Streamline Invoice Processes and Improve Customer Relationships by Implementing SAP SD Retroactive Billing

2/13/2014
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Streamline Invoice Processes and Improve Customer Relationships by

Implementing SAP SD Retroactive Billing
by Gaetano Altavilla, S enior SAP Solut ions Architect, Inst ructor, Project Manager, and Team Leader
April 6, 2012
SAP experts/SCM
Implementing retroactive bil ling, avai lable to you in SAP ERP Centra l Com ponent 6.0, addresse s the issue of
cha nging pricing a fter invoi ces have a lready bee n sent. Le arn the configuration ste ps ne eded to run retro-bi lling
across m odule s in your SAP ERP system. Maintain your good customer relati onshi ps using this a ccura te,
consiste nt business process.
Key Concept
Companies typically have agreements with customers to invoice t hem regularly during the fiscal year using different
prices. To update prices at the end of that period, y ou can implement retroactive billing, or retro-bil ling a proces s
that aut omatically adjusts invoic es based on new pric es defined retroactively, generating the corresponding credit or
debit notes.
If you bill c ustomers on a regular bas is, but are then fac ed with having to correct invoices already posted, you can
implement the SAP-provided t ools for not only adjusting the pos ted invoic es to reflect t he new prices (e.g., changes in
market values ), but als o to monit or this process . SAP s retro-billing process available enables you to automatically adjust
the invoices based on t he new prices defined ret roact ively , aut omatically generating the corresponding credit or debit notes.
Additionally, SAP offers many standard tools to monit or this process .
The main benefits of the ret ro-billing func tionalities inc lude:
Improving a c ompanys revenues
Streamlining the invoic e processes for a specific period (i.e., a fiscal year)
Helping to plan and manage a companys cash flow
Improving the cust omer relat ionship and sat isfac tion
Helping to plan and manage t he customers c ash flow
The retro-billing process also produces a history of sales orders and the effects t hat t he changes have on y our c ustomer
acc ounts . This informat ion c an be invaluable to your organization.
Using a fictitious business case, you will walk through the ret ro-billing proc ess. Your first task will be t o dis play the
condition price for the cust omer with which you already have an agreement and to which an invoice has already been sent.
Alt hough you will be us ing a sales order as reference to t he billing document in this article, you can apply retro-billing to all
other SD documents .
Note
The audience for t his article is logis tics consultant s and anyone working in S AP logistics modules or in blueprints for
fut ure logist ics implementat ions.
Note
The article is bas ed on the lates t version of SA P ERP Cent ral Component (SAP E CC) 6.0, and specifically relates t o
the SAP sales and distribution (S AP SD) and SAP Logis tics Execution-Shipping (LE-SHP) modules .
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Create New Price Conditions Retroactively

In this first step, you define the new pric e conditions to be applied ret roact ively to all relevant billing documents already
pos ted in the syst em, based on current cust omers and financial department agreement s.
Step 1. To create a new pric e condition ret roact ively for the c ondit ion t ype P R00, use t ransaction VK11 or follow the menu
pat h from the main SAP screen Logistic s > S ales and Distribution > S ales > Mas ter Data > Pric e Conditions > Maint ain.
Step 2. As shown in Figure 1, ent er the sales organiz ation (i.e., 0004), distribution channel (i.e., 04), and cus tomer (i.e.,
1) values for the material (i.e., number 3, FERT Test Material) beginning January 31, 2009 through December 31, 2009.
Fi gure 1
Che ck ne w pri ce de fined retroacti vely
Simulate and Save Retro Billing

