If you bill customers on a regular basis, but are then faced with having to correct invoices already posted, you can implement the SAP-provided tools for not only adjusting the posted invoices to reflect the new prices (e.g., changes in market values), but also to monitor this process. SAP’s retro-billing process available enables you to automatically adjust the invoices based on the new prices defined retroactively, automatically generating the corresponding credit or debit notes. Additionally, SAP offers many standard tools to monitor this process.

The main benefits of the retro-billing functionalities include:

• Improving a company’s revenues
• Streamlining the invoice processes for a specific period (i.e., a fiscal year)
• Helping to plan and manage a company’s cash flow
• Improving the customer relationship and satisfaction
• Helping to plan and manage the customer’s cash flow

The retro-billing process also produces a history of sales orders and the effects that the changes have on your customer accounts. This information can be invaluable to your organization.

Using a fictitious business case, you will walk through the retro-billing process. Your first task will be to display the condition price for the customer with which you already have an agreement and to which an invoice has already been sent. Although you will be using a sales order as reference to the billing document in this article, you can apply retro-billing to all other SD documents.

Create New Price Conditions Retroactively

In this first step, you define the new price conditions to be applied retroactively to all relevant billing documents already posted in the system, based on current customers and financial department agreements.

Step 1. To create a new price condition retroactively for the condition type PR00, use transaction VK11 or follow the menu path from the main SAP screen Logistics > Sales and Distribution > Sales > Master Data > Price Conditions > Maintain.

Step 2. As shown in Figure 1, enter the sales organization (i.e., 0004), distribution channel (i.e., 04), and customer (i.e., 1) values for the material (i.e., number 3, FERT Test Material) beginning January 31, 2009 through December 31, 2009.

Figure 1

Check new price defined retroactively

Simulate and Save Retro Billing

Next, you need to run transaction VFRB to simulate the postings, so you can check the results and then share them with your sales and finance managers. Once the simulated posting have been approved by sales and finance, you can save the results. You use the same transaction for saving the retro billing results as you would for simulating the retro billing itself.

Step 1. To simulate or save the retro-billing posting, use transaction VFRB, or follow menu path Logistics > Sales and Distribution > Billing > Billing document > Retro-Billing.

Step 2. As shown in Figure 2, enter the customer (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 system carries out a completely new pricing and re-determines the taxes.

Figure 2

Selection screen of the retro-billing program

Step 3. Click the execute icon at the top left of the screen to run the retro-billing program. The system provides the details of the retro billing for the customer.

At this stage, you have two options: one is to simulate the retro-billing posting results and another is to post the retro-billing documents. In this specific example, I have chosen to Simulate the results before the actual postings as shown in the (Figure 3).

Figure 3

Output screen of the retro-billing program

The results show the 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.

At this point, you have two options for dealing with the information:

• Simulation mode. If you want to simulate the retro-billing, click the Simulate button. This mode gives you the opportunity to pre-evaluate the credit and debit memo figures, and also share the results to the finance and sales managers.
• Posting mode: If you are confident that the information in the retro-billing is accurate, you can post the retro-billing. Upon the approval of the sales and financial managers, you use this mode to post the actual credit/debit memo documents.

Step 4. If you choose to simulate the retro-billing, you can 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 choose both documents with both reason codes. If you want to post credit and debit memo documents for a specific customer at the same time, you need to select both document types. However, this is usually per document type. In this case, select CM (retro-bill) with the standard SAP code G2 and then CM RB reason code 100 (Figure 4).

Figure 4

Specify the credit and debit memo document type with reason codes

Figure 5

Results of retro-billing simulation program

As you can see, only credit memos are generated, as specified (Figure 4).

Step 6. Click the Log button. The system displays the details of the errors occurred during the document posting. As shown in Figure 6, the credit memo was created but not released to accounting.

Figure 6

Credit memo created via retro-billing

The credit memo has been created (in the SD module) under the document number 9000019, but it has not been released to the FI and CO modules because of the error in the account determination. You need to release the credit memo to FI and CO. The releasing happens automatically if the account determination has been defined correctly in customizing.

Display the Retro-billing Document

To address the error, you need to update the billing document. In this case, you enter the document number 9000019.

Step 1. To display the credit memo and update the document data, you first need to update the billing document. Use transaction VF02 or follow menu path Logistics > Sales and Distribution > Billing > Billing Document > Change.

