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Sales order process from accounting perspective
15.7.2008
SALES ORDER PROCESS FROM ACCOUNTING PERSPECTIVE
CONTENTS 1. CREATE SALES ORDER........................................................................................................................................... 2 1.1 INTEGRATION TO ACCOUNTING AND CONTROLLING ......................................................................................... 3 1.2 SALES ORDER ITEMS ......................................................................................................................................... 4 1.3 ACCOUNT ASSIGNMENT – PROFIT CENTER....................................................................................................... 6 1.3.1 Sales views of the material master .............................................................................................................. 7 1.3.2 Profit center by substitution........................................................................................................................ 9 THE SUBSTITUTION TAKES NORMALLY PLACE IN SALES ORDER. HOWEVER, FOR INTERCOMPANY TRANSACTIONS IT TAKES PLACE IN BILLING............................................................... 10 2
CREATE OUTBOUND DELIVERY .................................................................................................................. 11 2.1 2.2 2.3
3
BILLING................................................................................................................................................................ 17 3.1 3.2 3.3 3.4
4
CREATE BILLING DOCUMENT .......................................................................................................................... 17 DISPLAY BILLING DOCUMENT ......................................................................................................................... 18 ACCOUNTING DOCUMENTS ............................................................................................................................. 18 ACCOUNT DETERMINATION ANALYSIS............................................................................................................ 20
ACCOUNT DETERMINATION......................................................................................................................... 22 4.1 4.2 4.3 4.4 4.5 4.5.1 4.5.2
5
CHANGE SALES ORDER, DELIVERY.................................................................................................................. 11 CREATE TRANSFER ORDER.............................................................................................................................. 13 POST GOODS ISSUE ......................................................................................................................................... 14
DOCUMENT FLOW ........................................................................................................................................... 22 SALES ORDER ................................................................................................................................................. 23 GOODS ISSUE POSTING .................................................................................................................................... 23 REVENUE POSTING ......................................................................................................................................... 25 ACCOUNT DETERMINATION CONFIGURATION ................................................................................................. 26 Goods issue - MM account determination ................................................................................................ 26 Billing - SD account determination .......................................................................................................... 29
HOW TO CREATE STOCK COVERAGE FOR THE EXCERCISE? .......................................................... 33
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Sales order process from accounting perspective
15.7.2008
1. Create sales order To what extent should the fico users know sales and distribution (SD)? Especially, when SD is such a huge application. A good compromise is to know the integration points between Fico and SD. The best way to learn to understand the integration is to follow the process. In this presentation you will learn how to create a sales order, delivery and billing document. After that you can analyze the integration. The example is from SAP IDES Model company.
The sales order process can be found in SAP logistics menu (transaction VA01). Choose first an Order type. The order type for this exercise is OR Standard Order. The customers and products are assigned to a Sales organization. You can enter the sales organization in the initial screen or later. Fill in the following data: Sales organization: 1000, Distribution Channel: 10, Division: 00. The combination of sales organization, distribution channel and division is called Sales Area.
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Sales order process from accounting perspective
15.7.2008
1.1 Integration to accounting and controlling The first integration point to accounting is here. The sales organization is assigned to the company code and plant. The sales organization 1000 is assigned to company code 1000. This means that the revenue and account receivables will be posted to the accounting of the company code 1000. Press enter and you will come to the overview screen. Enter the customer number 1000 in the Soldto party. The customer must belong to Sales Area 1000-organization 1000.
Customer 1000 has several delivery locations and you must select a Ship-to party. Select 1000.
Here is another integration point. The Ship-to party determines the tax code and country.
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Sales order process from accounting perspective
15.7.2008
1.2 Sales order items Enter the product R-1180 and order quantity 1 pc. Press enter. At this point the system checks that the product is created in the sales area and that it is available in stock.
If you had tried to make an order of 1000 pc, the availability control would notify you, that this is not possible. In a demo environment this can often happen, as there is no production. If you encounter this problem, you can create stock coverage for the exercise in MM. How to do this is explained at the end of this presentation.