Nex t, you need to run t ransaction VFRB to s imulate the pos tings , so you c an check t he results and then share them with
your sales and finance managers. Once the s imulated posting have been approved by s ales and financ e, you can save the
res ults. You use t he same transac tion for s aving the retro billing result s as you would for s imulating the retro billing it self.
Step 1. To simulat e or save the retro-billing posting, use transaction VFRB, or follow menu path Logist ics > Sales and
Dis tribution > Billing > Billing document > Retro-Billing.
Step 2. As shown in Figure 2, ent er the cus tomer (i.e., Payer 1), sales organization (i. e., 0004), retroactive billing period
(i. e., 31.03. 2008 31. 03.2010), and price type B, which means that the s ystem carries out a completely new pricing and
re-determines the taxes .
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Fi gure 2
Sel ection screen of the retro-bil ling program
Step 3. Click the execute ic on at the top left of the screen to run the retro-billing program. The syst em provides the details
of the retro billing for the cust omer.
At this stage, you have two options: one is to s imulate the ret ro-billing post ing result s and anot her is to post the retrobilling documents. In t his s pecific ex ample, I have c hosen to S imulate the res ults before the actual postings as shown in
the (Figure 3).
Fi gure 3
Output screen of the re tro-billing program
The results s how t he current value (i. e., 1.500, 00) and retro-billing value (i.e., 50, 00) for each billing documents and the
billing dates (i.e., 25.03.2009 and 31.03.2009), respectively.
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At this point , you have two options for dealing with the information:
Simulation mode. If you want to s imulate the ret ro-billing, click the Simulate butt on. This mode gives you t he
opportunity t o pre-evaluate the c redit and debit memo figures, and also s hare the result s to the financ e and sales
managers .
Pos ting mode: If y ou are confident that the information in the retro-billing is acc urate, you can post the retro-billing.
Upon the approval of the sales and financial managers , you use this mode to post the act ual c redit /debit memo
doc ument s.
Step 4. If you choose t o simulate the retro-billing, you c an specify the outcome you want: credit memo document with a
credit memo reason code or debit memo document along with a debit memo reason code. You can c hoose both
doc ument s wit h bot h reason c odes. If y ou want to post credit and debit memo documents for a s pecific customer at the
same time, you need to selec t bot h doc ument types. However, this is usually per doc ument type. In this case, select CM
(retro-bill) with the s tandard SA P code G2 and t hen CM RB reason code 100 (Figure 4).
Fi gure 4
Spe cify the credit and debit memo document type with reason codes
Note
In standard S AP sy stems , the reas on code 100 is used for a credit memo and the code for debit memo is 200. If
nec essary, you can create ot her reason codes bas ed on your companys requirements.
Step 5. Click the execute ic on. The sy stem simulates the outcome of the retro-billing, as shown in Figure 5.
Fi gure 5
Results of re tro-billing sim ulati on program
As you c an see, only credit memos are generated, as s pecified (Figure 4).
Note
To run t he program in posting mode, click t he Retro-billing but ton. You dont have the option of s pecifying the outcome
(Fi gure 3). The sc reen that appears is similar t o the one shown in Figure 5 with one not able exception: there is only
a Log button.
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As part of the simulate and save task, the next action is mandatory to verify immediately the results of the post ings. It is
rec ommended t hat y ou always verify the post ing result s.
Step 6. Click the Log button. The syst em display s the details of the errors oc curred during t he document pos ting. As
shown in Figure 6, the credit memo was created but not released to accounting.
Fi gure 6
Cre dit m emo create d via retro-bil ling
The credit memo has been created (in t he SD module) under the document number 9000019, but it has not been releas ed
to the FI and CO modules bec ause of the error in the account determination. You need to release the credit memo t o FI
and CO. The releas ing happens aut omatically if t he ac count determination has been defined correctly in customizing.
Display the Retro-billing Document