Step 2. Enter the credit memo document number (i.e., 9000019), and press the Enter key. See Figure 7. Note that the net value is automatically determined based on the retro-billing program.

Figure 7

Update the credit memo in the line item overview screen

• You can only work with the full retro-billing amount. It is not possible to process partial amounts.
• The system does not carry out a tolerance check on the net value. Also, it does not take into account different value-added tax (VAT) amounts for one item. All conditions other than the retroactive billing amount are determined automatically.
• The system does not update the list automatically (Figure 3)

Step 3. Next, select the billing line item and click the condition symbol (or follow menu path Goto > Item > Item condition). All price conditions applied to the credit memo are displayed, as shown in Figure 8.

Figure 8

Update the credit memo

Note that the difference between the invoice previously posted (document number 90000013), and the new credit memo (document number 90000019) has been defined using the price condition PDIF. Also note that the active condition type 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 causes that prevent the automatic releasing of the credit memo, you must analyze the account determination, which was identified as an error (Figure 5).

Step 4. Select the billing line item, and then follow menu path Environment > Acc. determination analysis > Revenue accounts. The system provides details about the access sequence related to the account determination (Figure 9).

Figure 9

Account determination details

Release the Retro-billing Document to Accounting

With the G/L account specified, you can now release the credit memo to FI and CO modules.

Step 1. Use the transaction VFX3 or follow menu path Logistics > Sales and Distribution > Billing > Billing Document > Blocked Billing Docs (Figure 10).

Figure 10

Selection screen of the billing release program

Step 2. Specify the appropriate selection screen (populating at least the Payer and Sales Organization fields, and checking the appropriate check box in the Incomplete due to section), and run the report. The system provides the details of the billing document (i.e., the blocked credit memo document), as shown in Figure 11.

Figure 11

Output screen of the billing release program

Step 3. To release the credit memo document, select the line item and then follow menu path Edit > Release to Accounting (Figure 12).

Figure 12

Credit memo release

Display the Logistics Retro-billing Document

In every posting in the SAP system, you always have one logistics document and at least one finance document. To verify that, after the retro-billing program has run, the logistics document has been created correctly.

Step 1. To display the logistics document associated with the credit memo, use transaction VF03 or follow menu path Logistics > Sales and Distribution > Billing > Billing Document > Display.

Step 2. Enter the credit memo document number and press the Enter key.

Step 3. To display the account assignment details, follow menu path Environment > Acc. Determination analysis > Revenue accounts (Figure 13).

Figure 13

Main screen to display the credit memo

As shown in Figure 14, you can see the G/L account has now been specified.

Figure 14

Display the G/L account in the credit memo document

Display the Finance Retro-billing Document

You can display the finance document associated with the credit memo to verify that the document has been created and that the associated accounting document has been posted correctly.

Step 1. Use transaction VF03 or follow menu path Logistics > Sales and Distribution > Billing > Billing Document > Display.

Step 2. Enter the credit memo document number and click the Accounting button (Figure 13). The system displays the information shown in Figure 15.

Figure 15

Display the accounting document associated with the credit memo

Display the Customer’s Balance

Next, you want to verify that the customer’s account balance reflects the credit memo.

Step 1. To display the customer’s balance, use transaction FD10N or follow menu path Logistics > Sales and Distribution > Credit Management > Account > Display balances.

Step 2. Enter the customer whose balance you want to verify (Figure 16).

Figure 16

Selection screen for customer’s balance report

Step 3. Run the report. The system displays the details of the customer account, as shown in Figure 17.

Figure 17

Output screen for customer’s balance report

You can see the debit and credit of the customer split by periods, and in particular, the posting done in April per the example.

Step 4. To check the details of those postings, double-click the line item. As shown in Figure 18, the system provides the related information.

Figure 18

Details of the customer’s balance in the period of April

Payment Processing

As part of any billing process, you need to schedule the credit memo processing job, which typically occurs in the background.

To schedule the job to process the credit memo in the background, use transaction F110 or follow menu path Accounting > Financial Accounting > Accounts Receivable > Periodic Processing > Payments. Figure 19 shows the report with the payment results.

Figure 19

Log of the payment run

Sales Order History

By looking at the sales order history, you are able to see the logistic and financial credit documents created automatically by the retro-billing process.

