement of goods

purchase orders

purchase requisitions

planned orders
production orders

reservations

dependent reservations

dependent requirements

sales requirements

delivery requirements

Requirements in sales and distribution (sales requirements and delivery

requirements) result from all transactions which forward a requirement to Materials
Management (MM) or to Production Planning (PP). For example, this could include
sales orders or deliveries and quotations as well. Sales and distribution
requirements reduce existing stock or inward movements of stock on the material
availability date to ensure that other outward movement of stock elements cannot
access the quantity reserved in this way.

SD3-4: Delivery Scheduling

SAP can automatically schedule essential shipping activities, using backward

and forward scheduling rules.

It uses defined activity times to schedule delivery activities.

Terms used in scheduling are defined below.

Transit time is the time in days that is required to deliver goods from your
premises to the customer location. It is defined for a route.

Loading time is the time in days that is required for loading a delivery item. It
is determined from the shipping point, the route, and the loading group of the
material.

Pick/pack time is the time in days that is required for allocating goods to a
delivery as well as the time in days that is required for picking and packing. It
is calculated using the shipping point, the route, and the weight group of the
order item.

Transportation lead-time is the time in days that is needed to organize the

shipping of the goods. This might include booking a ship and reserving a
truck from a forwarding agent. It is defined for a route.
The following 5 deadlines are of importance for delivery scheduling:

1. Material availability deadline: must start picking and packing activities on

the material availability deadline. This deadline must be selected early
enough in advance so that the goods are ready by the given loading
deadline.

2. Transportation scheduling deadline: the date on which you must

start to organize the transportation of the goods.

3. Loading deadline: the date on which the goods must be available for
loading and on which all vehicles that are required to ship these goods must be
ready for loading. After the time required for loading the goods (loading time) has
expired, goods issue can be carried out.

4. Goods issue deadline: the date on which the goods leave the company in
order to arrive punctually at the customer location.

5. Delivery deadline: the date on which the goods are to arrive at the
customer location. The difference between the goods issue deadline and the
delivery deadline is calculated from the transit time required for the route between
the delivering plant and the customer.

The delivery deadline can be the customer's requested delivery deadline or the
confirmed delivery date (that is, the earliest date on which you can deliver goods to
the customer).

Notes:

During order entry, each schedule line for an item can contain a requested delivery
deadline. The goods should arrive at the customer on this date. At the order
processing stage, the system can automatically schedule when the essential
shipping activities such as picking, loading and transporting must be started so that
the requested delivery date can be kept.

The terms used in scheduling are defined below. You must distinguish between

times (time duration) needed to carry out certain activities

dates that are calculated on the basis of these times

Times
Values based on past experience of the shipping department are entered in the
system in the form of transit times, loading times, pick/pack times, and
transportation lead times:

The transit time is the time in days that is required to deliver goods from your
premises to the customer location. It is defined for a route.

The loading time is the time in days that is required for loading a delivery item. It is
determined from the shipping point, the route, and the loading group of the
material.

The pick/pack time is the time in days that is required for allocating goods to a
delivery as well as the time in days that is required for picking and packing. It is
calculated using the shipping point, the route, and the weight group of the order
item.

The transportation lead-time is the time in days that is needed to organize the
shipping of the goods. This might include booking a ship and reserving a truck from
a forwarding agent. It is defined for a route.

The following deadlines are of importance for delivery processing:

You must start picking and packing activities on the material availability deadline.
This deadline must be selected early enough in advance so that the goods are
ready by the given loading deadline.

The transportation scheduling deadline is the date on which you must start to
organize the transportation of the goods. This deadline must be selected early
enough to ensure that the means of transport is available by the loading deadline.

The loading deadline is the date on which the goods must be available for loading
and on which all vehicles that are required to ship these goods must be ready for
loading. After the time required for loading the goods (loading time) has expired,
goods issue can be carried out.

The goods issue deadline is the date on which the goods leave the company in
order to arrive punctually at the customer location.

The delivery deadline is the date on which the goods are to arrive at the customer
location. The difference between the goods issue deadline and the delivery deadline
is calculated from the transit time required for the route between the delivering
plant and the customer.

The delivery deadline can be the customer's requested delivery deadline or the
confirmed delivery date (that is, the earliest date on which you can deliver goods to
the customer).
If backward scheduling determines a date in the past as the date on which a
schedule line becomes due for shipping or if the material will not be available on
the date calculated, the system automatically carries out forward scheduling to
determine the earliest possible shipping deadline.

