White Paper

Condition Contract Management White Paper CUSTOMER V2.0

CONDITION CONTRACT MANAGEMENT

The purpose of this d document ocument is to explain the essential functionalities of Condition Contract Management and how the product can support subsequent settlement scenarios. Described functionality and features are based on the latest product release of SAP S/4HANA. Therefore, Therefore, it might be the case that in lower releases or in the SAP Business Suite the described features might not be available.

DISCLAIMER: The contents of this document, and and SAP’s strategy and possible future developments, products, and/or platforms d irections and functionality are all subject to ch ange and may be changed by SAP at any time for any reason without notice. The information in this document is not a commitment, promise, or legal obligation to deliver any material, code, or functionality. This document is provided without a warranty of any kind, either express or imp lied, including but not limited to, th e implied warranties warranties of merchantability, fitness for a particular purpose, p urpose, or non -infringement. This document is for informational purposes and may not be incorporated into a contract. SAP assumes no responsibility for errors or omissions in this document, except if such damages were caused by SAP’s intentional or g ross negligence. All forward-looking statements are subject to various various risks and uncertainties that could cause actual resu lts to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.

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TABLE OF CONTENTS Condition Contract Management .................................................................................................................. 5 OVERVIEW ................................................................................................................................................. 5 CONDITIONS ACCOMPANYING INVOICE AND CONDITIONS REQUIRING SUBSEQUENT SETTLEMENT............................................................................................................................................. 5 Conditions Accompanying Invoice ........................................................................................................... 5 Conditions Requiring Subsequent Settlement ......................................................................................... 5 More Detail s about Condit ions Requir ing Subsequent Settlement ......................................................... 6 Parti al Set tlement ....................................................................................................................................... 6 Final Settlemen t ......................................................................................................................................... 6 Delta Settlemen t ......................................................................................................................................... 7 Manual Settlemen t ..................................................................................................................................... 7 Delta Ac cru als Set tlement ......................................................................................................................... 7 Detailed Statemen t ..................................................................................................................................... 7

EMBEDDING IN STANDARD PROCESSES ............................................................................................... 8 Proc ure-to -Pay ........................................................................................................................................... 8 Order-to -Cash ............................................................................................................................................ 9 SPECIAL FORMS OF SETTLEMENT ......................................................................................................... 9 EXAMPLE OF HOW TO USE CONDITION CONTRACT MANAGEMENT ................................................... 9 BASIC PROCESS ..................................................................................................................................... 10 Proc ess Flow............................................................................................................................................ 10 Examp le of Use ........................................................................................................................................ 11 Detailed Example ..................................................................................................................................... 12 BACKGROUND INFORMATION ............................................................................................................... 13 Determination of Business Volume and Rebate Calculation ................................................................. 13 Distri buti on to Ac cou nt Ass ignm ent Objects and t o Eligi ble Partners ................................................. 13 Multi ple Data Sou rces .............................................................................................................................. 14 Integration with Settlement Management ............................................................................................... 14 Integration with SAP Promotion Management for Retail ....................................................................... 14 Default Values .......................................................................................................................................... 15 Ext ended Checks ..................................................................................................................................... 15 Cancell ation ............................................................................................................................................. 15 Speci al Features ...................................................................................................................................... 15 Reporting and Mass Processing ............................................................................................................. 16

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TIPS AND TRICKS .................................................................................................................................... 17 Business Volume Selection Criteria ....................................................................................................... 17 Different Rebate Rates within a Settlement Period ................................................................................ 17 Lon g-Term Contracts ............................................................................................................................... 17 Settl ement Material .................................................................................................................................. 17 User Interface (UI) Simplification ............................................................................................................ 18 Arc hi vi ng .................................................................................................................................................. 18 Settl ement of Budgets ............................................................................................................................. 18 Condition Contract Determination .......................................................................................................... 18 Field Dependencies ................................................................................................................................. 19

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Cond ition Contract Management OVERVIEW Condition Contract Management provides a central, stand ardized solution for the administration of supplier and customer conditions. You can work with conditions that accompany an invoice (such as prices, quantity and value conditions) and with conditions that require subsequent settlement. The latter differ from conditions that are valid with immediate effect in that they are agreed on during logistics processes but are settled at a later date. They are relevant during processes such as procure-to-pay or order-to-cash. You can use Condition Contract Management to create and settle all types of conditions for the relevant contract partners (supplier or customer). For the first t ime, you have a comprehensive, common view of the operational conditions in the system without having to gather them from different applications.