To address the error, y ou need to update the billing document. In this case, y ou enter t he document number 9000019.
Step 1. To display the credit memo and update the doc ument data, you firs t need to updat e the billing document. Use
transact ion V F02 or follow menu path Logist ics > Sales and Dist ribut ion > Billing > Billing Document > Change.
Step 2. Enter the credit memo doc ument number (i.e., 9000019), and press the E nter key. See Figure 7. Note t hat t he net
value is automatic ally determined based on the retro-billing program.
Fi gure 7
Update the credit memo in the line ite m ove rview scre en
Note
To see t he details of t he ac count ing documents associated with the S D doc ument , click the Acc ounting button. To s ee
a list of billing documents, clic k the Billing documents button.
When you proc ess any invoice using the retro-billing program, t ake into account the following points:
You can only work with the full retro-billing amount. It is not poss ible to process part ial amount s.
The syst em does not carry out a t olerance c heck on the net value. Also, it does not take into account different
value-added t ax (V AT) amount s for one item. All conditions other than the retroactive billing amount are det ermined
aut omatically .
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The syst em does not update t he list automat ically (Fi gure 3)
Step 3. Next, select the billing line item and c lick the c ondit ion s ymbol (or follow menu pat h Got o > Item > Item condition).
All pric e conditions applied to t he credit memo are displayed, as shown in Figure 8.
Fi gure 8
Update the credit memo
Not e that the differenc e bet ween the invoic e previous ly posted (document number 90000013), and the new credit memo
(document number 90000019) has been defined using the pric e condition PDIF. Also note that the act ive c ondit ion t ype for
the credit memo is PDIF - Diff.value (own) of 50, 00 EUR and the price condition PR00 - Price of 120, 00 EUR has been
deactivated.
To find the root c auses that prevent t he automat ic releasing of the credit memo, you mus t analyze the account
det ermination, which was identified as an error (Figure 5).
Step 4. Selec t the billing line item, and t hen follow menu path Environment > Acc. determinat ion analys is > Revenue
acc ounts . The syst em provides det ails about the acces s sequence related t o the account determination (Figure 9).
Fi gure 9
Account determination detail s
Note
As indic ated in Fi gure 10, no valid general ledger (G/L) account has been maintained to post the c redit memo. To
specify the appropriate G/L account, t he sy stem administrator uses t he customizing trans action VKOA for the
appropriate c ombination (e.g., Chart of Acc ount INT, Sales Organizat ion 0004, Material A ccount Ass ignment Group
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[Ac ctAss gGr] 01, Customer Ac count Assignment Group 01 [Acc assignment grp], Ac count key ERS).
Not e that this step is part of the cus tomiz ing and should have been performed before the actual postings.
For information about t ransaction VKOA , go to the Define G/L account det ermination sec tion in the Appendix:
Cus tomiz ing s ettings s ection following this art icle.
Release the Retro-billing Document to Accounting

Wit h the G/L account specified, y ou can now release t he credit memo to FI and CO modules .
Step 1. Use t he transac tion VFX3 or follow menu path Logis tics > Sales and Dis tribution > Billing > Billing Document >
Blocked Billing Docs (Figure 10).
Figure 10
Sel ection screen of the bill ing release program
Step 2. Specify the appropriate s elect ion s creen (populating at leas t the Payer and Sales Organization fields, and checking
the appropriate check box in the Incomplete due to section), and run the report. The sys tem provides the det ails of the
billing document (i.e., the block ed credit memo document), as s hown in Fi gure 11.
Figure 11
Output screen of the bi lling rele ase progra m
Step 3. To release the credit memo doc ument , select t he line it em and then follow menu path E dit > Release t o
Acc ounting (Figure 12).
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Figure 12
Cre dit m emo release
Display the Logistics Retro-billing Document

In every post ing in the SAP system, you always have one logistics document and at least one financ e doc ument . To verify
that, after t he retro-billing program has run, t he logistics document has been created c orrec tly.
Step 1. To display the logis tics document associated with the c redit memo, use transaction VF03 or follow menu path
Logistic s > S ales and Distribution > B illing > B illing Doc ument > Display .
Step 2. Enter the credit memo doc ument number and press the Ent er key.
Step 3. To display the account as signment details, follow menu path Environment > A cc. Determination analysis > Revenue
acc ounts (Figure 13).
Figure 13
Mai n screen to display the credit memo
As shown in Figure 14, you c an see the G/L account has now been spec ified.
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Figure 14
Display the G/L account in the credit memo docum ent
Display the Finance Retro-billing Document

You can display the finance document associated with the c redit memo to verify that the document has been created and
that the associated acc ounting document has been post ed correct ly.
Step 1. Use t ransaction VF03 or follow menu path Logistics > Sales and Distribution > Billing > Billing Document >
Dis play.
Step 2. Enter the credit memo doc ument number and click the Acc ounting button (Figure 13). The sys tem displays the
informat ion s hown in Fi gure 15.
Figure 15
Display the a ccounting docum ent a ssoci ated with the credit memo
Display the Customers Balance

Nex t, you want to verify that the cust omers acc ount balance reflect s the credit memo.
Step 1. To display the customers balance, use t ransaction FD10N or follow menu pat h Logistic s > S ales and Distribution
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> Credit Management > A ccount > Display balances .