For example, starting from the current date, the system calculates the loading
deadline, the goods issue deadline, and then the confirmed delivery date. It does
this by adding together the shipping times mentioned above.

When you change a sales document, such as adding schedule lines or rescheduling,
the system carries out delivery scheduling for all the schedule lines, new and old.
Because the material availability date lies in the past for backlog schedule lines, the
system performs forward scheduling. This may have the undesired affect of the
system rescheduling lines that may have already been confirmed.

You can specify for each sales document type that the system is to schedule
deliveries only backwards. With no forward scheduling, you can better recognize
backlogs in production and the customer receives goods on time.

An item consists of one or more schedule lines. The schedule line contains all the
data that is needed for a delivery.

For example,

a customer orders 20 units of a particular material which you enter as one item in
the sales order. However, you can only deliver 10 pieces now and the remaining 10
pieces next month. So you need to schedule two deliveries.

The data for these deliveries (dates, confirmed quantities) are stored in two
separate schedule lines.

Notes:

The transportation lead-time is the time in days that is needed to organize the
shipping of the goods. This might include booking a ship and reserving a truck from
a forwarding agent. It is defined for a route.

The pick/pack time is the time in days that is required for allocating goods to a
delivery as well as the time in days that is required for picking and packing. It is
calculated using the shipping point, the route, and the weight group of the order
item.
The loading time is the time in days that is required for loading a delivery item. It is
determined from the shipping point, the route, and the loading group of the
material.

The transit time is the time in days that is required to deliver goods from your
premises to the customer location. It is defined for a route.

Structure of sales documents

Header

Line Item # 1

Schedule Line # 1

Schedule Line # 2

Line Item # 2

Schedule Line # 1

Notes:

All sales documents have basically the same structure. They are made up of a
document header and any number of items. The items can in turn be divided into
any number of schedule lines.
Header data

The general data that is valid for the entire document is recorded in the document
header. For example,

Number of the sold-to party

Number of the ship-to party and the payer

Document currency and exchange rate

Pricing elements for the entire document

Delivery date and shipping point

Item data

Whereas data in the document header applies to all items in the document, some
data applies only to specific items. This data is stored at item level and includes
the:

Material number

Target quantity for outline agreements

Number of the ship-to party and the payer (an alternative ship-to party or payer can
be defined for a particular item)

Plant and storage location specifications

Pricing elements for the individual items

Schedule line data

An item consists of one or more schedule lines. The schedule line contains all the
data that is needed for a delivery. For example, a customer orders 20 units of a
particular material which you enter as one item in the sales order. However, you can
only deliver 10 pieces now and the remaining 10 pieces next month so you need to
schedule two deliveries. The data for these deliveries (dates, confirmed quantities)
are stored in two separate schedule lines. In sales documents where delivery data is
not relevant, for example, contracts, credit and debit memo requests, the system
does not create any schedule lines.

Data recorded in the schedule lines includes the:

Schedule line quantity

Delivery date

Confirmed quantity
SD3-5: Shipping Point and Route Determination

A shipping point is determined for each line item

A delivery can only be processed from one shipping point

Routes - route to be traveled & transit time are determined using customized
rules

Routes can be used to simply define transit time

Notes:

In this step, you define the shipping points in your company or edit shipping points
that already exist. In order to adapt the functional scope of a shipping point to the
organization in your company, you should process the following check list:

The shipping point is the top level in the organization for shipping.

A shipping point can be allocated to several plants.

A shipping point can be divided into several loading points.

A delivery is always initiated from exactly one shipping point. Thus, all items of a
delivery belong to one shipping point. Groups of deliveries also belong to exactly
one shipping point.

You can influence delivery scheduling via allocation to departure zones.

The shipping point can be proposed automatically during order processing

depending on the plant, loading group and shipping condition.

A shipping point has an address.

The shipping point is used as a selection criterion for lists of deliveries and the work
list deliveries.

The shipping point is used as a selection criterion for processing deliveries like
printing, picking or goods issue.

You can determine the printer destination for messages differently for every
shipping point on account of shipping documents.

Using routes, you can combine sales order items according to shipping criteria.
The system determines routes automatically for a sales order item and can repeat
the procedure for a delivery (see section Route determination).

In order to define routes, proceed as follows:

Define the modes of transport.

Define the shipping types.

