SAP Order To Cash Business Process

SAP Order to Cash Business Process
Introduction
Agenda
- Integrated view of SAP
- High Level Business Process Break up
- Overview of O2C Process
- Organizational Structure in O2C
- Appendix
Integrated overview of SAP
Various modules available in SAP R/3 to map a enterprise business process
High Level Business Process Break up

We can break up various business functions which any
organization employs ideally into 4 major components
Production Planning (P2P)- Production planning is the planning of
production and manufacturing processes in a company or industry. It utilizes the
resource allocation of activities of employees, materials and production capacity, in
order to serve different customers
Material Management (MM) - Materials Management can be defined

as an integrated approach to manage the entire need, flow and cost related to
materials by any firm
Order to Cash (O2C) Mechanisms to execute the business processes

used in the selling, shipping and billing of products and services
Finance (FI) - FI deals in managing financial transactions within enterprises.
Overview of O2C Process
High Level view of Order to Cash Processing
Pre-sales
Activities
Sales Order
Entry
Shipping
Payment
Invoice
Customer
O2C Process : Pre-Sales Activities

Pre-sales documents need to be managed within the presales activities:
Inquiries and Quotations. These documents help identify possible sales
related activity and determine sales probability.
An inquiry is a customers request to a company for information or quotation in
respect to their products or services without obligation to purchase.
How much will it cost
Material/Service availability
May contain specific quantities and dates
The inquiry is maintained in the system and a quotation is created to address

questions for the potential customer
The quotation presents the customer with a legally binding offer to deliver
specific products or a selection of a certain amount of products in a specified
timeframe at a pre-defined price.
O2C Process Sales Order Entry

A Sales Order is a record of your customers request for Goods / Services
The sales order contains all of the information needed to process your
customers request, the following information is determined for each sales
order:
Master Data Customer and Material

Delivering Schedule
Shipping point and route determination
Availability Check
Transfer of requirements to MRP
Pricing
Credit limit check
Various types of Sales Order are
Rush Order
Cash Sales
Consignment Sales
Returns
Debit and Credit memo
O2C Process :Shipping

The shipping process begins when we create the delivery document for the sales order.
Delivery Document checks order and materials to determine if a delivery is possible
delivery block (hold), completeness
This document controls, supports, and monitors numerous sub-processes for shipping
processing:
Picking
Packing
Post Goods Issue
Integrated with the Material Management (MM) and Finance (FI) modules
Updates the Inventory
Updates G/L accounts
Cost of goods sold
Inventory
Copyright 2011 Deloitte Development LLC. All rights reserved.
O2C Process : Billing

The billing process is used to generate the customer invoice.
The billing document is created by coping data from the sales order and/or
delivery document.
Order-based billing
Delivery-based billing
The billing document will automatically create a debit posting to the customer
sub-ledger account and credit company revenue account
It is at this point that the sales process is passed over to Financial Accounting
to await payment.
10
O2C Process: Payment

Payment is the final step in the sales order process, this
step is managed by the Financial Accounting
department.
Final payment includes:
Posting payments against invoices.
Reconciling differences between payment and invoice.
Payment will create a posting clearing the liability in the

A/R account and decreasing your bank account.
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SAP DATA
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Transactional Data
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Organizational Structure
Org Structure / Enterprise structure in SAP is a structure of SAP organizational units
that reflects the structure of the business in the real world.
There are various SAP organizational units that can be mapped to business
structure based on the real world business requirements such as: Client, Company
Code, Plant, Storage Location, Sales Organization, Distribution Channel, Division,
Sales Office, Sales Group, Sales Person, Shipping Point, Loading Point, etc.
Organizational units may be assigned to a single module (such as a sales
organization assigned to Sales and Distribution (SD) module, or to several modules
(such as a plant assigned to Materials Management (MM) and Production Planning
(PP) module).
Enterprise structure design is a fundamental process in a SAP implementation
project. The design is mainly determined by the business scenarios performed in an
enterprise. Once the design is determined, it will affect many things such as how to
perform a transaction and generate reports on SAP system
14
Org Structure in SAP O2C
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O2C: Organizational Structures

Client
Company Code
Sales Area
Internal Sales Structure
Sales Offices
Sales Groups
Salesperson
Sales Organization
Distribution Channel
Division
Plant
Shipping Point
Loading Point
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Organization Structure : Definitions

