Automatic generation of accounting document due to sales activity is referred as SD FI integration.
Below article will help you understand SD FI integration in Order To Cash cycle (sales cycle).
Lets understand accounting document generation at the time of goods issue/ dispatch.
When goods are dispatched, finance document as shown below is posted automatically. Question is how system determines the GL account and amount to post the accounting document?
Since goods are moved hence material document is created. Corresponding finance document gets created as a result of MM-FI integration. GL account for inventory account is picked from OBYC setting (transaction key BSX). GL account for COGS is picked from OBYC setting (transaction key GBB and account modifier VAX).
Inventory & COGS is always valued at standard cost of the material.
Amount calculated = Quantity * standard cost of material per unit.
Let's understand accounting document generation when billing document is released to accounting.
When billing document is released to accounting, accounting document gets posted automatically. Question is how system determines GL account and amount to post accounting document?
Let’s understand how SD-FI integration enables GL account and amount determination for posting accounting entry.
SD FI integration in detail
Price determination procedure or pricing procedure:
Price determination procedure is basically combination of multiple condition type. Condition type represents different prices that are put together (addition or subtraction) to arrive at net sales price.
Net price = Base price –Discount + surcharge + tax
Each of these prices “Base price, Discount, Surcharge, Tax etc. is created as condition type in sap.
Once pricing procedure is selected, list of all condition types involved is known. Now for each condition type system has to determine the condition value.
Each condition type is linked to an access sequence. Access sequence is basically sequence in which condition tables are to be accessed to search for condition record (Condition records are maintained in condition table).
As per sequence maintained in access sequence, system starts with table 1. If condition record is found then system picks the condition value and stops searching any further. If condition record is not found in table 1 then system starts searching for table 2. If condition record is found then system picks the condition value and stops searching any further, if not found in table 2 then system starts searching in table 3.
If no condition record is found in all the tables, system issues message no record found. Condition type gets zero value.
Similarly value for each & every condition type is determined. System calculates (addition & subtraction of condition values) to arrive at net sales price. This net price is basically the price which is charged to customer. Hence GL account for account receivable is debited with this net price.
Note: Condition types can be real or statistical. Only real condition types are included in price calculation. Statistical condition types are not included in price calculation and are only for information/ reporting purpose.
GL account determination for each condition type:
Till now system has calculated condition type value but GL account needs to be determined for posting accounting entry.
Now business might require to record sales price & discount separately. This can be done by assigning condition type to account key and mapping account key to GL account.
Sap provides large number of predefined account keys. Below are just two examples of account key
ERL – Sales
ERS – Sales deduction or sales discount
All those condition types whose value needs to be posted to sales account are assigned account key ERL
All those condition types whose value needs to be posted to discount account are assigned account key ERS.
We understood how pricing procedure works. How system determines the GL account and amount for posting accounting entry. Now let’s understand how pricing procedure is selected.
Pricing procedure selection process:
Selection of pricing procedure plays a big role in calculation of sale price.
In practical business scenario, sale price depends upon:
Company offers different prices to different customers depending upon the kind of business relation that the customer has with company. Hence company categorizes the customers into different categories and customers in a particular category can be offered special discount.
Hence customer play role in selection of pricing procedure.
Distribution channel + Division + Sales organization
Price for online order might be different from showroom price. Wholesale order might be eligible for additional wholesale discount. (Hence distribution channel play role in selection of pricing procedure.)
If you are buying car, price may be composed of base price, insurance charge, road tax etc. But if you are buying bicycle, price may not have insurance charge & road tax. Goods which are being sold play role in selection of pricing procedure. (Hence division play role in selection of pricing procedure)
If you purchase product directly from company or if your purchase from marketing agency (selling on behalf of company), price may differ. (Hence sales organization play role in selection of pricing procedure).
Above examples are given just to help you understand that selection of pricing procedure depends upon combination of Sales organization + Distribution channel + Division
Different business scenarios (sales order, return sales order, free samples, rework order etc.) will have different nature of prices involved. Price components involved in sales order can be different from price component involved in return sales order.
Hence, order type play role in selection of pricing procedure.
Overall, selection of pricing procedure depends upon combination of
Order type + Customer + Sales area (sales organization + distribution channel + division)
→ When a sales order is created, sales order has all information (order type, customer, sales area) necessary for selection of pricing procedure.
From pricing procedure system determines GL account & amount for accounting entry. When billing document (sales document) is released then accounting document (finance document) gets generated automatically. This is referred as SD FI integration.