CONDITIONS ACCOMPANYING INVOICE AND CONDITIONS REQUIRING SUBSEQUENT SETTLEMENT Conditions Accom panying Invoice Conditions that accompany an in voice include all the condition types that in fluence the value of a purchase order item or sales order item , for example. More specifically, these includ e all prices, discounts and surcharges, handling or freight costs, and all statist ical conditions, such as those that influence th e effective value. The condition contract enables you to store and edit the conditions negotiated with your business partner in one place in the system. This offers the best possible overview and maximum transparency of the conditions entered in the system and ensures that these conditions can be accessed centrally. The condition contract provides different functions th at make it easier to manage conditions. In addition to a validity interval that defines the period in which conditions can be negotiated, several different release scenarios are available in order to activate the conditions for operational use. Furthermore, you can enter a wide range of information (such as texts or reference data) to facilitate communication with the involved parties. You can use the condition contract to also enter condition records that were not negotiated with a business partner. In this way, during pricing you can determine anticipated conditions that are needed in the different business processes and in the associated valuation rules and post these conditions to FI. The condition contract therefore supports the entry of data at organizational data level or throughout an organization. Conditions Requiring Subsequent Settlement These conditions are not settled directly with the actual invoice but are settled at a later date. In addition to the condition data, settlement dates, data used to determine the business volume as a basis for the settlement amount, and the scope of validity are entered in the condition contract for these conditions. The condition contract settlement supports supplier and customer rebate arrangements. This includes chargeback agreements and commission handling. Furthermore, you can configure a wide range of different scenarios in Customizing. You can post accruals for conditions requiring subsequent settlement. Accruals c an be created when you post source documents, like purchase orders or SD billing documents, or you can post them in the delta accruals settlement run. The contracts can be settled automatically or manually. A distinction is made between whether settlement documents are to be sent to the business partner or whether a partner's settlement document has to be used as the basis for settlement. Condition Contract Management supports automated processes suc h as those for condition contract extensions or for copying d ocuments as well as corrections to accruals following changes to conditions. You

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can also enter and settle contracts with a validity date in the past. So, a contract does not have to be entered before the documents relevant to business volume are posted. More Details about Conditions Requiring Subsequent Settlement The condition contract settlement can be used everywhere where subsequent compensations based on business volume or quantity are to be settled with a business partner or with a group of business partners. The settlement does not usually take place at document item level but, du e to the high volume of documents, it is made based on cumulative key figures (business volume). These key figures are determined from the transactional document data. The condition contract settlement can be used for purchase-based and for sales-based compensation. Different data sources can b e used to determine the business volume, for example purchase orders, deliveries, billing documents, point-of-sale data, or agreed fixed budgets. You can use the following key figures that are determined by th e system from the transactional document data as the basis for the settlement: quantity, monetary sales, weight, volume, or points. The key figure used for the settlement is also usually uniformly known as the "business volume base". You can define contracts for one or more business partners (supplier, customer, or plants as internal customers). This means that, for example, you can also define business -partner specific contracts as contracts for a group of suppliers or customers that are to be settled in the same way. As a rule, these group contracts are then always used if these settlement processes are identical for all involved partners. This is the case, for example, for the settlement of charges or the distribution of general rebate payments (all customers receive a 3% rebate). Conditions requiring subsequent settlement are generally settled at different times according to the agreement with the business partners. You can define the settlement dates in the contract in a settlement calendar. In addition to the settlement date, you also specify which settlement type is to be used. The following settlement types are available: Partial settlement Final settlement Delta settlement Delta accruals You can also use detailed st atements in the settlement to document which trans actional documents have gone into the settlement. Partial Settlement

In a partial settlement, the conditions of a condition contract are provisionally settled for a specific time period in the entire duration of a condition contract. A distinction is made here between a normal partial settlement and a cumulative partial settlement. In a cumulative partial settlement, the sales and revenue from previous time periods that have already been settled are "rolled up". This means, for example, that the better condition values associated with scale levels can b e used earlier in the condition contract settlement. Normally, you settle the partial settlements for a final time with the final settlement. Final Settlement

A final settlement permanently settles a specific time period in the entire duration of a condition contract. The settlement of a condition contract can contain one or several final settlement/ s. The start of the time period is either the validity start date of the condition contract or the date of the last final settlement. The end of the time period is the current final settlement date or the validity end date of the condition contract. All the values of a time interval that were previously partially settled are settled in a final settlement. Unlike partial settlements, final settlements are not settled in later partial or final settlements. It is still possible, however, to correct final settlements using a delta settlement.