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Sales order process from accounting perspective
15.7.2008
You might end up to this screen, if there is no availability. Here the arrow buttons are gray. To get back to the sales order screen, click One-time-delivery-button.
The order is now complete. Open the tab Shipping. Note the Delivery date and shipping point. You need to know these, when you make the delivery.
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Sales order process from accounting perspective
15.7.2008
1.3 Account Assignment – Profit Center Double click the sales order line item. Open tab Account Assignment. No postings to accounting are generated from the sales order, but the profit center is determined here. The profit center is copied from the sales order to the delivery and invoice. It can only be changed in the sales order. Also the profitability segment is shown. It depends on your COPA-settings whether COPA is updated with sales order items, billing items or both.
Where did the profit center come from? In this case the profit center is taken from the material master Sales/General/Plant Data -view for the delivering plant (transaction MM03). Another possibility would be that the profit center is determined from the sales order substitution rules. With substition rules you can define the rules and the profit center according to your needs (transaction 0KEL). If no profit center is found and COPA is active, the profit center will be dummy profit center. In case COPA is not active and profit center accounting is and there profit center is not found from the product or substitution rule, it will be left empty. This will cause an error in billing. The profit center is copied from sales order tables to delivery and billing tables and cannot be changed later. Save the sales order and note the order number.
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Sales order process from accounting perspective
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1.3.1 Sales views of the material master The default profit center comes from material master view Sales: General/Plant Data. Look at the master record of material R-1180 (transaction MM03).
Enter the plant 1000, Sales organization 1000 and Distribution Channel 10.
Profit center information is plant specific. If the product sold is maintained on several plants, which profit center is selected to the sales order? The answer is the profit center of the delivering plant. You find the delivering plant in material master
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Sales order process from accounting perspective
15.7.2008
The delivering plant and tax information are in the Sales Organization view 1.
The Account Assignment group of the material in Sales Organization view 2 is often used in combination with Account Assignment Group for customer to SD account determination. For this product it is not relevant.
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Sales order process from accounting perspective
15.7.2008
The profit center of the plant 1000 for this product is 1500, which the same as for the delivering plant 1200. However, they could be different. The profit center defaulted in the sales order is the profit center of the delivering plant.
1.3.2 Profit center by substitution The profit center can be dtermined using a substitution rule in profit center accounting. The rules are maintained in configuration but can be looked at in profit center accounting.
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Sales order process from accounting perspective
15.7.2008
Here a rule for division is created. If the division is 04 the defaulted profit center is changed to 1200.
The substitution takes normally place in sales order. However, for intercompany transactions it takes place in billing. If there is no profit center to be found and copa is active, the posting goes to a dummy profit center.
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Sales order process from accounting perspective
15.7.2008
2 Create Outbound delivery 2.1 Change sales order, delivery Go back to the menu and choose VA02 Change Sales order. Open the order and select from the menu Sales Document option Deliver.
The initial screen for delivery opens. The information needed to create a delivery is copied from the sales order.
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Sales order process from accounting perspective
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If you get an error message “No schedule lines due for delivery up to the selected date” or wrong shipping point, go back to the sales order and check the shipping point and delivery date. Open the picking tab. You can see that the picked quantity is locked. This means that this product cannot be picked in this screen, a WM transfer order is required.
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Sales order process from accounting perspective
15.7.2008
2.2 Create transfer order You can create the Transfer order from the menu Subsequent Functions, Create Transfer order
You have to first save the delivery. Note the delivery number
Press enter on the initial screen Create Transfer Order.
Press button ‘Generate To Item’. Save the Transfer order.
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Sales order process from accounting perspective
15.7.2008
Note the Transfer Order number.