Step 2. Enter the customer whose balance you want to verify (Fi gure 16).
Figure 16
Sel ection screen for custome rs balance report
Step 3. Run t he report. The system dis plays the details of the customer account, as shown in Figure 17.
Figure 17
Output screen for customers bala nce report
You can see t he debit and credit of the cus tomer split by periods, and in part icular, the pos ting done in April per the
example.
Step 4. To check t he details of t hose postings, double-click the line item. As shown in Figure 18, the system provides the
related information.
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Figure 18
Details of the customers ba lance in the pe riod of April
Payment Processing
As part of any billing process, y ou need to schedule the c redit memo proc essing job, which ty pically oc curs in the
bac kground.
To schedule t he job to process the credit memo in the back ground, us e transact ion F110 or follow menu path A ccounting >
Financial Acc ounting > Accounts Receivable > Periodic Proc essing > P ayments. Figure 19 s hows the report with the
pay ment results.
Figure 19
Log of the pa yment run
Sales Order History

By looking at the sales order his tory, you are able t o see the logis tic and financial credit documents creat ed automat ically
by the retro-billing process .
Step 1. To display the sales order his tory, use the t ransaction VA03 or follow the menu path from the main S AP sc reen
Logistic s > S ales and Distribution > S ales > Mas ter Data > Sales Order > Display.
Step 2. Enter the sales order doc ument number and choose t he history option. The sy stem shows the details reported
(Fi gure 20).
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Figure 20
Details of the sal es order history
Appendix: Customizing Activities in the SAP System

This appendix list s the cust omizing settings I applied to test the retro-billing process in a standard SAP s ystem.
1. Define Order Reasons

To make the c redit and debit memos and memo requests relevant for retroac tive billing, y ou need to assign to them a
relevant retro-billing order reas on, as follows:
For primary documents, assign type 2
For secondary documents , ass ign t ype 1
SAP different iates between primary and secondary documents . Primary documents are:
Invoices
Credit memos that refer to returns
Credit and debit memos in which y ou have entered the relevant order reason
Sec ondary doc ument s are the following billing documents in whic h you have entered t he relevant order reason:
Credit and debit memo reques ts
Credit and debit memos
The syst em display s suc h a document only when it has been creat ed with reference to the invoice and when the currencies
in both documents match.
To define cus tom order reasons, use transac tion OVAU or follow menu path Tools > Customizing > IMG > Ex ecute Project
> S AP Reference IMG > S ales and Distribution > S ales > Sales Documents > Sales Document Header > Define Order
Reasons (Figure 1).
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Fi gure 1
Define order reason
Here are all codes relevant for a credit and debit memo request and credit and debit memo used for retro-billing. In t his
art icle, I us ed the code 100 to generate the credit memo reques t.
2. Define G/L Account Determination

To define the G/L accounts determination to release t he logistics billing documents to t he FI and CO modules , you can use
transact ion V KOA or follow menu path Tools > Cus tomiz ing > IMG > Execute Project > SAP Reference IMG > Sales and
Dis tribution > Bas ic Functions > Account As signment/Costing > Revenue Acc ount Determinat ion > Assign G/ L Acc ounts
(Fi gure 2).
Fi gure 2
Sel ection screen to define the G/ L account assignment
Depending on the business st rategy provided by y our financ ial depart ment, there might be additional opt ions other than
these four shown in the Figure 2. In t his article, I used the first option to show how t he G/ L acc ount can be det ermined for
the combination of Cust omer Group/Material Group and Account Key (Fi gure 3).
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Fi gure 3
Output screen to define the G/L a ccount assignme nt
Not e that the G/L Account (701010), provided by the financ e department, is det ermined by the combination of the other
set tings : V, KOFI, INT, 0004, 01, 01, and E RS.
3. Display Condition Type (PDIF)