Client : In the SAP landscape, a client is an entity with independent information and data. Client
specific data includes user master data (including authorizations and user groups), data
customization and application/business data.
Company : A company is an organizational unit in Accounting (FI) which represents a business
organization for which individual financial statements can be drawn according to the relevant
commercial law.
Sales Organization :
Sells and distributes products, negotiates terms of sales and is responsible for these
business transactions
Critical organization element to the definition of business markets
Sales Organization is liable for sold products, responsible for the customers right of recourse
& negotiating sales condition.
Sales Organization can be assigned to one or more plant. This assignment is not unique, so
several Sales Organizations can also be assigned to one plant.
Each Sales Organization has its own master data, for eg customer & material master data,
as well as conditions, pricing & output type.
A Sales Organization is the highest level (after the Client) to which sales figure are summed
for SD with statistics currency.
Sales Organization is also used to take regional, national, international sub-division of the
market into account.
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Organization Structure : DefinitionsContd

Distribution Channel :
Identifies how products and services reach the customer
A Distribution Channel represents the strategies to distribute goods and / or services to the
customers. Eg: wholesale, retail, institutional, etc.
Distribution Channel can be assigned to one or more Sales Organization.
Same customer can be served through one or more Distribution Channel, within a Sales
Organization.
Distribution Channel can be set as per company's marketing strategies or internal
organization.
Master data can vary (Customer & material Master data, Prices, discounts / surcharge,
output type, etc) for each Sales Organization & Distribution Channel, i.e, within Distribution
Channel master data can be defined separately.
Distribution Channel can be used as selection criteria for creating lists.
Division :
Used to define product line distribution
Organization level to which customer specific information and requirements are maintained
e.g. pricing, partial delivery
Assigned to one or more Sales Organizations
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Organization Structure : DefinitionsContd

Sales Area : Organizational element comprised of: Sales Organization , Distribution Channel &
Division Used to link together the organizational aspects of sales to customers Each SD
document is assigned to exactly only one Sales Area.
Sales Office : Responsible for sales & distribution, within geographical area.Typically defines a
territory or market area Linked to one or more Sales Areas Optional organization structure
Sales Group : Sales Group is an organizational unit that carries out sales & is responsible for the
process internally ,Sub-division of a sales office in territory or market
Sales Person :Defined in HR Personnel Admin. Specifically defines an individual (sales
rep.) in sales processing
Plant : An organizational unit serving to subdivide an enterprise according to production,
procurement, maintenance, and materials planning aspects. It is a place where either materials
are produced or goods and services provided. A plant is where stocks of a material are kept ,
During sales process, the Plant is first used to verify stock (availability check) & later to supply the
goods the customer has ordered.
Shipping Point & Loading Point Shipping Point Location that performs all delivery related
activities Assigned a factory calendar A delivery can be processed from only one shipping
point Loading Point A subdivision of the shipping point used for more specialized handling
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Structure for O2C Processing
Client 410
Sales Area
Company Code
C100
Plant P100
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Plant P101
Sales Org
S100
Distribution
Channel (RE)
Division
(01)
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Internal Sales Structure

US Sales Office
S100
Western Sales
Office
Northwest Sales
Group
Southwest Sales
Group
Northwest Sales
Group
Southwest Sales
Group
Salesperson 1
Salesperson 4
Salesperson 6
Salesperson 7
Salesperson 2
Salesperson 5
Salesperson 3
23
Eastern Sales
Office
Salesperson 8
Salesperson 9
Structure for Distribution
Client 410
Company Code
C100
Plant P100
Shipping Point
Rail Dock
Loading Point
LP03
24
Loading Point
LP02
Plant P101
Shipping Point
Express Dock
Shipping Point
Freight Dock
Loading Point
LP01
Master Data
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MASTER DATA
Master data is very important for all SAP modules.
Theses are flexible data records that support the business environment and
remains in the database for a long period of time. it also has an organizational
aspect as it is assigned to organizational units. So, if there is something wrong
with master data it will have big impact on the process. we can find the most
important master data for SD Processes in SAP as below:
Customer Master
Material Master
Condition Master Data for Pricing
Customer Material Info Record
Output Master Data
Master data is created centrally and can be used in all applications. For
example, a customer is master data that can be used in customer requests,
orders, deliveries, invoices, and payments.
Even there are different methods to create them in SAP system, like manually
created (if number data are limited) or through LSMW (where volume data to
created is on higher).
26
O2C: Master Data

Customer Master Data
Material Master Data
Condition Master Data
Cust/Mat Info Record
Output Master Data
27

Customer Master
Contains all of the information
necessary for processing orders,
deliveries, invoices and customer
payment
Every customer MUST have a master
record
Customer Master Data is

created by Sales Area
Sales Organization
Distribution Channel
Division
28

The customer master
information is divided
into 3 areas:
General Data
Company Code Data
Sales Area Data
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Customer Master
General Information relevant for the entire organization:
Name
Address
Communication
Client 410
Company Code specific information:

Acc. Mgmt
Payment
Bank
Company Code 102

Company Code 101
Company Code 100
30
Sales Area specific information:

Sales Office
Currency
Sales Org. 101

Sales Org. 100
Material Master Data

Material Master
Contains all the information a
company needs to manage about a
material
It is used by most components within
the SAP system
Sales and Distribution

Materials Management
Production
Plant Maintenance
Accounting/Controlling
Quality Management
Material master data is stored in

functional segments called Views
31
Material Master Views
Sales Data
Basic Data
Purchasing Data
Mat. Plan. Data
Material Master
Forecasting Data
Storage Data
Controlling Data
Quality Data
Accounting Data
32
Material Master
General Information relevant for the entire organization:
Name
Weight
U/M
Client 410
Sales specific information: Delivery Plant

Loading Grp
Plant 102
Plant 101
Plant 100
33
Storage Location specific information:

Stock Qty
Storage Location 20
Storage Location 10
Condition Master (Pricing)

Condition master data includes:
Prices
Surcharges
Discounts
Freights
Taxes
You can define the condition master to

be dependent on various data:
Material specific
Customer specific
Conditions can be dependent on any

document field
34
Customer-Material Information Record

Data on a material defined for a
specific customer is stored in a
Customer material info record.
Info Records contain:
customer-specific material number
customer-specific material description
customer-specific data on deliveries and
delivery tolerances
You can also maintain default text to

appear on sales orders for that
customer
35
Output
Output is information that is
sent to the customer using
various media, such as:
E-mail
Mail
EDI
Fax
XML
Output examples:
Quotation
Confirmation
Invoice
36
Transactional Data
37
Transactional Data
Data is created in SAP as a result of a business user completing a
business transaction such as creating Sales Order
These are the business documents that you create using the master
data.
Transactional Data can change very often and are not constant. And this
data is created/modified out of an application transaction.
The Rushmore Group, LLC

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38
Pre Sales Activities
Inquiry

39
39
Structure of Sales Document

40
40
41
41
Cross Module Interaction View OTC

Business Document
Quotation
document
Business Document
Sales Order
document
Availability
Availabilitycheck
checkand
and
product
productallocation
allocation
Credit Limit Check
Business Document
Sales Order
document
Warehouse
Management
Sales Order
based on
quotation
ref.
Business Document
Sales Order
document
Sales & Distribution

Quotation
Financials
Unblock sales order

Business Document
Sales Order
document
Business Document
Delivery
document
Delivery
Picking
Pickingand
andconfirmation
confirmation
Business Document
Completed
Delivery doc.
Business Document
Delivery
document
Business Document
Delivery
document
Packing
Packing
Post
Postgoods
goodsissue
issue
Billing
Account
Balancing
Incoming payment
42
42
Overview of Table Structure in O2C
43

44
44
45
46
47
48
49
50
Order to Cash Flow with SAP T Codes and Tables
51

52
52
Appendix
53

54
54

55
55

56
56

57
57
O2C : SAP Tables and Fields
59
59
Order to Cash Processing Flow Diagram
60
60
60
61
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O2C: Pre-Sales Activities

Sales Support is a component of SD that assists in the sales, distribution, and
marketing of a companies products and services to its customers. It contains the
following functionality:
Creating and tracking customer contacts and communications (sales activity)
Phone call records

On-site meeting
Letters
Campaign communication
Implementing and tracking direct mailing, internet, and trade fair campaigns based on
customer attributes
Pre-sales documents need to be managed within the presales activities: Inquiries

and Quotations. These documents help identify possible sales related activity
and determine sales probability.
Pre-Sales Activities - Inquiry

An inquiry is a customers request to a company for
information or quotation in respect to their products
or services without obligation to purchase.
How much will it cost
Material/Service availability
May contain specific quantities and dates
The inquiry is maintained in the system and a

quotation is created to address questions for the
potential customer.
Pre-Sales Activities - Quotation

The quotation presents
the customer with a
legally binding offer to
deliver specific
products or a selection
of a certain amount of
products in a specified
timeframe at a predefined price.
O2C : Sales Order Entry
Sales Process Sales Order Entry

The sales order contains all of the information needed
to process your customers request, the following
information is determined for each sales order:
Delivering Schedule
Shipping point and route determination
Availability Check
Transfer of requirements to MRP
Pricing
Credit limit check
Sales Order: Delivery Scheduling

When an order is created the you must enter
a requested delivery date for the order or
each line item.
The system will then determine a delivery
timeline, this will be used when determining
our material availability, or ATP (Availablity to
Promise) date.
The system will determine this date using
forward and backward scheduling rules you
have defined.
68
Sales Order: Shipping & Route Determination