Define the transportation connection points and maintain the relevant data on the
detail screen.

Define the routes and route stages.

You can also maintain the route stages for several stages.

The SAP System determines routes automatically for each sales document item. It
determines the itinerary and mode of transport in shipping.

Routes are determined depending on the following criteria:

Country and departure zone (departure zone of the shipping point)

Shipping conditions agreed in the sales order

The shipping condition is defined in shipping point determination.

Transportation group of the material

Country and transportation zone (receiving zone) of the ship-to party

The SAP System copies the route from the sales document item into the delivery at
header level.

To define route determination, you must edit the following points:

Define transportation zones for each country. These transportation zones can be
either departure zones for the shipping point or receiving zones for the ship-to
party.

Assign the departure zones to the shipping points.

Define transportation groups for the materials.

Specify the routes to be selected according to the given criteria in sales processing.

Define the delivery types for which route determination should be repeated and set
the necessary indicator in the appropriate delivery types.

Define the weight groups.

SD3-6: Transfer of requirements to MRP

Sales order is transferred to MRP as a Customer Independent

Requirement (CIR). If a deficit is found, SAP will propose a purchase
req. or planned order to fulfill the shortage after running MRP or MPS.

Sales and distribution requirements reduce existing stock or inward

movements of stock on the material availability date to ensure that
other outward movement of stock elements cannot access the quantity
reserved in this way.

Notes:

The following elements can be included in the availability check:

Stock

safety stock

stock in transfer

quality inspection

blocked stock

Inward/Outward movement of goods

purchase orders

purchase requisitions

planned orders

production orders

reservations

dependent reservations

dependent requirements

sales requirements

delivery requirements

Requirements in sales and distribution (sales requirements and delivery

requirements) result from all transactions which forward a requirement to Materials
Management (MM) or to Production Planning (PP). For example, this could include
sales orders or deliveries and quotations as well. Sales and distribution
requirements reduce existing stock or inward movements of stock on the material
availability date to ensure that other outward movement of stock elements cannot
access the quantity reserved in this way.

SD3-7: Foreign Trade and License Processing

Predefined trade areas NAFTA, EU

Automated reporting for trade areas

Automated controls

License management

Embargo lists

Control by customer, country, product, point in time

Notes:

As countries move increasingly toward a global market economy, businesses

become more involved in and influenced by foreign trade. This affects not only the
vendor and customer relationship, but that of foreign subsidiaries within a single
company.
With this opening of market opportunities come regulations, licenses, import tariffs,
and an increasing amount of paperwork required by government agencies and
other legal entities.

SAP Retail provides extensive support for world-wide export/import trade as well as
deliveries within specific trade areas (such as the EU or NAFTA), thus automating
the burdensome paperwork and freeing your shipping and receiving departments to
concentrate on moving merchandise quickly. R/3 functionality includes:

Maintenance of data specific to foreign trade in the following master records:

Customer master

Vendor record

Article master

Purchasing info record

Copying data specific to foreign trade into purchasing and sales documents

Data interface for the retrieval of export-specific data

Export control

Government reporting

Preference procedures

SD3: Create Sales Order

The sales order document is made up of three primary areas:

Header

Data relevant for the entire sales order: customer data, total cost of the order,
number of the sold-to party, number of the ship-to party and the payer, document
currency and exchange rate, pricing elements for the entire document, delivery
date and shipping point order

Line Item

Information about the specific product: Ex: material and quantity, cost of an
individual line

Schedule Lines
Uniquely belongs to a Line Item, contains delivery quantities and dates for partial
deliveries

Item Data

Whereas data in the document header applies to all items in the document, some
data applies only to specific items. This data is stored at item level and includes the:

Material number

Target quantity for outline agreements

Number of the ship-to party and the payer (an alternative ship-to party or
payer can be defined for a particular item)

Plant and storage location specifications

 Pricing elements for the individual items

Schedule line data

Notes:

The transportation lead-time is the time in days that is needed to organize the
shipping of the goods. This might include booking a ship and reserving a truck from
a forwarding agent. It is defined for a route.

The pick/pack time is the time in days that is required for allocating goods to a
delivery as well as the time in days that is required for picking and packing. It is
calculated using the shipping point, the route, and the weight group of the order
item.

The loading time is the time in days that is required for loading a delivery item. It
is determined from the shipping point, the route, and the loading group of the
material.