2.3 Post goods issue All this has so far been irrelevant of accounting perspective. The most important transaction remains to be done, the goods issue posting. The goods issue date is the posting date for the inventory postings. This is the date, when the ownership of the goods changes.At this point the inventory balance is changed. The Goods issue date is in the standard system the same as the billing date. If you press the Post Goods Issue button here, the date will be the current date (19.11.) although the planned goods movement date is first 27.11. You can also specify the Actual good movement date. Go back to the menu and choose from Shipping and Transportation / Outbound delivery / Change (transaction VL02N)
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Sales order process from accounting perspective
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Your delivery number should come defaulted, if not enter it. Confirm with enter. Open the Picking tab. You can see that the Overall WM status has changed and there is 1 pc in both the delivery and picked quantity.
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Sales order process from accounting perspective
15.7.2008
Save the document. At this point accounting documents are created.
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Sales order process from accounting perspective
15.7.2008
3 Billing 3.1 Create billing document When the delivery is completed, the order can be billed.
Go back to the menu and select from menu Billing / Billing document Create (transaction VF01). In the document field the delivery number should be defaulted. If it is not there, enter your delivery number.
Press enter and you will see the invoice to be created. Save the document. Note the invoice number.
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Sales order process from accounting perspective
15.7.2008
3.2 Display billing document Select Display from the Billing document menu.
Press enter on the Display Billing Document screen and look at the created invoice. Note that the payer is not the customer 1000, but customer 1050. Double click on the item line and open tab Item partners.
3.3 Accounting documents From integration point billing creates the revenue postings and updates accounts receivable.
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Sales order process from accounting perspective
15.7.2008
The posting goes to company code 1000, which was assigned to the sales organization 1000. The used reconciliation account can be seen behind the customer line. The profit center is 1500, which has come from the material master.
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Sales order process from accounting perspective
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3.4 Account determination analysis From the invoice display you can analyse at the account determination. Choose Environment / Account Determination analysis / Revenue accounts.
Here you can see the SD condition types and the accounting information generated. PR00 is the condition for sales revenue. The condition RL00 is a factoring discount. It is an invoice list condition and does not generate postings for the invoice. Open first level 10 of condition PR00. This tells you that the account determination could not be done because the account assignment group is missing.
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Sales order process from accounting perspective
15.7.2008
Open level 20. Revenue Account 800000 is determined. All the condition steps have valid values. This is the place were you can examine the causes of accounting errors. The accounting document created at SD billing contains typically following three lines: -
Customer posting in accounts receivable and simultaneously posting to reconciliation account in general ledger Sales revenue posting Tax posting
There can also be other accounts like discounts, but let's find out where these accounts come from. The reconciliation account comes from the paying customer's master data.
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Sales order process from accounting perspective
15.7.2008
4 Account determination Now the sales order process is completed. Let's take a closer look at it from the accounting perspective.
4.1 Document flow You find the document flow from the menu Environment in every phase of the sales order process. There also a button for it. The document flow looks slightly different depending on the phase, but if you open it from the sales order, you will see all the phases and sub phases.
The document flow ties together all the documents of the sales process. Put the cursor on the line and click on 'Display document' to open the document.
Accounting documents are created at the goods issue and billing. The text 'not cleared' next to the accounting document means that the invoice is not paid yet. The integration points are following: 1. Sales order: the profit center is determined and copied to the following documents 2. Goods issue: posting to inventory and inventory change accounts. 3. Invoice: posting to revenue account, accounts receivable and tax accounts
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Sales order process from accounting perspective
15.7.2008
4.2 Sales order Move from the document flow to the sales order. Place the cursor on the Standard Order and click the 'Display document'-button. The sales order does not create any documents to accounting. However, some of the account assignments are decided at this point. There are accounting relevant fields on both header and item level. The item level fields are more relevant. The sales order items can be divided into different deliveries and invoices and the accounting information follows the items. Generally you could say that the header level information is customer related and item level is product related. Select the sales order line item and then menu Goto / Item / Account Assignment (or double click the item row and open tab Account Assignment).