During the creation of the sales order the system
must determine the shipping point from which the
material will be shipped and the route the material
will take to get from your warehouse to your
customers location.
A shipping point is determined for each line item
within the order.
The route determination will is used to define the
transit time of the material that we used in
scheduling.
69
Sales Order: Availability Check

Availability Check
Determines the material
availability date
Considers all inward and outward
inventory movements
Proposes 3 methods of
delivery
One-time delivery
Complete delivery
Delayed proposal
Rules are created by YOU
70
Sales Order: Transfer to Planning

The order is transferred to Material Requirements Planning as
an (CIR) Customer Independent Requirement. If a deficit is
found the system will propose a Purchase Req. or Order to fulfill
the shortage.
71
Sales Order: Pricing

The system displays pricing information for all sales
documents on the pricing screens at both the header and the
line item level.
Header pricing is valid for the whole order it is the cumulitive of all line
items within the order
Line item pricing is for each specific material.
The system will automatically search for price, discounts,

surcharges, calculate taxes and freight. You have the ability
to manually manipulate the pricing at both the header and
line item level within the sales order by entering a condition
type and amount.
Taxes and freight can be set-up so we cant manually enter.
72
Sales Order: Credit Check

Allows your company to manage its credit exposure and risk for each
customer by specifying credit limits.
During the sales order process the system will alert the sales rep about the
customers credit situation that arises, if necessary the system can be
configured to block orders and deliveries.
73
O2C : Delivery
Delivery: Shipping & Transportation

The shipping process begins when you create the delivery document for the
sales order. This document controls, supports, and monitors numerous subprocesses for shipping processing:
Picking
Packing
Post Goods Issue
Integrated with the Material Management (MM) and Finance (FI) modules
January 2007 (v1.0)

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SAP Order to Cash Business Process

Integrated overview of SAP

Various modules available in SAP R/3 to map a enterprise business process

High Level Business Process Break up

Material Management (MM) - Materials Management can be defined

Order to Cash (O2C) Mechanisms to execute the business processes

Finance (FI) - FI deals in managing financial transactions within enterprises.

Overview of O2C Process

High Level view of Order to Cash Processing

O2C Process : Pre-Sales Activities

The inquiry is maintained in the system and a quotation is created to address

O2C Process Sales Order Entry

Master Data Customer and Material

Various types of Sales Order are

O2C Process :Shipping

Copyright 2011 Deloitte Development LLC. All rights reserved.

O2C Process : Billing

Copyright 2011 Deloitte Development LLC. All rights reserved.

O2C Process: Payment

Payment will create a posting clearing the liability in the

Copyright 2011 Deloitte Development LLC. All rights reserved.

Copyright 2011 Deloitte Development LLC. All rights reserved.

Copyright 2011 Deloitte Development LLC. All rights reserved.

Copyright 2011 Deloitte Development LLC. All rights reserved.

Org Structure in SAP O2C

Copyright 2011 Deloitte Development LLC. All rights reserved.

O2C: Organizational Structures

Internal Sales Structure

Copyright 2011 Deloitte Development LLC. All rights reserved.

Organization Structure : Definitions

Copyright 2011 Deloitte Development LLC. All rights reserved.

Organization Structure : DefinitionsContd

Copyright 2011 Deloitte Development LLC. All rights reserved.

Organization Structure : DefinitionsContd

Copyright 2011 Deloitte Development LLC. All rights reserved.

Structure for O2C Processing

Copyright 2011 Deloitte Development LLC. All rights reserved.

Copyright 2011 Deloitte Development LLC. All rights reserved.

Copyright 2011 Deloitte Development LLC. All rights reserved.

Internal Sales Structure

Copyright 2011 Deloitte Development LLC. All rights reserved.

Structure for Distribution

Copyright 2011 Deloitte Development LLC. All rights reserved.

Copyright 2011 Deloitte Development LLC. All rights reserved.

Copyright 2011 Deloitte Development LLC. All rights reserved.

O2C: Master Data

Material Master Data

Condition Master Data

Cust/Mat Info Record

Output Master Data

Copyright 2011 Deloitte Development LLC. All rights reserved.

Customer Master Data

Customer Master Data is

Copyright 2011 Deloitte Development LLC. All rights reserved.

Customer Master Data

Copyright 2011 Deloitte Development LLC. All rights reserved.

Company Code specific information:

Company Code 102

Sales Area specific information:

Sales Org. 101

Copyright 2011 Deloitte Development LLC. All rights reserved.

Material Master Data

Sales and Distribution