The transit time is the time in days that is required to deliver goods from your
premises to the customer location. It is defined for a route.

DS3: Create sales order: item proposal

If a customer frequently orders the same combination of materials, SAP can

store the frequently used data as an item proposal in the system.

During sales order processing, the user can copy all or some of the materials
and quantity data from the item proposal directly into the sales order
(document)

Item proposal can be assigned to one or multiple customer master records

Notes:

If a customer frequently orders the same combination of materials, or if you

recommend a particular selection of products for an opening order, you can
store the frequently used data as an item proposal in the system. If you wish,
the item proposal may also include proposed order quantities. During sales
order processing, you can then copy all or some of the materials and quantity
data from the item proposal directly into your document (sales order,
quotation, and so on). In addition, you can assign a particular item proposal
to one or more specific customer master records. The system can then
automatically propose the number of the assigned item proposal whenever
you process sales orders for the relevant customers.
Notes:

Once the sales order is entered the delivery notes starts the delivery process.
Along with most processes in SAP it is configurable and can be tailored per order or
customer.

As soon as the material availability date or the transportation scheduling

date for a schedule line is reached, the schedule line becomes due for shipping.
When you create an outbound delivery, you initiate shipping activities such as
picking and transportation scheduling.

In its role as central object of the goods issue process, the outbound delivery
supports all shipping activities including picking, packing, transportation and goods
issue. During the outbound delivery process, shipping-planning information is
recorded, status of shipping activities is monitored and data accumulated during
shipping processing is documented. When the outbound delivery is created, the
shipping activities, such as picking or delivery scheduling, are initiated, and data
that is generated during shipping processing is included in the delivery.
Notes:

Requisition Nothing really happens unless we get the goods or pay for them

The system does the transactions for you using the automatic account assignment

When we receive these, it can match the receipt against the PO

Debit Inventory (we now have additional inventory value)

Credit GR/IR (we are going to owe/pay for that additional inventory)

COGS: Cost of goods sold

Credit is minus

Debit is plus
DS5: Billing Overview

SAP has the functions of processing credit/debit memos and rebates

It automates invoicing, based on sales orders and/or deliveries

It can create pro forma (paper) invoices

It is integrated with Finance (FI) & Controlling (CO)

It updates customers credit data

DS5: Billing
 Sales Invoice

Sold To:
Rushmore Group

Sales Org: S001

Dist Channel: RE
Division: 01
Notes:

The invoice generates 3 automatic accounting instructions:

Conditions/Price:
1. Credits the revenue account
$120
2. Debits the customers account

3. Simultaneously debits the A/R reconcilliation account (total A/R)

DS5: Billing Methods

Delivery 820 Invoice 945

Delivery based Order 6
Delivery 821 Invoice 946
Invoicing

Delivery 833
Collective Order 9
Delivery 834 Invoice 968
Invoicing Order 14 Delivery 856

Invoice 991
Split Order 32 Delivery 886
Invoicing Invoice 992

Notes:
The following methods may be used in Billing:

One individual billing document per sales document

You can set the system to create one billing document for each sales
document, e.g. one invoice per delivery.

A collective billing document for several sales documents

As long as certain data agrees, you can also combine different documents
(orders and/or deliveries) fully or partially in a common billing document The
following prerequisites must be met:

the header data appearing in the billing document must agree

the split conditions specified do not apply

several billing documents for one or more sales documents ( invoice split)

If you want to guarantee that invoices are created separately according to certain
criteria, you can do this by defining certain split criteria.

DS5: Billing Documents

It explicitly specifies documents

Billing due list builds a work list of invoices that should be generated

Automatic posting to Financial Accounting (FI): debit to customer sub-ledger

account and credit revenue account.

Notes:

Billing document is the umbrella term for invoices, credit memos, debit memos, pro
forma invoices and cancellation documents.

The invoice list lets you create, at specified time intervals or on specific dates, a list
of billing documents (invoices, credit and debit memos) to send to a particular
payer.

The billing documents in the invoice list can be single or collective documents
(collective invoices combine items from more than one delivery).

The standard version of the SAP R/3 System includes two types of invoice lists:

for invoices and debit memos

for credit memos

Like all parts of sales order processing in R/3, billing is integrated into the
organizational structures. Thus you can assign the billing transactions a specific
sales organization, a distribution channel, and a division. Since billing has an
interface to Financial Accounting, the organizational structures of the accounting
department, (the company codes as well as the sales organizations assigned to the
company codes) are important.

