200+ words
Lecture 5 Order to Cash (OTC)
FIN319
Learning Objectives
Understand the elements involved on the Order to Cash (OTC) process
Understand the goal of Sales and Distribution (SD) and Inventory Management (IM)
Understand the IM elements involved on the OTC process
Understand the SD elements involved on the OTC process
Understand the FI elements involved on the OTC process
Understand the integration points between SD, IMWM and FICO
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Introduction
Order to Cash
Order to Cash (OTC) Business Process
Order to Cash
Covers the process from the contact with the customer and ends with the collection of cash for goods or service
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Sales Order
Sourcing
Shipping
Billing
Incoming Payment
Load schedule
Capacity Materials
Manufacturing/
Backflush
Order to Cash (OTC) Business Process
Customer order
Receive order from the customer (demand)
Order fulfillment/Backflush (financial impact)
Manufacturing of goods or delivery of services
Shipping (financial impact)
Delivery of finished goods
Billing (financial impact)
Billing to customer
Cash collection (financial impact)
Goal
5
Order to Cash (OTC) Organizational Structure
Client
An independent environment in the system
Company Code
Represents an independent legal accounting unit
Balanced set of books, as required by law, are prepared at this level
A client may have more than one company code
Credit Control Area
An organizational entity which grants and monitors a credit limit for customers
Credit limits
Monitors credit
Extend credit
It can include one or more company codes
It can managed credit
Centralized
Decentralized
Represents the legal and/or organizational views of an enterprise and it forms a framework that supports the activities of a business in the manner desired by management
Org
Procurement to Pay (PTP) Organizational Structure (Cont)
Plant
The plant represents a production unit and is the central organizational unit in Materials Management and Production Planning.
Under the OTC represents the place where goods will be deliver to customer.
Shipping point
Is a location in a plant from which outbound deliveries are shipped
They associated to one or more plants and a plant may have more than one.
Sales Area
A unique combination of sales organization, distribution channel and division
Sales organization is the organization unit responsible for the sale and distribution of goods and services in a geographical area
Distribution channel is the means by which a company code delivers goods and services (e.g. wholesale, retail, online, etc)
Division is a way to consolidate goods and services with similar characteristics
Org
Procurement to Pay (PTP) Organizational Structure (Cont)
Sales Office
A physical location that has the responsibility to sales goods or services within a geographical area
Org
Order to Cash (OTC) Global Bike Material Management Structure
Two company codes
Four sales organization
2 under GBI
2 under Global Bike Germany
3 Distribution channels
1 for GBI
2 for Global Bike Germany
Sales office
3 under GBI
2 under Global Bike Germany
Global Bike
Global Bike Inc
Global Bike Germany GmbH
San Diego
Client
Company code
Sales Org
US West
US East
DE South
DE North
Sales Office
Miami
Dallas
Heilderberg
Hamburg
Order to Cash Data Types
Master records
Single source of common business data used across SAP.
Transactional records
Data that represents a OTC event.
Sales & Distribution
Finance: AR subledger
Purchasing
Inventory
Sales order
Sourcing
Backflush and Shipping
Invoice & Payment
Material master
Customer master
Price condition
Order to Cash (OTC) Reflection
What similitude do you find between plant and sales office?
How would you describe the concept of sales area?
What is the difference between sales organization and sales office?
Inventory Management
Order to Cash
Inventory Management (IM) Introduction
Inventory and Warehouse management deals with placing and handling stock that will be shipped to customers in the correct place within the company’s premises and plays a relevant element in the order to cash (OTC) process.
Inventory
Inventory control
Stock
Demand
GL
Inventory Management (IM) Transactions
| Tcode | Description | Type |
| MFBF | Backflush | Transaction |
| MB03 | Material document | Transaction |
Invetnory
Inventory Management (IM) Backflush
Backflush is a goods movement in which we accept the manufactured finished goods after the transformation from components.