The profit center is defined at sales order level. Depending on the system settings the profit center comes either from the material master (View: Sales:General/Plant) according to delivering plant (transaction MM03) or from the Sales order substitution rules defined in profit center accounting (transaction 0KEL). With these rules the profit center can be defined for example according to sales organisation, product or customer characterics. If no profit center is found and COPA is active, the dummy profit center is used. If COPA is not active, the profit center is left empty and you will get an error situation in billing.
4.3 Goods issue posting In the Document Flow place cursor on the GD goods issue: delvy document and click on 'Display document' -button. This takes you to the MM Material document.
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Sales order process from accounting perspective
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The movement type for sales delivery is 601.
Click the accounting documents button.
A list of created accounting documents is shown. Click on the Accounting document.
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Sales order process from accounting perspective
15.7.2008
In this example the goods issue posting looks like this.
The stock posting goes to a balance sheet account and the offsetting posting to inventory change (P&L account). The posting is created automatically at goods issue and the system has to find somewhere all the necessary information for the posting. The accounts used are determined in MM automatic account determination. The account assignments of the offsetting posting depend on the settings. If the account is not defined as a cost element the posting goes to the profit center from the material master. If the account is a cost element, a cost object becomes mandatory. Usually the system looks for it in the CO automatic account assigment table OKB9. In this example the cost assignment is a profitability segment and the posting rules are defined in COPA IMG.
4.4 Revenue Posting Move from Document Flow to the billing document. Place cursor over Invoice and click on 'Display Document'.
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Sales order process from accounting perspective
15.7.2008
In the invoice you can find accounting information from several places. There is a direct link to accounting documents. The Accounting button lists all the accounting documents created. From the Environment menu you find Account determination Analysis, which lets you analyze how the account determination is made. On both header and item level you will also find lots of accounting relevant data.
4.5 Account determination configuration 4.5.1 Goods issue - MM account determination At goods issue the the owner of the goods changes and the stock change must be recorded. It is posted in the balance sheet to the inventory account and the offsetting posting (cost) goes to a profit an loss account Inventory changes.
4.5.1.1 Account assignments The inventory account is a balance sheet account. In Profit center customizing you can define whether you transfer the material stock balance to Profit Center Accounting periodically or on-line. The profit center always comes from the material master according to the delivering plant (tr. MM03, Sales: General/Plant). www.siliconlabs.fi
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Sales order process from accounting perspective
15.7.2008
The account assignments of the offsetting posting depend on how the account is defined. If the inventory change account is not defined as a cost element, the posting goes to a profit center. Here the profit center is copied from the sales order. It can come from a substitution rule or from the material master. If the account is defined as a cost element, it requires a cost assignment, which can be a cost center, order or profitability segment. As the good issue posting is an automatic posting, the system has to find the assignment automatically. It looks for the assignment in CO automatic account assignment table OKB9. You can also define Automatic assignment to a COPA profitability segment (COPAIMG: PA transfer structures, tr. KEI2), which is the case here.
4.5.1.2 Accounts The accounts are defined in MM customizing under Valuation and account assignment. MM account determination is not a 'straight forward -task. SAP has has made Wizard to assist in this. Here I will only show you how to find the configurations for our example.
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Sales order process from accounting perspective
15.7.2008
Start the 'Configure automatic postings under 'Account determination without the Wizard'. If you get a pop up for missing account grouping code, press cancel. CLick the 'Simulation' button.
Enter the plant (1200), material number (R-1180) and movement type 601 Goods issue Delivery. Press enter and then click the Account Assignments button.
On the simulation screen the system combines all the relevant information and shows the accounts it has determined.
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Sales order process from accounting perspective
15.7.2008
The MM account determination is based on transaction technique. In inventory postings there is always the transaction Inventory Posting (BSX). It defines the inventory account, which here is 310000. The system finds this account according to the transaction and valuation class of the material. The transaction for offsetting posting is GBB 'Offsetting entry for inventory'. This transaction has an extra specification called Account Modification key, which has a different meaning depending on the procedure. The system finds this account according to the transaction, account modification key and valuations class. If you are interested on how the account determination works, SAP Press has published a book about SAP Account determination. In book reviews you find my review of this book.