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Delta Settlement

Subsequent corrections or late postings can alter the business volume base of a time interval for which there is already a final settlement. You can now use a delta settlement to settle these subsequent chang es and to correct the final settlement for the time interval. You can also repeat delta settlemen ts. Previous delta settlements are then also taken into consideration. You can define the delta settlement in the contract settlement calendar ahead of time. On e or more delta settlements are permitted. For example, you can h ave a final settlement on December 31 and then a delta settlement on January 15 and January 31 of the following year. Manual Settlement

It is possible to enter manual documents in the condition contract settlement (such as a credit memo for the supplier). Example The condition contract settlement settles and posts against a clearing account to reverse the accruals (in the same way as for the goods receipt posting and not directly against the supp lier). After the supplier invoice has been received, a m anual settlement document (credit memo) is created with reference to th e condition contract. When you save the document, a document flow entry is upd ated. On the one hand, this ensures the transparency of the sett lement and, on the other h and, this means that both settlement documents (internal and external) are displayed in the contract. In the Clearing Workbench, you can then check the internal single settlement documents against the external invoice data. This simplifies the way in which differences are handled. The FI posting is made in the next step using the Clearing Workbench. Delta Accruals Settlement

You can create accruals with t he delta accruals settlement in an accumulated form when you do n ot create accruals together with the source documents, like purchase orders or SD billing d ocuments. Usually, you schedule jobs to run the delta accruals settlement p eriodically. You also use this settlement type to m ake corrections to accruals that are required because the condition data has changed. In a delta accruals settlement, existing accruals are automatically cleared. It is not possible to use delta accruals to change the moving average price. The moving average price can be adjusted only as part of the stock posting. However, it is possible to post accruals to G/L accounts in order to map the rebate claim in FI. Detailed Statement

In Customizing you can specify whether a detailed statement is to be written for a settlement. If it is, the system g enerates a settlement index of the relevant busin ess volume source tables that have determined the business volume at the time of the settlement. In addition to the index, the system updates additional data that explains the relevant business volume value. This is needed if th e value can still change after a settlement. Furthermore, the system makes a copy of the selection criteria for the business volume base because these criteria can also be changed in the contract at a later date. This ensures that the claim to a settlement can be audited.

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EMBEDDING IN STANDARD PROCESSES Condition Contract Management can be implemented, activated, and operated in parallel with the classic standard logistics processes - procure-to-pay and order-to-cash. It is not necessary to adjust the standard processes to integrate Condition Contract Management. Furthermore, you can also integrate Condition Contract Management in various other processes, for example, the settlement of charges or rebates that arise during pooled payment or pooled billing transactions.

Procure-to-Pay The procure-to-pay (P2P) process contains all the steps from the entry of purchase orders and goods receipts to invoice verification and payment. You can now use Cond ition Contract Management to edit and settle not only the conditions that accompany an invoice but also all th e relevant conditions that require subsequent settlement. Use Cases in the Procure-to-Pay Process The basic purchasing scenarios are as follows: Rebates based on purchase orders Rebates based on goods receipts Rebates based on invoice verification documents Rebates based on fixed budgets (fixed amounts) Since accruals relevant to the moving average price are used in all purchase order-based settlement processes, the moving average price can be adjusted as necessary as soon as the goods receipt is posted. Any accruals that are created are reversed once the settlement has been mad e. Alternatively, you can use conditions that are solely relevant for the settlement. The necessary accruals for G/L accounts can be posted using the delta accruals posting, which means that the moving average price remains the same.