Material is placed on stock (finished goods) ready for shipment
Inventory
Sales order
Customer notification
Customer Demand
Manufacturing finished goods
Procure raw material
Inventory Management (IM) Material Movements Types
It is a three digit key that represents a movement of goods
Examples of movement types
101, goods receipt into warehouse
103, good receipt into blocked stock
122, return goods to vendor
231, consumption for a sales order
Inventory
Inventory Management (IM) Backflush
Event series during a backflush
Material document
Stock quantities and values are updated
Accounting document
Raw material inventory updates from price on material master from components
Finished foods inventory updates from price on material from finished foods and BOM
Any variance goes Backflush variance
Inventory
Material document
Raw material Inventory valuation
Accounting document
Finished goods Inventory valuation
Controlling document
Inventory Management (IM) Backflush (MFBF)
Repetitive Manufacturing
Confirmation type
Confirmation qty
Posting date
Material
Plant
Production strategy
Make to stock
Make to order
Batch
Inventory
Quote
Sales Order
Backflush
Shipping/
Delivery
Billing
Incoming payment
Inventory Management (IM) Backflush: Financial impact
Company code
Plant
Raw Material ($1000)
Finish Goods
Bill of Material ($1,000)
Posting & Document date
Transaction date
Currency
Line items
Finish goods inventory (debit)
Raw material inventory (credit)
Amounts
Document date:
09/30/2018
Posting date:
Document Number
1XXXXXXX
09/30/2018
Item in document currency
Line
PK
Account
Amount
Company code:
US00
Currency:
USD
Transaction date:
09/30/2018
001
40
200900 Raw Material Inv
$1,555.00-
002
50
200910 Finished goods Inv
$1,555.00
Inventory
Inventory Management (IM) Display Material Document (MB03)
Material document or
Material document list
Material
Plant
Movement type
Inventory
Order to Cash (OTC) Reflection
Where do you connect the PTP with the OTC processes?
What do you think is the financial impact of backflush?
What could the reason of any backflush variance?
Would you say GBI has a repetitive manufacturing process, why?
What production strategy do you think GBI might use and why?
Sales and Distribution
Order to Cash
Sales and Distribution Introduction
Sales and Distribution contains the most relevant elements of the order to cash process gathering the data from the customer order to the delivery of goods.
Sales
Sales
Demand
Fulfillment
Quote
Sales and Distribution Sub-modules
Sales
Billing
Controls the shipping and transportation instructions
Controls the billing process
Master Data
Control the material master data
Shipping and Transportation
Sales
Control the creation and changes of sales orders
Sales and Distribution Transactions
| Tcode | Description | Type |
| XD01 | Customer Master | Master Data |
| VK31 | Create pricing conditions | Master Data |
| VA21 | Create quotes | Transaction |
| VA01 | Crate sales orders | Transaction |
Sales
Sales and Distribution Customer master
Customer Master Account is data needed to conduct business with customers and execute transactions related with fulfillment process.
Sales
General (Client)
Sales area
Account
Name
Address
Bank information
Currency
Delivering plant
Delivery priorities
Shipping conditions
Partner functions
Sales and Distribution Customer master (XD01)
General data (Client) level
Account
Name
Address
Bank information
Sales area org level
Currency
Sales
Sales and Distribution Master Data: Material Master
The material master defines, among other things, how a product is sold, manufactured, purchased, inventoried and costed.
Information is grouped into views that are organized by business function.
The majority of views of master data are stored at the plant level.
Sales
Contains all of the key information a company needs to manage a material within its organization.
Basic Data
Material
Sales
Unit of measure
Material group
Description
Sales org data 1
Sales org data 2
Delivery plant
Tax data
Conditions
Sales general
Availability
Transportation
Sales and Distribution Material Master (MM01)
Material
Industry sector
Views
Basic Data
Sales
Purchasing
Plant
MRP
Storage
Sales
Sales and Distribution Material Master Views
Basic
Sales (SD)
Purchasing
Plant
Forecast
Storage
Quality
Accounting
Controlling
Sales
Sales and Distribution Master Data: Conditions
You can define the condition master to be dependent on various data:
Material specific
Customer specific
Conditions can be dependent on any document field
Sales
Contains the selling prices of finished goods.
Pricing elements
Gross price
Freight cost
Sales taxes
Surcharges and discounts
Sales and Distribution Conditions (VK31)
Type of condition
Sales org
Distribution channel
Material
Condition
Sales
Sales and Distribution (SD) Quote
The quotation presents the customer with a legally binding offer to deliver specific products or a selection of a certain amount of products in a specified timeframe at a pre-defined price.
Sales
Sales and Distribution (SD) Quote(VK21)
Quote data and sales org
Header
Sold to and Ship to
Line items
Validity
Required date
Material
Quantity
Price
Sales
Quote
Sales Order
Backflush
Shipping/
Delivery
Billing
Incoming payment
Sales and Distribution (SD) Sales Order
Sales order processing can originate from a variety of documents and activities
Customer contacts us for order: phone, internet, email
Existing Contract
Quotations
Elements of a sales order
Customer Information
Material/service and quantity
Pricing (conditions)
Specific delivery dates and quantities
Shipping and billing information
The sales order contains all of the information needed to process your customers request, the following information is determined for each sales order:
Delivering Schedule
Shipping point and route determination
Availability Check
Transfer of requirements to MRP
Pricing
Credit limit check
Sales
Sales and Distribution (SD) Create Sales Order (VA01)
Header data
Sold To
Ship To
Item details
Delivery date
Picking date
Payment terms
Incoterms
Material
Delivery plant
Net price
Sales
Quote
Sales Order
Backflush
Shipping/
Delivery
Billing
Incoming payment
Sales and Distribution (SD) Sales Order Delivery Scheduling
When an order is created you must enter a requested delivery date for the order or each line item.