Step 1. To display the sales order history, use the transaction VA03 or follow the menu path from the main SAP screen Logistics > Sales and Distribution > Sales > Master Data > Sales Order > Display.

Step 2. Enter the sales order document number and choose the history option. The system shows the details reported (Figure 20).

Figure 20

Details of the sales order history

Appendix: Customizing Activities in the SAP System

This appendix lists the customizing settings I applied to test the retro-billing process in a standard SAP system.

1. Define Order Reasons

To make the credit and debit memos and memo requests relevant for retroactive billing, you need to assign to them a relevant retro-billing order reason, as follows:

• For primary documents, assign type 2
• For secondary documents, assign type 1

SAP differentiates between primary and secondary documents. Primary documents are:

• Invoices
• Credit memos that refer to returns
• Credit and debit memos in which you have entered the relevant order reason

Secondary documents are the following billing documents in which you have entered the relevant order reason:

• Credit and debit memo requests
• Credit and debit memos

The system displays such a document only when it has been created with reference to the invoice and when the currencies in both documents match.

To define custom order reasons, use transaction OVAU or follow menu path Tools > Customizing > IMG > Execute Project > SAP Reference IMG > Sales and Distribution > Sales > Sales Documents > Sales Document Header > Define Order Reasons (Figure 1).

Figure 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 this article, I used the code 100 to generate the credit memo request.

2. Define G/L Account Determination

To define the G/L accounts determination to release the logistics billing documents to the FI and CO modules, you can use transaction VKOA or follow menu path Tools > Customizing > IMG > Execute Project > SAP Reference IMG > Sales and Distribution > Basic Functions > Account Assignment/Costing > Revenue Account Determination > Assign G/L Accounts (Figure 2).

Figure 2

Selection screen to define the G/L account assignment

Depending on the business strategy provided by your financial department, there might be additional options other than these four shown in the Figure 2. In this article, I used the first option to show how the G/L account can be determined for the combination of Customer Group/Material Group and Account Key (Figure 3).

Figure 3

Output screen to define the G/L account assignment

Note that the G/L Account (701010), provided by the finance department, is determined by the combination of the other settings: V, KOFI, INT, 0004, 01, 01, and ERS.

3. Display Condition Type (PDIF)

The standard price condition PDIF should be present in your system. To check, use transaction V/06 or follow menu path Sales and Distribution > Basic Function > Pricing > Pricing Control > Define Condition Types > Maintain Condition Types (Figure 4).

Figure 4

Check the settings for the price condition PDIF

4. Define Price Procedure

Because the system posts the difference with the condition type PDIF, which is used when creating credit or debit memos, you need to make sure that the price condition PDIF is included in the price procedure. Use transaction V/08 or follow menu path Sales and Distribution > Basic Function > Pricing > Pricing Control > Define And Assign Pricing Procedures (Figure 5).

Figure 5

Check the price procedure that includes the price condition PDIF

5. Define Price Procedure Determination

Make sure that the price procedure is assigned to the relevant sales combinations. To do so, use transaction OVKK or follow customizing menu path Sales and Distribution > Basic Function > Pricing > Pricing Control > Define Pricing Procedure Determination (Figure 6).

Figure 6

Assign the pricing procedure to relevant sales combinations

Gaetano Altavilla

Dr. Gaetano Altavilla is a senior SAP practice manager. His focus is on pre-sales, delivery of SAP application solutions for large international corporations, and SAP knowledge management in Europe, the Middle East, and Africa (EMEA).

In his 18 years of SAP application experience working for many multinational companies, such as Procter & Gamble and Hewlett-Packard, he has covered a wide range of ERP logistic areas, focusing on the MM, WM, SD, LES, PP, PP-PI, PLM (QM, PM, PS) modules, as welll as CRM (TFM), SRM (EBP), SCM (SAP APO), and MES (ME) components.

Dr. Altavilla holds a degree with first-class honors in mathematics from the University of Naples and is certified in many SAP modules: SAP Logistics Bootcamp, SAP MM, SD, LE (SHP/WM/LE), PP, PLM (PM, QM, PS), SRM, CRM, SCM (APO), SCM (TM), FI, CO, and Solution Manager. He also has experience in ABAP/4 and application link enabling (ALE) and IDocs. He has participated in numerous industry conferences, such as the SAP Skills Conference in Walldorf at SAP SE.

You may contact the author at Gaetano_altavilla@hotmail.com.

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