End-to-end Business Process within Procure-to-Pay

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Order-to-Cash The order-to-cash (O2C) process is the complete process from sales order to cash receipt. Substeps are usually defined individually within a company. Use Cases in the Order-to-Cash Process The basic sales scenarios are as follows: Rebates based on billing documents Rebates based on cash sale data Rebates based on agreed budgets Due to legal requirements, accruals have to be created for customer-related settlement processes. This can be done when the SD billing documents are created or in accu mulated form as part of the delta accruals posting. In this posting, the system determines the pending accruals and posts these automatically to FI. In doing so, it includes any accruals that have already been created so that the accruals always represent the current status of the expected payment obligations. Therefore, it is not necessary to reevaluate billing documents that have already been posted or created.

End-to-end Business Process within Order-to-Cash

You can configure additional use cases in Customizing. These are not limited to the standard cases.

SPECIAL FORMS OF SETTLEMENT Examples of special forms of settlement include d ifferent charge settlements, such as for post office box charges or fuel card charges. Similarly, you can settle annu al contributions to cooperatives, associations, or franchise companies. A subsequent appropriate redistribution of money to eligible parties is also supported. For more information, see "Background Information".

EXAMPLE OF HOW TO USE CONDITION CONTRACT MANAGEMENT You have successfully negotiated conditions with your supplier for your comp any. These conditions are valid for a specific period and are subsequently settled at the end of this period. These conditions and the associated settlement periods are stored in condition contracts. You also enter bus iness volume selection criteria in condition contracts to specify the business volume base to b e used for the settlement. Based on the selection criteria, the settlement program determines the business volume from the corresponding transactional data, such as purchase orders or supplier invoices. The bu siness volume is used as the basis for the periodic partial settlements (at the end of the month or quarter, for example) and for the final settlement. Theoretically, you can also create condition contracts for periods with a start date in the past. In this case, the initial settlement au tomatically takes into consideration all the existing, relevant busin ess transactions without you having to perform any manual activities or preliminary tasks.

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Process

BASIC PROCESS Prerequisites In Customizing, you have defined the b usiness volume tables (data sources) and the related selection fields in order to ensure that the business volume base is specified at the time of settlement. You have also defined split criteria for rebate amoun ts in the settlement documents, as well as the general settlement attributes of the contract. Actual data is then entered when the contract is created. You can use database tables or database views as data sources. Predefined database views are provided for the standard scenarios. If these do not meet your requirements, you can copy these as templates or create your own data sources based on these views. It does not matter whether the data source contains aggregated business data or d ata at document/document item level. This means that you have a large degree of flexibility to map your sp ecial requirements for determining the busin ess volume base in the system.

Process Flow 1 . Create a condition contract for the conditions that you have agreed with your supplier; the supplier is the condition contract partn er. Select a condition contract type th at corresponds to a scenario for supplier rebate arrangements. The condition contract type is the main control parameter in Condition Contract Management. Among other things, it controls which data can be entered in the condition contract, which business volume base is used for the settlement, and how the settlement documents are to be created. In addition to manual entry, the system also supports the creation of contracts using a BAPI service. 2 . Enter the negotiated agreements in the condition contract, such as validity, rebate conditions with corresponding scales, business volume s election criteria and settlement dates for partial and final settlements. 3 . If settlement dates are pending, the system starts the settlement report to calculate the rebate values for the settlement period. The rebate values are calculated based on the business volume, taking into account the rebate conditions from the condition contract. Finally, the settlement report saves the rebate calculations in settlement documents.

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4 . Optionally, you can apply the standard Settlement Management follow-on processes to settlement documents. You can group the settlement documents in a collective document before being transferred to FI instead of transferring the documents individually. You can also perform a supp lier or customer settlement using the settlement d ocuments. 5 . You can use message control to send the settlement documents to the supplier to be checked (using, for example, B2B Enterprise Services for CustomerInvoices). Result As a result of the creation and settlement of a condition contract based on the relevan t transactional document data, you have calculated a rebate claim for your supplier. The rebate claim has been posted as an open item in FI based on the corresponding settlement document.

