SAP Order to Cash Process

SAP Order to Cash Process


hello and welcome to the lesson 4.1 of SAP SD training course this is the first lesson of module 4 where we are going to study business processes in SAP SD we will start with an overview of order to cash process business process in sa p this is one of the most generic sales business processes and it is used by most of the companies in one or another form on this slide you can see a graphical overview of SAP order to cash business process where each box indicates a particular document or action in SAP ERP system there are four main stages of SAP order to cash process pre-sales activities order processing shipping and billing pre-sales activities take place before an actual sale deal has taken place next order processing stage includes activities for capturing and formalizing requests of customers as well as pricing and delivery conditions after this page the customer has made a commitment to order goods or services from the company and the company can either provide goods from the available stock order new goods for suppliers or manufacture these goods according to the request of the customer as soon as goods are ready to be sent to a customer the shipping stage of sa be order to cash process begins it involves creation of an outbound delivery document preparation and packing of goods planning of transport and finally this patch of goods from the warehouse besides sending goods to the customer it is also necessary to create an invoice so that the customer knows how much they need to pay the company customer invoices in SAP are created using building documents so the villain stage of SAP order to cash process deals with creating a billing document now let’s have a more detailed look at each of the steps in SAP order to cash process pre-sale activities of SAP order to cash process include the following steps and corresponding documents note that none of these steps are mandatory and one can even skip all the presale steps and create SAP sales order straight away however in many cases these steps are used by companies and so SAP offers functionality that supports them contact is an informal contact with a potential customer that can lead to a request for a quotation inquiry is a non-binding formal inquiry from a customer about products and services that a company offers and can be saved as a document in SAP quotation a document containing the offer of a company to a customer and mentioning products prices and other details and can be saved as a document in SAP contract a formal agreement between the company and the customer to provide products or services during a specific period of time on certain conditions and can be saved as a document in SAP scheduling agreement a formal agreement between the company and customer to provide products or services containing delivery quantities and dates these agreements are common in the component supplier industry SAP offers a convenient functionality of copying data from pre sales documents to see us orders this eliminates the need for entering the same information in SAP erp system multiple times and speeds of sales processes of a company next let’s have a look at the order processing state of SAP order to cash process on this stage the main focus is on SAP sales order document sales order a document that captures a request for goods and/or services from a particular customer it includes a variety of information such as information about goods and/or services pricing information delivery information dates and quantities shipment information e.g. a shipment route billing information e.g. terms of payment and risk management when SAP sales order has been finalized and confirmed it is time to move to the next stage of SAP order to cash process that is related to shipping goods or delivering services to the customer the main document on this stage is called SAP outbound delivery and it helps to perform various activities related shipment outbound delivery is a document that enable shipping of goods to a particular customer it includes information about a number of activities picking and Confirmation transfer orders packing arranging transport and shipment shipment document posting Goods issue material documents please note that not all of these activities are mandatory for example some companies prefer not to capture packing process in SAP ERP but perform it outside of SAP in these cases they will not perform packing in outbound deliveries SAP ERP is a highly customizable system that enables flexible configuration of whether a particular step of business process is optional or mandatory posting goods issue process is integrated with SAP FI financial accounting module and generates automatic postings on G/L accounts debit cost of goods sold COGS account credit inventory account finally the last stage of SAP order to cash process is related to billing the customer the common practice is that the customer pays after receiving the goods but of course it is also possible to configure SAP to expect a step with an advance payment from the customer before any goods are dispatched billing document is a document that serves as a basis for creation of invoices for customers typically paper versions of invoices are generated with output conditions maintained for a particular billing document type billing documents provide the following functionality create invoices create credit and debit memos cancel previously created billing documents integration with SAP FI financial accounting module for automatic postings to G/L accounts creation of a billing document usually automatically generates the following entries in FI module debit customer account credit revenue account credit tax account after the creation of a billing document for a company we will wait for a payment from the customer however the payment transaction is considered to be part of SAP FI financial accounting module therefore knowledge of how payment is performed and captured in SAP ERP it’s not required from an SAP SD consultant however for your overall development it is useful to know that the payment from the customer will generate a debit posting on the cash account and a credit posting on the customer account thank you for watching this lesson I hope that you enjoyed the explanation and I will see you in the next lesson bye bye

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