4.5.2 Billing - SD account determination The accounting document created at SD billing contains typically following three lines: - Customer posting in accounts reveivable and simultaneously posting to reconciliation account in general ledger www.siliconlabs.fi
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Sales order process from accounting perspective
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- Sales revenue posting - Tax posting There can also be other accounts like discounts. Let's study the origin of these postings.
4.5.2.1 Customer line / reconciliation account The first row in the posting is the customer line. It shows the customer number and makes an open item posting to accounts receivable. At the same time it makes a posting in general ledger to a reconciliation account. Double click the customer line and you can see the reconciliation account. The main rule is, that the reconciliation account comes from the paying customer's master data. For special cases, it is possible to use an alternative reconciliation account. Settings for that can be found in FI and SD customizing. The reconciliation account is a balance sheet account and has no other account assignments. However, you can transfer the posting to a profit center. This does not happen automatically. At period end you must first Calculate Balance Sheet Readjustment in FI closing (tr. F.5D9 and then transfer the postings in profit center accounting (tr. 1KEK).
4.5.2.2 Revenue posting SD account determination is defined in SD IMG under Basic Functions /Account Assignment / Costing / Revenue Account determination.
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Sales order process from accounting perspective
15.7.2008
In spite of the title 'revenue account determination', this is where the settings for all other accounts are made as well. Select option Assign G/L accounts. SD account determination is based on condition techniques. The system reads the conditions sequentially searching for a match. In this IDES case it will find the match on the second level in condition CustomerAccountGroup/AccountKey.
Click on the second row. The table looks baffling, but is really is not that complicated.
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Sales order process from accounting perspective
15.7.2008
In the first column you have the appilication. It is always V, which comes from the german word for sales. Next you have a condition type. There are two alternatives. You choose KOFI, if the posting goes to accounts that in CO are revenue elements (cost element types 11 and 12) and the account assighment is profitablity segment (COPA) or profit center. This is usually the case for revenues and discounts. KOFIK is used if you want to post to an account that is a cost element (type 01) and the account assignment is cost center. In the third column you give the name of your Chart of Accounts. In the fourth column enter the name of the Sales Organisation. In the fift column you give the Account assignment group of the paying customer. Next comes the Account assignment key. This is defined in SD customizing and is in SD pricing assigned to SD conditions like sales price. You don't anywhere define the company code in whose accounting the entry is made. This is determined indirectly via the sales organisation, which is assigned to the company code. The Account assignment groups for customers and materials are defined in SD IMG / Account assignment/costing customizing under 'Check masterdata relevant for account assignment'.
4.5.2.3 Tax posting The tax account determination is not done in SD. The account is taken from FI tax account definitions. The tax account is a balance sheet account and has no account assignments.
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Sales order process from accounting perspective
15.7.2008
5
How to create stock coverage for the excercise?
In the demo environment the stock coverage can easily get low, as there is no production. You can create new coverage in MM. Check first the current stock level. You can see the stock level from material master (transaction MM03).
Enter the product, press enter and select the view 'Storage location stock'.
Enter the plant and storage location.
Here you can see that there are currently 299 pieces of this product in the stock.
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Silicon Labs
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Sales order process from accounting perspective
15.7.2008
An easy way to increase the stock is to do a goods receipt without purchase order (transaction MB1C).
Enter dates, movement type 501, plant and storage location.
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Sales order process from accounting perspective
15.7.2008
Press enter to get to the next page. Enter the quantity.
Press enter. On the next page you can see the account, where this transaction is posted. Save the posting.
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Sales order process from accounting perspective
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The accounting document created looks following.
Check the storage after the posting and you can see that the balance has increased.
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Sales order process from accounting perspective
15.7.2008
In real life you should moninitor the use of MM movement type 501, because it provides an easy way to manipulate the balances.
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