Example of Use You are a retailer and agree with your supplier on a discount scale on the basis of your sales revenues. Your point-of-sale data is used as the business volume base. You plan to make settlements with this supplier every two weeks. One settlement document will be created for the supplier. 1 . You create a condition contract based on this agreement. 2 . The sale of relevant materials is updated in the corresponding business volume tables in SAP NetWeaver BW based on the p oint-of-sale data and is agg regated periodically, for example every two weeks (for more information abou t Customizing, see "Basic Process"). 3 . You start the settlement report every two weeks and settle the condition contract. The conditions in the condition contract are used to calculate prices and are taken into account in the calculation schema of the settlement document. The settlement d ocuments created from the settlement report use pricing to calculate the amount of the rebate claim based on the respective condition contract. As a rule, settlement documents are created with a posting block. This means that they function at first as a container for claims on the supplier. You can bundle claims in a new settlement document. In this case, posting to FI takes place from the collective settlement document you created. 4 . Optionally, you can involve the supplier’s approval for the release of settlement documents. You use output control to send the settlement documents to the supplier. If th e supplier accepts the rebate claim, you can release the settlement document.

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Detailed Example This example relates to a condition c ontract that is valid from October to December in a calendar year. The condition is defined as a sc ale. A monthly interim settlement is scheduled, which means that partial settlements will be made at the end of each month.

The relevant business volume does n ot reach the minimum amount of USD 5,000 in October so a settlement amount is not calculated for this month. A total business volume of USD 7,000 is reached by the end of November: USD 3,000 from October plus USD 4,000 from November. The settlement run now calculates a rebate of USD 1 40 (2% of USD 7,000). The accruals amount is updated accordingly. A total business volume of USD 27,000 has been reached by the end of contract term and the second scale level has been reached. This means that there is a total rebate of USD 1,080 (4% of USD 27,000). When it calculates the final payment, the system takes into account the amount that has already been paid. In this example: USD 1,080 – USD 140 = USD 940. You can use transaction WB2R_BUSVOL (Business Volume for Contracts) to display the total busin ess volume for this contract. You use the selection parameter for the output level to define the aggregation level of the business volume displayed. Use transaction WB2R_SV (Supplier Contract Settlement) to start or simulate the settlement run. Other reports are available that can be used to schedule settlement jobs and to display different condition contract data. Result As a result of this settlement process, you have calculated a rebate claim for your supplier based on your aggregated point-of-sale data (sales). The settlement document is the basis for posting the rebate claims to FI. Itemized data for each sale is p ossible only if it was also up dated for each document in SAP NetW eaver BW and then aggregated.

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BACKGROUND INFORMATION Determination of Business Volume and Rebate Calculation In the case of the condition contract settlement, information about the business volume base is determined directly from the transactional documents. This means that, unlike other rebate solutions, it is no longer necessary to update documents in information systems for data aggregation. Predefined or customerspecific database views (at the level of th e billing document tables VBRK and VBRP or the purchase order data tables EKKO and EKPO, for example) can be used for the correspondin g settlement scenarios. Alternatively, you can also make us of external data sources or systems. Database views must be defined in accordance with the data sources. The data that is relevant for the settlement is aggregated and grouped based on the predefined settlement levels and the split criteria during the data procurement process. This means that important performancecritical steps in the settlement process have already been completed by the database for the condition contracts being settled. The settlement report then processes the formatted, accumulated data for the business volume base and generates the settlement documents according to the settings in the condition contract type. The rebate values together with the relevant tax amounts are calculated for the settlement document items during price determination based on the business volume values and on the subsequent conditions entered in the condition contract. You can apply the standard Settlement Management follow-on processes to the settlement documents created in this way. This means that you can group the settlement documents in a collective document before being transferred to FI instead of transferring the documents individually. You can also perform a supplier or customer settlement using the settlement documents. This form of settlement is extremely efficient. No agg regates are required to determine the business volume to be settled and there are no restrictions with regard to the determination of the business volume. The business volume is always determined at th e level of the documents that initiate the b usiness, meaning that the business volume that is determined is always correct and current. Complex data formatting is no longer necessary and the contracts can be settled as soon as they have been released. As a rule, aggregates are created in specific database fields when the business volume is determined and simple calculations may be carried out. Calculations belonging to the category "aggregation" can be delegated to the SAP HANA database to ensure optimum system performance with the maximum of flexibility. The use of Settlement Management to create th e settlement documents also contributes to optimum runtimes because the system can process a high volume of documents and items. Thanks to a strict separation between the determination of the business volume base and the definition of the rebate condition, it is possible to work with a very small number of conditions and condition types. As a result, the pricing procedures for settlement contain only a small number of condition types, which also leads to imp roved system runtimes.