The system will then determine a delivery timeline, this will be used when determining our material availability, or ATP (Availability to Promise) date.
The system will determine this date using forward and backward scheduling rules you have defined.
Types of scheduling
Backward
Forward
Sales
Sales and Distribution (SD) Backward Delivery
The time needed to complete all the necessary steps from order to delivery beginning with the required delivery and then works in reverse order.
Sales
Sales and Distribution (SD) Forward Delivery
The time needed to complete all the necessary steps from order to delivery from the customer beginning with order, make sure material will be available and the delivery date
Sales
Sales and Distribution (SD) Introduction to Shipping
The shipping process begins when you create the delivery document for the sales order. This document controls, supports, and monitors numerous sub-processes for shipping processing:
Picking
Packing
Loading
Posting Goods Issue
Integrated with the Material Management (MM) and Finance (FI) modules
Sales
Delivery
Picking
Packaging
Post Goods issue
Sales and Distribution Shipping (Transactions)
| Tcode | Description | Type |
| VL01N | Outbound delivery | Transaction |
| VL35 | Picking | Transaction |
| VL02N | Packaging | Transaction |
| VL02N | Post Goods Issue | Transaction |
Sales
Sales and Distribution (SD) Delivery
Checks order and materials to determine if a delivery is possible — delivery block (hold), completeness
Confirms availability
Confirms export/foreign trade requirements
Determines total weight & volume
Generates packing proposal
Calculates weight and volume
Checks scheduling
Considers partial deliveries
Updates route assignment
Assigns picking location
Updates sales order
Determines batches
Quality check (if needed)
Sales
Sales and Distribution (SD) Transaction: Create Delivery (VL01N)
Header
Shipping point
Date
Order number
Ship to party
Item
Planned goods issue
Total weight
Material
Quantity
Sales
Quote
Sales Order
Backflush
Shipping/
Delivery
Billing
Incoming payment
Sales and Distribution (SD) Delivery: Picking
Quantities based on delivery note
Assigned date when picking should begin
Automated storage location assignment
Supports serial number/lot number tracking and batch management
Integrated with Warehouse Management (WM)
Sales
Quote
Sales Order
Backflush
Shipping/
Delivery
Billing
Incoming payment
Sales and Distribution (SD) Delivery: Loading and Packaging
Identifies which packaging is to be used for specified products
Identifies and updates accounts associated with returnable packaging
Tracks the packed product by container
Insures weight/volume restrictions are enforced
All packed items are assigned to the required means of transportation
Sales
Quote
Sales Order
Backflush
Shipping/
Delivery
Billing
Incoming payment
Sales and Distribution (SD) Post Goods Issue
Post Goods Issue triggers the official change of ownership of finished goods
Sales
Stock overview
Post Goods issue
Finish goods
Delivery
Sales and Distribution (SD) Post Goods Issue
Event series during a goods issue
Material document
Stock quantities and values are updated
Accounting and Controlling document
Inventory updates from price on material master (finished goods)
COGS updates from price on material master (finished goods)
Billing due list is updated
Output generated
Sales
Material document
COGS
Accounting document
Billing due list
Transaction output
Controlling document
Sales and Distribution (SD) Post Goods Issue (VL02N)
Outbound delivery
Document date
Post Goods Issue
Sales
Quote
Sales Order
Backflush
Shipping/
Delivery
Billing
Incoming payment
Sales and Distribution (SD) Post Goods Issue: Financial impact
Company code
Plant
Document and Posting date
Inventory: FG Material ($1000)
Qty: 1
Line items
GL accounts
Posting key (debits and credits)
Amounts
Document date:
09/10/2018
Posting date:
Document Number
1XXXXXXX
09/11/2018
Item in document currency
Line
PK
Account
Amount
Company code:
US00
Currency:
USD
Transaction date:
09/20/2018
001
50
200910 FG Inv
$1,000.00 -
002
40
780000 COGS
$1,000.00
Sales
Sales and Distribution (SD) Billing
Sales
| Tcode | Description | Type |
| VF04 | Billing Due List | Transaction |
Sales and Distribution (SD) Billing
The billing document is created by coping data from the sales order and/or delivery document.
Order-based billing
Delivery-based billing
The billing process is used to generate the customer invoice.
It will update the customer’s credit status.
