MM: Invoice Reduction

Purpose:

    Invoice Reduction is used to correct errors (price or quantity variance) in vendor invoice.

Process:

1. Use layout Invoice Reduction for posting invoice.
2. Use correction id: Vendor error: reduce invoice. Correction ID is as item level in MIRO tcode.
3. Enter invoice qty (as per vendor invoice) in invoice quantity according to vendor field and invoice amount ((as per vendor invoice)) in invoice amount according to vendor field.
4. This invoice posting creates two accounting documents, fist doc contains account postings for actual qty and amount (as per vendor invoice) while sec document (credit memo) contains difference in between invoice qty and value (as per vendor invoice) and proposed (system) qty and values. The difference amount is posted to clearing account for invoice reduction.
5. PO history displays proposed (system) qty and values for the invoice document.
6. Invoice reduction posting creates a message record which is used to generate a complaint letter to the vendor.

Configuration:

Tax reduction can be carried out at

1. In the complaint document: tax in original posting documents is same as vendor invoice.
2. In the original document: There will not be any tax posting in complaint document.  The tax amount in the original document will be reduced by tax amount for invoice reduction.

MM: Material Valuation

•
• Material can be valuated (valuation area) either at plant level or company code level. 
• Material type controls if material is valuated or not.
• Material can be valuated either at Standard Price or Moving Average Price (MAP). 

Standard Price:
• All goods movements are valuated with the same (standard) price. Variances from this standard price are posted to price difference accounts.
• GR/IR account is updated at PO price.

MAP:
• System valuates goods receipts with the purchase order price and goods issues with the current moving average price. If there is any difference in price during IR, difference is posted to stock account and system calculates new MAP (total value / total stock).
• If material stock is less than invoice quantity, stock account is debited or credited for actual stock and remaining amount is posted to price difference account.
• GR/IR account is updated at PO price.

SD: Rebates

Purpose:

1. A rebate is a discount given to the customer retroactively. This discount is based on the sales volume over a specific period of time.
2. Rebate can be independent of sales volume also.

Process:

1. Create rebate agreement. Specify payer, condition record, validity, settlement material etc.
2. System keeps track of rebated related billing documents including credit and debit memos.
3. Accruals are posted to financial accounting when billing document is released to accounting.
4. Rebate settlement can be done either manually or automatically or using batch programs (in the background).
5. A credit memo is issued for the accumulated rebate amount to settle the rebate agreement.
6. Retroactive rebate agreement helps to take care of billing document (within rebate agreement validity period) created before creation of rebate agreement.

Configuration/Master Data

1. Rebate processing must be activated for customer master (payer), Sales organization and Billing document type.
2. Rebate condition types are created with condition class ‘C’ (Expense reimbursement).
3. Define rebate agreement type.
4. Define condition type groups to define group of condition types and tables for rebate processing.
5. Assign condition type group to rebate agreement type.
6. Assign condition types and conditions tables to condition type groups.

MM: Delivery Cost

1. Delivery cost is additional cost (freight, custom etc) for delivering goods.
2. Delivery cost can be either planned or unplanned.
1. Planned delivery cost: This cost is known at the time of creating purchase order. Planned delivery coast is entered while creating purchase order on an item basis.
1. During invoice verification, planned delivery cost can be changed.
2. Planned delivery costs are posted to separate accounts (clearing accounts) at goods receipt. This account is cleared when user posts the invoice for these delivery costs.
3.  Planned delivery costs become part of the valuation of a material at GR.
4. In case of price difference planned delivery cost in the PO and in the invoice, this will be treated same as prices variances for ordered material.

2. Unplanned delivery cost: This cost is not known at the time of creating purchase order.
1. Unplanned delivery coast is entered during invoice verification.
2. While entering invoice, total amount of unplanned cost is entered detail tab (not at item level).
3. Unplanned costs can be either distributed to the individual line item or to a separate GL account (configuration).
4. While posting unplanned costs to individual line item, this is treated same as price variance.
5. While posting unplanned costs to separate GL account, this cost is not debited to stock.