Distribution to Account Assignment Objects and to Eligible Partners You can distribute the rebate amounts from subsequent settlement to the eligible partners according to their business volume base contribution. For this purpose, you can define plants or customers as eligible partners. This is relevant, for example, for contracts th at are transferred from SAP Promotion Management for Retail to the condition contract settlement. You can use the corresponding s hare of business volume or order volume as the assessment basis. The granularity defined in Customizing depends on the business volume level in the relevant business volume table. If business volume has been determined at plant, cost center, or material level, for example, and has been stored and updated in the corresponding business volume table, then a balanced distribution of the rebate amount is possible down to this level. This means that a posting is automatically made at account assignment object level at the time of settlement in accordance with the share at th e time the service was provided.

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Multi ple Data Sourc es It is often necessary to combine different data sources th at define the total business volume relevant for settlement. For example, by combining multiple business volume tables, you can settle settlement management documents, sales documents, or goods receipts together using the corresponding original documents. In addition, you can also use external data sources as additional sources. A master business volume table or a corresponding view that contains all the relevant fields is defined for this purpose in Customizing. You can use additional tables to assign the relevant business volume tables that are to be processed in sequence. The field names have to be identical in all views (the field names from the source file can be overwritten in the views). By entering the business volume table group in the con dition contract, you specify which of these data sources are to be used. You can still use BAdI implementations to determine at runtime which data sources are to be used. For example, you can implement business volume table A to be used if it contains business volume data, otherwise business volume table B is to be used. Finally, you can also take advantage of th e Core Data Services (CDS Views). CDS Views allow you to define a tailored data access on multiple data sources like tables, views or even other CDS Views. You can preprocess the data at data selection time to avoid subsequent data adjustments within the BAdIs of the settlement program. You have to specify the CDS DDL Source as a business volume tab le in Customizing. Be aware that the dynamical selection statement to retrieve data from DDL Sou rce is not able to access data from associations of a CDS view. Furthermore, you can use additional database tables, like the material master table or vie w in the business volume table definition t o select fields which are not stored in the data source directly, but needed to derive the business volume.

Integration with Settlement Management From the condition contract settlement, you can integrate settlement documents into pooled payment processes, for example. You do this by making corresponding settings in Customizing for Settlement Management to adjust the settlement documents to pooled payment. Incoming supplier invoices are offset in the payment run that contains the claims from the condition contract settlement against the supp lier's payables and only then released for payment. The classic pooled payment can therefore be combined with the subsequent condition settlement, if this is required.

Integration with SAP Promotion Management for Retail An inbound interface is provided for integration with SAP Promotion Management for Retail. You use this interface to transfer the supplier confirmations created during the planning of promotions to Condition Contract Management to create the corresponding condition contracts. The condition contracts generated using the interface can be locked regardless of the authorization concept against UI changes, either in their entirety or at field level based on configuration settings for the condition contract type.

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Default Values To reduce the effort required for the creation of condition contracts, you can create default field entries in Customizing, such as for payment currency or terms of p ayment. You make the required s ettings in the transfer manager tool in Cus tomizing for Settlement Management. This can be configured for each condition contract type. This is particularly important for condition contracts that are transferred from external systems using interfaces. Furthermore, it is easy to adjus t the layout of the condit ion contract in Customizing. Different settings are provided to display or hide t ab pages and fields. You can define fields as required entry fields or optional fields, or you can remove fields completely from the UI to stop incorrect entries being made. Extended Checks Checks can also be defined in Customizing to stop incorrect entries being m ade during the creation of contracts. For example, you can run a check to make sure that a business volume base has been entered. It would not then be possible to save a contract without making this entry. Cancellation Condition contract settlements can be can celled using a cancellation transaction. The settlement to b e cancelled is selected at contract level but the cancellation itself takes place using the underlying settlement documents. Partial settlements can also be cancelled. These are cancelled in the reverse order in which the partial settlements were made. Special Features The condition contract settlement is designed to optimize runtimes, which means that as few condition types as possible are used in the pricing procedures for settlement. The number of accesses is also kept to a minimum. When you create a condition contract, you can select both the calculation rule and the scale base indicator at condition record level, regardless of the settings and default values for the underlying condition types in Customizing. This also automatically reduces the number of conditions required in the pricing procedure and the access sequence. You can use d ifferent condition types to define the amount of th e accrual conditions and of the contractually agreed conditions. You can adjust the layout of the conditions t o meet your company's needs. Accrual conditions can be maintained regardless of the legally binding external requirements. Ideally, all the accrual-relevant asp ects can be mapped by a sin gle condition or by a small number of conditions in the calculation sch ema. Compared to the traditional rebate settlement, the number of condition types in the calculation schema is reduced and, as a result, the computational effort required to determine and calculate conditions is minimal. To ensure that the billing process is not influenced, the delta accruals function in Condition Contract Management supports the separate posting and update of accruals for customer rebates. This means that the billing process does not have to perform this calculation process. You c an configure the creation of accruals with the delta accruals fun ction to meet your business n eeds. For example, you can have accruals created on a daily or monthly basis. The settlement report can be started periodically, it can run for one or more business partners, and it can settle one or more condition contracts. The settlement documents created from t he settlement report use pricing to calculate the amount of the rebate claim based on the respective condition contract.