DS5: Billing Plans

Periodic total amount for a planned billing period

Milestone distributing the total amount over multiple billing dates -

typically used with the project system (PS)

Installment evenly proportioned amounts and defined payment dates

Resource related consumed resources such as service or consulting

Notes :

Periodic billing means billing a total amount for each individual billing date in the
plan. For example, if you are creating a rental contract, the system can propose a
schedule of monthly rental payments, according to the length and conditions of the
contract.

Milestone billing means distributing the total amount to be billed over multiple
billing dates in the billing plan. For example, you can use a billing plan for billing a
make-to-order item that is assigned to a project in the SAP Project System. When
you enter the project-related make-to-order item in the sales order (or assembly
order), the system proposes a billing plan based on milestones defined for networks
in the project. As each milestone is successfully reached, the customer is billed
either a percentage of the entire project cost or simply a pre-defined amount.

The installment plan allows the customer to pay in installments. With the
installment plan the system creates one invoice for all installments. On the basis of
this billing document you can print an invoice listing all the installments with the
relevant payment dates and amounts to be paid by those dates.

The installments are calculated by the system by taking a percentage of the total
invoice amount for each installment. These percentages can be defined by your
system administrator. The system takes into account any rounding differences for
the last payment date.
For each installment the system creates a customer line item in financial
accounting.

The installments are defined by the payment terms, which are controlled by the
payment terms key. Your system administrator can define the following data for this
key:

the number of installments

the payment dates

the percentage of the billing value

Resource-Related Billing

The price for customer-specific services are not always defined in a contract as
fixed prices, nor can they always be determined using standard pricing. This is the
case if, for example, no empirical values exist for specific services, and therefore
the services cannot be calculated adequately before conclusion of a contract.
Typical examples of this are:

Make-to-order production

External plant maintenance in the service company

Specific services such as consulting

You carry out resource-related billing for these orders. In the billing document,
single material, internal activities, and costs are assigned to the customer
afterwards.

SD6: Payment

Payment is the final step in the sales order process.

SAP posts payments against invoices.

The posting clears the liability in the A/R account and increases your bank
account.
If the customer complains, for instance, that the goods were faulty, you take the
goods back to check them. Once you have checked the goods, you can implement
one of the following activities:

- Send the customer a credit memo

- Make a subsequent delivery of the goods, free of charge

SD7: Handle Customer Return

1 Order 14 Delivery 856 Invoice 968

Quality
2 Return Order Return Delivery
Inspection
Return to Inventory

3 Credit Memo Payment

Notes :
Sales returns processing manages merchandise that the customer has returned due
to complaints. You enter the returned merchandise in the system and subject them
to an analysis (in the laboratory, for example). When the analysis is complete, you
use the results of that analysis to decide whether the merchandise can be reused.
You can trace this procedure through the document flow for sales returns
processing.

There are 3 components in a return.

1. The product(s) are ordered, delivered and invoiced (paid)

2. There is a request for a return

1. Return delivery

2. An optional quality inspection is run

3. Undamaged, unopened product is returned to stock inventory

3. A credit memo is created and then paid for the returned merchandise
according to the terms of returns

After you have checked the goods, you can implement one of the following
activities for the complaint:

Approve it by deleting the block

reject it by entering a reason for rejection.

You should bear in mind the following:

The quantity for which the customer should receive credit.

The order quantity rather than the delivered quantity is used as the basis for the
credit memo. If the customer returns only some of the goods and disposes of the
remaining goods himself, you can still create a credit memo for the full amount. On
the other hand, you can create a partial credit memo for certain items even if the
customer returns the entire quantity. To do this, the quantity to be ordered in the
return has to be reduced to the quantity to be credited.

Whether the customer should receive a replacement.

If the customer is to receive replacement goods, do not create a credit memo. You
can enter a reason for rejection for the apropriate items in the return. You then
create a free of charge subsequent delivery with reference to the return in order to
send the replacement goods to the customer.
SD7: Handle Customer Return

Returns document

Billing block can be proposed

Use the Order reason field to identify the reason for the return

Full access to pricing and ability to re-price

Return delivery

Issues a goods receipt to place material into inventory

Notes :

The Sales Returns component is used to manage full products in the consumer
products industry (for example, in the beverage industry) that the customer has
returned due to a complaint. The complaints are all related to quality defects, not
incorrect deliveries. The path that the returned merchandise takes often has to be
tracked in detail for example, returned beer first has to be sent to a lab (e.g. in a
brewery) for inspection. Once the analysis of the returned merchandise is complete,
the vendor or manufacturer determines

The status of the merchandise and whether it can be reused

Whether the customer will be credited for the merchandise and, if so, in what
amount

In practice, time delays occur between entry of the returns in the system, analysis,
and settlement. The Sales Returns component gives you an overview of your
physical warehouse stocks and the corresponding postings whenever you require.