The standard price condition PDIF should be pres ent in your sys tem. To check, use t ransaction V/06 or follow menu path
Sales and Dis tribution > Bas ic Function > P ricing > P ricing Control > Define Condit ion Types > Maintain Condition Types
(Fi gure 4).
Fi gure 4
Che ck the settings for the price condi tion PDIF
4. Define Price Procedure

Bec ause the s ystem post s the differenc e wit h the condition type PDIF, which is used when creating credit or debit memos,
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you need to make s ure t hat t he price c ondit ion P DIF is inc luded in t he price procedure. Use t ransaction V/08 or follow
menu pat h Sales and Dis tribution > Bas ic Function > P ricing > P ricing Control > Define A nd As sign Pricing Procedures
(Fi gure 5).
Fi gure 5
Che ck the pri ce procedure that include s the price condition PDI F
5. Define Price Procedure Determination

Mak e sure that the pric e procedure is assigned t o the relevant sales combinations. To do so, use t ransaction OVKK or
follow c ustomizing menu path Sales and Dist ribut ion > Basic Function > Pricing > Pricing Cont rol > Define Pricing
Procedure Det ermination (Figure 6).
Fi gure 6
Assign the pricing procedure to releva nt sa les combinations
Note
To process for pay ments the credit or debit notes, make sure the cus tomiz ing s ettings related to t he payment program
(transac tion F110) have been completed via customizing transact ion FBZP. There are no special sett ings to be done to
process the retro-billing related documents .
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Gaetano Altavilla
Dr. Gaet ano A ltavilla is a c ertified associate s enior SAP solut ions architect, inst ructor, project
manager, and team leader loc ated in Naples, Italy. His foc us is on pre-sales, delivery of SAP
applicat ion s olutions for large international corporations and SAP K nowledge Management in
EME A. In his 14 years of IT experience, working for many multinational companies, s uch as
Procter & Gamble and Hewlett -Pack ard, he has covered a wide range of ERP logis tics areas ,
foc using on MM, WM, SD, LES, PP, PP-PI, and PLM (QM, PM, P S) modules , as well as
CRM (TFM), SRM (EB P), and SCM (AP O) components. Dr. A ltavilla holds a degree with firstclass honors in mathematics from the University of Naples and he is certified in many SA P
modules: SAP Logis tics Bootc amp, SAP MM, SD, LE, PP, PM, QM, PS , SRM, SCM (APO),
CRM, FI, CO, and S olution Manager. He also has experience in AB AP/4 and A LE/IDOCs. He
has part icipated in numerous industry conferences, such as the SAP S kills Conferenc e in
Walldorf at S AP AG.
See more by t his author

You may contact the aut hor at Gaetano_altavilla@hotmail.com.
If you have c omments about t his article or publication, or would lik e to submit an artic le idea,
please c ontac t the edit or.
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Streamline Invoice Processes and Improve Customer Relationships by

Create New Price Conditions Retroactively

Che ck ne w pri ce de fined retroacti vely

Simulate and Save Retro Billing

Sel ection screen of the retro-bil ling program

Output screen of the re tro-billing program

Results of re tro-billing sim ulati on program

Cre dit m emo create d via retro-bil ling

Display the Retro-billing Document

Update the credit memo

Account determination detail s

Release the Retro-billing Document to Accounting

Sel ection screen of the bill ing release program

Output screen of the bi lling rele ase progra m

Cre dit m emo release

Display the Logistics Retro-billing Document

Mai n screen to display the credit memo

Display the G/L account in the credit memo docum ent

Display the Finance Retro-billing Document

Display the Customers Balance

> Credit Management > A ccount > Display balances .

Sel ection screen for custome rs balance report

Output screen for customers bala nce report

Details of the customers ba lance in the pe riod of April

Log of the pa yment run

Sales Order History

Details of the sal es order history

Appendix: Customizing Activities in the SAP System

1. Define Order Reasons

Define order reason

2. Define G/L Account Determination

Sel ection screen to define the G/ L account assignment

Output screen to define the G/L a ccount assignme nt

3. Display Condition Type (PDIF)

Che ck the settings for the price condi tion PDIF

4. Define Price Procedure

5. Define Price Procedure Determination

Assign the pricing procedure to releva nt sa les combinations

See more by t his author

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