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Reporting and Mass Processing A wide range of tools are provided as part of the condition contract settlement for reporting and mass processing: The mass release, locking, and c ancellation of contracts (including the recalculation of contracts that have already been partially settled) can be performed interactively. The follow-on documents required for these processes are generated automatically. To increase the degree of automation, reports can be run as background jobs. Errors and other messages are stored in the application log and are available for evaluation. You can use transaction WB2R_BUSVOL to display the business volume for one or m ore contracts, suppliers, customers, or settlement periods. Additional selection criteria are p rovided as dynamic selections so you can restrict the selection to meet your business needs. Transaction WB2R_AB_DOCS provides a number of options for finding settlement documents. You can search for settlement d ocuments for specific condition contracts and you can also restrict your search to a settlement period and document status. The reporting fun ctions of Settlement Management are also provided for further analyses. Correction of Condition Contract Settlements: Condition Contract Settlement offers for custom er or supplier settlements own reports to correct already settled condition con tracts automatically. These reports cancel and regenerate settlement documents for the settlement of conditio n contracts. Normally you run these reports if you have to adjust condition contract details which are relevant for settleme nt, or if the business volume w as not in a final stage, for example, due to returns or cancellations of the underlying business volume d ocuments.

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TIPS AND TRICKS Business Volume Selection Criteria The definition of the relevant bu siness volume selection criteria must be very flexible, because its content reflects the outcome of the agreement with the business partner for which the rebate is valid. Condition contract settlement offers the possib ility to define own views to select the busin ess volume as required. The selection relevant fields and how these fields are considered within the selection statement can be customized flexibly. You can include or exclude certain b usiness content from the bu siness volume determination on selection criteria level. Furthermore, the selection criteria can be defined as time dependent to specify a different validity period, independent from bu t within the condition contract validity. Additional customizing settings allow you to build and to combine selections and WHERE clauses to fulfill your business needs to select the relevant business volume. Note: You can also specify a material group or a customer group as business volume selection criterion. Usually, these hierarchy selection criteria are not part of the business volume table, but you configure an explosion to single values for contained materials or customers. They are then used to build the WHERE clause for the business volume selection. Similarly, you can use entries of other stand ard or own defined hierarchies in conjunction with an explosion group that you define in Customizing. The explosion group contains the rules that control the explosion of the hierarchy entry into single values for the WHERE clause.

Different Rebate Rates wit hin a Settlement Period In some cases, the rebate rate is not fixed within a settlement period. Condition Contract M anagement allows you to calculate the settlement amount appropriately. The system splits the settlement data based on the different validity dates of the settlement conditions for a given settlement d ate. The business volume will be determined according to the validity dates of the settlement condition, and for each valid-to date, a separate settlement item will be created with th e corresponding business volume and rate. There is no n eed to add additional settlement calendar dates on condition contract level.

Long-Term Contracts Condition Contract Management supports long -term contracts with different features. You can simply create a contract for many years, or you can create a yearly based contract with successor contracts for the followon validity periods. You can decide whether you want to treat each cont ract as a separate contract, or you want to treat the different successor contracts as 'one' contract. If you choose the 'one' contract approach, the accruals will be handled differently if accruals related from one contract fall into th e validity range of another one. In this case, the accruals will be treated in the same way as if you would h ave one contract with a corresponding validity. The setup of the ‘one’ concept will follow your contractually o bligations or your own business rules and requirements. In both cases, you can archive the u nderlying business volume documents if all settlement activities are done and if all referred contracts are ready for archiving. If you have only one long-term contract, it is not allowed to archive business volume relevant documents to avoid different/wrong settlement results, if the system must consider business volume data from an already archived period.