You can enter sales returns with or without a reference to a previous sales
(return) document. You can use the drivers return delivery note, for example, as a
template.

The system provides the order items from the sales returns document as a
template for entering the results of the analysis. You can therefore immediately see
which materials are pending for analysis and in which amounts.

You can link the results of the analyses with the entered order items from the
sales returns document individually or jointly, in full or partial quantities and
settle them immediately in the system.
 You can create an empties credit memo immediately, without having to wait
for the results of the analysis. The system generates a credit memo for the
customer for the deposit value of the empties as soon as the allegedly defective
merchandise is returned. Because the empties do not usually have any defects, you
can credit the customer with the deposit value of the allegedly defective
merchandise in advance.

The system checks whether your entries for the analysis items are
permissible.

The system generates logs and updates the document flows that reflect the
current status of sales returns processing.

The system generates the appropriate credit memos (SAP SD documents) and
documents for warehouse stock postings (SAP MM documents) based on the results
of the analysis. The system can create the documents immediately or later in
background processing. If problems occur during background processing, you are
notified via express mail.

Credit memo

Billing block must be cleared from Return

Posts to Financial Accounting (FI)

Can be processed in batch (background)

Can be processed collectively (grouped)

Notes :

The system can automatically propose a delivery or billing block when you enter a
complaint. This may be necessary if one department enters complaints and another
department reviews them.

The system generates logs and updates the document flows that reflect the current
status of sales returns processing.

The system generates the appropriate credit memos (SAP SD documents) and
documents for warehouse stock postings (SAP MM documents) based on the results
of the analysis. The system can create the documents immediately or later in
background processing. If problems occur during background processing, you are
notified via express mail.

These returns can be processed one at a time or in batched.

Sales Quotation

Sales Order
SD Process: Billing Documents

At this point that the sales process is passed over to Financial Accounting to await
payment.

At this point that the sales process is passed over to Financial Accounting to await
payment.

Notes:

Creating Billing Documents Explicitly

Purpose

If you only have to bill specific orders or deliveries, you can carry out manual billing
explicitly.

When processing the billing due list, you do not need to enter the individual
documents to be invoiced. The system lists the documents to be invoiced on the
basis of the selection criteria you enter. It can also combine several deliveries in
one invoice.

Process Flow

1. You select the function for creating a billing due list.

 2. You enter the selection criteria for the billing documents to be created.
For example, enter billing type F2, if you only want to create invoices
with this billing type.

3. You then display the billing due list.

4. The system uses the selection criteria to create the billing due list (a
list of sales documents to be billed). You can now process this list, e.g.
select some or all of the sales documents to be billed.

5. You select the function for billing. The system creates the
corresponding billing documents for the selected documents.

Document Flow

The document flow feature allows you to find the status of an order at any
point in time. The SAP system updated the order status every time a change
is made to any of the documents created in the customer order management
cycle (Order to Cash).

Notes :

The sales documents you create are individual documents but they can also form
part of a chain of inter-related documents. For example, you may record a
customers telephone inquiry in the system. The customer next requests a
quotation, which you then create by referring to the inquiry. The customer later
places an order on the basis of the quotation and you create a sales order with
reference to the quotation. You ship the goods and bill the customer. After delivery
of the goods, the customer claims credit for some damaged goods and you create a
free-of-charge delivery with reference to the sales order. The entire chain of
documents the inquiry, the quotation, the sales order, the delivery, the invoice,
and the subsequent delivery free of charge creates a document flow or history.
The flow of data from one document into another reduces manual activity and
makes problem resolution easier. Inquiry and quotation management in the Sales
Information System help you to plan and control your sales.
The system always updates the preceding documents. However, if you also want it
to update the subsequent documents in the document flow, you must make the
relevant settings in Customizing for copying control. Copying control and
documents flow are defined for documents in:

Sales support

Sales

Shipping

Transportation

Billing