Overview of Sales and Distribution Processes
Summary & Notes of Business cycle (Order To Cash) – Overview of SD Processes
This process involves accepting order from the customer till payment is received from the customer, hence it is called “Order To Cash”
Here is the process flows: (There are several variations to this steps e.g
Service order: Quotation -> Order -> billing (shipment not required)
3rd party Order: Order ->PO -> billing (billing created ref to order)
1. Pre-Sales processes includes following sub-processes:
(establish & maintain customer relationship)
Ø Entering and tracking customer contacts -> engage customers & follow ups to make customer buy a product or service e.g sending samples
Ø Campaigns -> marketing measures to inform & get the customer interested to buy a product or service. E.g mailing, trade fair, telephone etc
Ø Answering customer telephone queries -> providing customers info’s and answers to customers queries (Occurs throughout the SD process)
Ø Inquiries -> non binding document provided to customer which contains sales info/terms (order type: IN,. Create: VA11, Change: VA12, Display: VA13
Ø Quotation -> non binding document provided to customer which contains sales info/terms with validity date (order type: QT,. Create: VA21, Change: VA22, Display: VA23
2. Sales order processes includes following sub-processes:
(electronic doc that captures and records customer's request for goods or services)
Ø Availability check -> system checks if material is in stock
Ø Credit check -> system checks if credit can be granted or if credit limit is exceeded or not
Ø Pricing (prices/discounts) -> prices and discounts are inserted if needed. (manual entry or auto populated from price/discount records)
Ø Transfer of requirement to MRP -> system passes on the demand on the sales order to material planning either to produce inhouse or purchase
Ø Paymennt card processing -> System performs check and verification when payment cards are used e.g credit cards etc.
Ø Tax calculation -> System defaults tax based on certain criteria’s & rules e.g Local State Tax & Central state tax for USA or VAT for Europe is based on shipping point and ship to dest. Or cnty,. It includes whether material is liable for Tax/VAT or not, may also include incoterms
Ø Freight Calculation -> Can be inserted manually or automatically from condition records as accruals, OR use alternative calculation which obtains data from external forwarder system. You can also leave blank on order and only populate on shipment cost either as return EDI/Idoc
Sales order -> Has 3 levels (1. Header 2. Line Items 3. Schedule lines)
3. Shipping processes includes following sub-processes:
(Creating of shipping doc to prepare products to depart warehouse to customer’s dest)
Ø Creation of outbound deliveries -> doc is triggered ref to an order (Create: VL01N, Change: VL02N, Display: VL03N)
Ø Picking -> Can be done by creating transfer order in Warehouse management (physical action requires to pick product from rack and stage)
Ø Packing -> Involves packing in box, drums or pallets, wrapped, labels, weigh etc (Optional use in SAP, but physically done in warehouse floor)
Ø Shipment document -> planning & monitoring of transport (Optional use in SAP, use to also capture freight cost etc)
Ø Post goods Issue -> Done after goods has shipped from warehouse (Once goods issue done, Stock is reduced & Cost of goods account updated)
Delivery document -> Has 2 levels (1. Header 2. Line Items).. can be batch managed or non batch managed
4. Billing processes includes following sub-processes:
(Creating of Invoice, so that customer can make payment for the product shipped)
Ø Creating Invoice for goods or services -> Invoices are created manually or via batch job (several invoice types, F2, F8, F5 etc)
Ø Automatically transferring invoice data to accounting -> serves as source for Financial accounting to monitor & process customer payments
Ø Creating credit & debit memo -> Involves complains which result in giving money (CR) or receiving money (DR). Also invoice correction (RK)
Ø Cancelling previously created Invoice -> Involves cancellation of invoice created for which accounting doc is not yet cleared (Tcode: VF11)
Billing document -> Has 2 levels (1. Header 2. Line Items).. can display and print batches or non batches
5. Payment processes includes following sub-processes:
(Customer pays the invoice, incoming payment handled in Financial accounting module)
Ø Posting payment against Invoices -> Once done in Financial accounting module, then G/L account are posted automatically (DR on cash account & CR memo on customer’s receivable account)
Ø Reconciling differences -> Involves the balance of two accounts (making sure the value debit on one account equals the value Credit on another)
Transaction code for payment clearance: F-28
(follow instruction on this link: http://help.sap.com/saphelp_46c/helpdata/fr/59/476212ce1311d1abec0000e8a5eb64/content.htm)
6. Basic concept in accounting:
Ø Double entry accounting -> any transaction has impact on at least 2 accounts,. One account is Debited and another account is Credited (e.g, when invoice is posted, Revenue account is Credited while Customer receivable account is Debited), once payment received, Cash account is Debited, while Customer receivable account is credited
Ø General Ledger -> This is collection of all individual account postings also called the T accounts. FI posting posting occurs in G/L account
Ø Journal Entry -> details which transaction and what accounts are affected (done in chronological order using double entry method)
7. Fundamental elements within Accounting:
(DR and CR does not mean + or -, it simply mean DR is on left, and CR is on right side)
Ø Assets account (DR) -> Cash, Bank, Receivables, Inventory, Land, Buildings, Vehicles, Machines, Furnitures etc
Ø Liability account (CR) -> Payables, debts, Bank Overdraft, accrued expenses, owed to depositors etc
Ø Equity account (CR) -> Capital (start funds, investment funds etc), Drawings (money withdrawn from Business), Accumulated fiunds (non profit, usually if revenue exceeds expenses, then excess goes into funds, & if expense exceeds revenue, then fund is used to compensate difference)
Ø Revenue/Income account (CR) -> Sales, Services rendered, Intrest income, Rent Income, charges & Fees etc
Ø Expense account (DR) -> Phone bill, Water bills, Electricity bills, Salaries, Wages, Depreciation, Bad debts etc
Here are the rules to follow
► All above 5 accounts forms the basis for Financial statements of any companies which are (1. Balance Sheet & 2. Income Statement), Profit & loss etc..