Settlement Material A settlement material is needed in case you have not defined a split criterion on material level or if no business volume exists. Additionally, there might also be data sources which do not have material data, bu t however, you should specify a settlement material. You can define a settlement m aterial in Customizing on condition contract type level. Furth ermore, you can default the data via the Transfer Manager fun ction which allows you to set the right material in a more flexible way based on your business requirements. Nevertheless, you can sp ecify or overwrite th e settlement material on contract level. The settlement material is normally used to derive conversion factors if required at time of settlement and during pricing.

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User Interface (UI) Simpl ifi cation Settlement Management provides the possibility to optimize context sensitive UIs for condition contracts and settlement documents according to business user requ irements. Fields which are not needed can be hidden or fields which have to be m aintained can be set as obligatory fields. This helps to avoid making input errors or to miss to maintain a mandatory field. Furthermore, you can hide tabs if the corresponding content is not needed or you can optimize and adjust the columns fields of table controls. It is also recommended to create an own display variant for ALV lists which fits best to the user requ irements. In addition, you can also personalize the document flow layout and its content. SAP Personas can be used to optimize an d personalize the UIs for each end user and for his specific roles.

Arc hi vi ng Condition Contracts can be archived if the contract status is 'Ready for Archiving'. You can set the status 'Logically Deleted' in the contract to ensure that it cannot b e processed or changed anymore. The system checks at status change to 'Ready for Archiving' that no open accruals exist. Be aware that there is no standard check to verify that a settlement run has been performed for all p ayment relevant settlement calendar entries. If you require such a validation, you should create a corresponding BAdI Implementation at status change to 'Logically Deleted'. Before you can archive the condition cont ract, you must archive the corresponding settlement documents to avoid data in consistencies. The archiving report will raise an error message for condition contracts with settlement documents. For condition contracts, which concern compensation management processes, you also have to archi ve related sales orders and billing d ocuments first. Note: You can archive settlement document s only if the related condition contracts have the status 'Ready for Archiving' or ‘Logically Deleted’. The settlement document archiving program performs a corresponding check. Finally, you cannot reverse settlement documents for which the corresponding condition contract has the status 'Ready for Archiving'.

Settlement of Budgets Condition Contract Management provides the feature to settle a g iven budget. The budg et can be defined as a fixed value condition in the condition contract. On the one hand, you can create a manual settlement of a budget where your partner requests a certain amount of a given budget. On the other hand, you can generate a payment stream based on corresponding dates of the settlement calendar. In addition, the settlement amounts can be maintained differently for each settlement date. You can implement this process independ ently of a defined business volume.

Condition Contract Determination The definition of condition type group and business volume selection criteria have a significant impact on the condition contract determination runtime during pricing. Therefore, you should define tailored condition type groups and field combinations for business volume selection criteria with respect to th e underlying business process, instead of reuse subsets of condition types and selection criteria at condition contract entry. Tailored customizing has a p ositive impact on the condition contract determination algorithm and on t he number of retrieved records at database selection. The usage of subsets will increase the database time, because the filter is less sp ecific, and the determination algorithm is more time consuming due t o the additional field combinations which must be considered.

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Field Dependencies Condition Contract Settlement allows you to d efine your relevant fields for bu siness volume selection criteria, split criteria and condition records to fulfill your business requirements. During the setup process, you must consider some interdependencies between the fields which are used at condition contract entry and in the follow-on processes. Fields which are defined within business volume selection criteria must be p art of the business volume table and must be available in the document structures of the source docum ents, if the contract conditions should be determined during pricing. As a prerequisite to determine the condition contract specific conditions during pricing, you must ensure that the related condition fields are part of the document structures and are available in the document structures as well. At the time of condition contract settlement, you must ensure that the split fields are part of the settlement document tables and that the required fields to determine the settlement con ditions are available during pricing, too. Note: You do not have to store the necessary fields in the corresponding data base tables of the involved source documents, if you can derive or join the data from other data base tables or views.

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