Sales
Reference
Order
Delivery
Billing document
Update credit status
Sales and Distribution (SD) Billing
Event series during a Billing
Material document
Sales order is updated
Accounting and Controlling document
Sales updates from billing document
AR updates from billing document
Sales
Material document
Sales Order History
Accounting document
Controlling document
Sales and Distribution (SD) Billing (VF04)
Date
Sales organization
Sold to party
Sales
Quote
Sales Order
Backflush
Shipping/
Delivery
Billing
Incoming payment
Sales and Distribution (SD) Billing: Financial impact
Company code
Plant
Document and Posting date
Sales ($1,500)
Qty: 1
Line items
GL accounts
Posting key (debits and credits)
Amounts
Document date:
09/10/2018
Posting date:
Document Number
1XXXXXXX
09/11/2018
Item in document currency
Line
PK
Account
Amount
Company code:
US00
Currency:
USD
Transaction date:
09/20/2018
001
40
Customer 123
$1,500.00
002
50
600000 Sales
$1,500.00 -
Sales
Sales and Distribution, Billing (SD) Reflection
What is the purpose of the delivery document on SAP?
What do you think is the financial impact of the post goods issue?
What do you think is the financial impact of processing the billing due list?
Accounts Receivable
Order to Cash
Accounts Receivable (FI-AR) Incoming Payment
Can be done automatically or manually
Post incoming (F-28)
Payments elements
Payment method
Bank from which we collect
Billing
Collection amounts
Event series during a cash collection
Accounting document
Customer references invoice
Bank reference payment
SD document is updated
AR
Accounts Receivable Incoming Payments (F-28)
Company code
Posting & document date
Document type
Currency
Bank Data (debit)
Value Data (collection date)
Customer Data (credit)
Additional selections for line items identification
AR
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Quote
Sales Order
Backflush
Shipping/
Delivery
Billing
Incoming payment
Sales and Distribution (SD) Incoming Payments: Financial impact
Company code
Document and Posting date
Cash collection ($1,500)
Line items
GL accounts
Posting key (debits and credits)
Amounts
Document date:
09/10/2018
Posting date:
Document Number
1XXXXXXX
09/11/2018
Item in document currency
Line
PK
Account
Amount
Company code:
US00
Currency:
USD
Transaction date:
09/20/2018
001
50
Customer 123
$1,500.00 -
002
40
10XXXX Bank
$1,500.00 -
AR
Sales and Distribution Document Flow
The document flow and order status feature allows you to find the status of an order at any point in time. The SAP updates the order status every time a change is made to any document created in the customer order management cycle (Order-to-Cash).
Sales
Order to Cash(OTC) Integration IM, SD and FI
Backflush
Dr Finished goods inventory current standard and BOM
Cr Raw material inventory current standard
Post goods issue
Dr COGS current standard finished goods
Cr Finished goods inventory current standard cost
Billing
Dr AR based on billing (invoice)
Cr Sales based on billing
Cash Collection
Dr Bank based on cash
Cr AR based on invoice
Integration
Raw Material Inv
$1,000
Finish Good Inv
$1,000
$1,000
COGS
$1,000
Sales
$1,200
Accounts Receivable
$1,200
$1,200
Bank
$1,200
Quote
Sales Order
Backflush
Shipping/
Delivery
Billing
Incoming payment
Summary of Lecture
Elements of Order to Cash (OTC) process
SAP OTC Org Structure
Goal of Sales and Distribution (SD) and Inventory Management (IM)
OTC Master and Transactional data
SAP IM (Backflush)
SAP SD (Quote, Sales Order, Delivery, Shipping and Billing)
SAP FI (Cash collection)
Integration points between SD, IMWM and FICO
Order to Cash (OTC) SAP Practice
Create customer
Cerate sales order from quote
Delivery
Create an inquiry
Billing
Cash collection
Create a quotation
Post goods issue
Order to Cash (OTC) Practice: Data relationship
Display
Master data
Transactional data
Customer
Customer inquiry
Material
Customer Quote
Create SO
Post Goods issue
Review Document Flow
AR Collection
Billing
Delivery
Order to Cash(OTC) User Logon Screen
Click on the icon in your desktop.
Enter the following information:
System ID: Mongoose
Client: 112
User ID: LEARN-XXX
Enter your password
Enter Client, Server and Password
Client is a numeric field and this number represents a whole business entity.
Users are client specific which means that having a user identification in one client will only allow access to that particular client.
The system settings are stored in a file on your machine called the saplogin.ini file. This file is normally preconfigured centrally and then made available to all the users. Once you have been provided with the SAP Logon, you need a username and password to logon to the SAP system. The username and password is unique for each user and you do have the option to change your password using the New password button available on the screen.
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