3. Delivery can be either settled with invoice for goods or user can create a separate invoice only for delivery costs.

SD: Free Goods

Purpose:

1. This is common practice to provide free goods to the customers. Free goods can be inclusive or exclusive.

Process:

1. Sales order is created as usual.
2. Inclusive free goods: e.g. 1 unit out of 10 units is free.  So, if a customer is ordering for 10 units, 1 unit will be given free and customer will pay only for 9 units.
3. Exclusive free goods: e.g. if a customer is buying 10 units, he will get additional 1 unit free. So, if a customer is ordering for 10 units, 1 unit (additional) will be given free and customer will pay only for 10 units. Exclusive free product can be either same as ordered product or can be a different product.
4. In the sales order, free goods (item category TANN) are displayed as a sub item of the original item.

Configuration/Master data:

1. Free good procedure is assigned to combination of sales area, document pricing procedure and customer pricing procedure.
2. Free goods procedure is created in the same way as we create pricing procedure, listing/exclusion procedure etc using condition technique.
3. Free goods – condition records are created using tcode VBN1.
4. In condition records we can control, if free goods are delivered alone or with main item.
5. Calculation type for determining free goods quantity. E.g. company is offering 3 units of free goods for 100 units ordered. Customer orders 212 units.
1. Pro rata: free goods quantity is rounded. Free goods quantity = 212*3/100 = 6.36 = 6 (after rounding)
2. Unit reference: Ordered quantity is rounded down as per condition record quantity. Free goods quantity = 200 (rounded down)*3/100 = 6
3. Whole units: checks if ordered quantity is multiple of condition record quantity. Free goods quantity = 0 as 212 is not multiple of 100.
4. We can create our own calculation rules using VOFM tcode.
6. For item category TANN, if
1. Pricing field (in item category configuration VOV7) is maintained as blank (no pricing): there will be no pricing (zero) for free goods.
2. Pricing field (in item category configuration VOV7) is maintained as ‘B’ (Pricing for free goods (100% discount)): and maintain condition type R100 with requirement 55 (free goods) in the pricing procedure, then sales order will have 100% discount for free item.

MM: Subsequent Debit/Credit

• Subsequent debit/credit is used for adjusting additional (after invoice for existing transaction is settled) invoice or credit memo.
• Subsequent debit/credit does not change invoice quantity of PO items. In only changes invoice value.    
• It updates PO history.
• If the quantity mentioned in subsequent debit/credit is already delivered, the system will make offset entry to the stock account (for MAP) or to the price difference account (standard price).

SD: Customer Consignment

Purpose:

1. Consignment goods are owned by company and stored at customer warehouse/location.
2. Once customer consumes these goods, company (business) will invoice these goods to customer.
3. Customer returns faulty or consumed materials.
4. Customer returns excess material.

Process flow:

1. Consignment fill up (KB)      --> Standard delivery (LF)
2. Consignment issue (KE)       --> Standard delivery (LF)  --> Invoice (F2)
3. Consignment Return (KR)    --> Return Delivery (LR)     --> Credit for return (RE)
4. Consignment Pick up (KA)  --> Return Delivery (LR)

SD: Sales Objects Determination Rule

Sales Object Sales Order - Item category	Determination Rule Sales document type + Item category Group  (material) + Usage + High level Item Category
Schedule line category	Item category of the line item + MRP type (Material)
Delivery Plant	System determines plant in following sequence - Customer - Material info record (sold to) - From customer master (Ship-to) - From Material Master
Shipping Point	Delivery Plant + Shipping condition (Sold-to) + Loading group(Material)
Route	Country and departure transportation  zone of the shipping pt(Customizing) + shipping condition (Sold to party) + Transportation group (Material) + country and destination transportation zone of the Ship to party(General Data)
Pricing Procedure	Sales Area + + Document Pricing Procedure from Sale/Billing Document type + Customer Pricing Procedure (Sold-to)
Rebate	Processing must be activated for customer master (payer), Sales organization and  Billing document type