Retro-Billing Process

1. Introduction
Out of those various business processes in billing is accommodates & reconciliation of the retroactive prices
adjustment for number affecting existing invoices. The retroactive prices adjustment can be due:

Strong bargaining power of customer over

New pricing agreement between supplier
Volatile/change is price of essential commodities for manufacturing

To name a few.

This kind of prices adjustment can be handled by Retro-Billing. For instance, a new pricing agreement that you
agreed with your customers may affect billing documents that have already been processed and settled. If that pricing
agreement is effective before the pricing date of the billing documents, you can perform retroactive billing to call up a
list of these documents and revaluate them with the new price. You can then create additional billing documents to
settle any differences.

So, by definition & example of retro-billing, it can have a life cycle of months or sometimes beyond a year. Therefore
this makes it a unique process.

2. Overview
Figure 1. Retro-Billing Process

On 01.03.2011, Supplier ships & sells 10 units of Material ABCD to Customer XYZ for INR 58 per unit (valid from
01.03.2011 to 31.12.9999), total amount INR 6653.30.

On 02.03.2011, invoice is sent to Customer for INR 6653.30.

Now on 01.07.2011, due to negotiations price may change to INR 68 w.e.f. 01.07.2011 (valid till 31.12.9999). Thus
you will update your condition type in TCode VK11 / VK12 for this Material ABCD & Customer XYZ to INR 68 with
validity from 01.03.2011 to 31.12.9999. But as you have already invoiced the customer in past so, to take care of this
retroactive price adjustment you have an extra billing.

So, standard SAP platform provides the retro-billing transaction VFRB. This transaction provides basic retro-billing
functionality enabling identification of invoice documents affected by retroactive price changes and execute creation
of multiple documents.

In Retro-billing, enter the selection criteria like Payer, Sales Organization, Billing date from & to, Pricing type,
Currency, Sold-to Party & Material.
 By this system will provide you the list of invoices to which this retroactive price changes is applicable and
hence you can simulate or even execute retro-billing & system will accordingly generate Credit/Debit
memo type based on differential amount.

For positive retroactive price changes, i.e., INR 10 per unit price from former as INR 58 & revised as INR 68. In this
case system will generate Debit Memo for the differential amount to be collect receivable from Customer. Whereas,
for negative retroactive price changes, i.e., INR 15 per unit price from former as INR 58 & revised as INR 43. For this
case system will generate Credit Memo for the differential amount to be pay back the differential amount to Customer.

These documents will get be in document flow of the original invoices.

3. Prerequisite for using on Retro-Billing

A. Billing Document for Retroactive Pricing Adjustment
1. Retro Debit Memo
2. Retro Credit Memo
3. Corresponding relevant Copying Control
4. Pricing procedure for capturing price change

B. Condition Record
1. The value for base price should determined automatically in the invoice through condition
record
2. It should be maintain on the bases of Material & Customer combination
3. It should be a have valid validity from & to date

C. Order Reasons
You need to maintain proper order reasons specific to retro billing document type for Credit/Debit memo.

4. How Retro-Billing Works on SAP

A. Invoice & Condition Record - Existing
You can use TCode VF05N for list of billing documents or invoices based on
 Billing Document Date (to & from)
Billing Type,
Customer & Payer,

To view desired invoices with current base prices use TCode VF03.

In invoice, check item data condition tab to view pricing.

In the invoice, to view corresponding maintained condition record for condition type, say, ZPR0. Selecting the

condition type and click on button to view the maintained condition record.
B. Condition Record - Change
For changing in the existing condition record for base price condition type use TCode VK12. Choose key combination

as Customer/Material.
 Provide the desired parameter for execution the condition records.

Maintain the change in price difference. Say, positive difference of INR 10 from former price INR 58 and
revised price INR 68.

C. Executing of Retro-Billing

Use TCode: VFRB for exercising retro-billing option. Provide following parameter based on your requirement, but
keeping mandatory fields in mind:

o Payer (Mandatory)
o Sales organization(Mandatory)
o Billing date from(Mandatory)
o Billing date to (Mandatory)
o Pricing type(Mandatory)
o Currency(Optional)
o Sold-to party(Optional)
o Material (Optional)
 You have a option of include Invoices with the Same Net Values. This indicator defines whether invoices whose
current net value is the same as the post-calculated net value should be included in the retro-billing list.

o If the indicator is set, invoices with the same prices are included.
o If the indicator is not set, invoices with the same prices are not included

For instance, Invoice was created with a price of 100 Units. After the unit price is reduced to 50 Units, the retro-billing
list is used to create a coupon for 50 Units. If you discover later that this price reduction was incorrect and you set the
price back to 100 Units, a retro-billing list only appears if this indicator is set.

Below you can find details of entries without error

Select the desire invoice/invoices for the list of entries without error and click on button for simulation
run.

Then following screen will appear for simulation run.

For generating Retro Debit/Credit memo click on button.

You can click on button for viewing the generated retro billing. Green indicator confirms that the
document generated without any
errors.

Subsequently you can view the generated Debit memo from retro billing by using TCode VF03