Chapter 9

Billing of Services

Billing of Services
Highlights
The service spectrum can be flexibly structured using master records and conditions. Condition types let you define prices, using a wide range of criteria.
The configuration of a service product directly influences the determination of
the sales price. Periodic and resource-related billing support the various service scenarios found in the market. The values on service invoices are transferred seamlessly to Controlling and Profitability Analysis and directly to accounts receivable.

Services can be defined in the R/3 System as product master records. These (service) products can be given a sales price, which can be automatically used as the
basis for billing. You can choose between:

Billing Methods

Periodic billing of contracts

Resource (time and material) related billing on the basis of resource usage in
the service order
For both types of billing, pricing is calculated for the service. Some of the criteria
used for calculating prices include:

Pricing

Customer
Customer group
Service product
Sales organization
Distribution channel
Division
The R/3 System is flexible enough to allow the creation of combinations of priceinfluencing factors using valid condition types.
The cost of a service does not just contain a basic price, but also other charges such
as:

Other Charges

Surcharges and discounts

Taxes
Other additional costs
These additional charges can be represented in the R/3 System and taken into
account for the purposes of pricing.
When pricing is performed, the system automatically follows an access sequence
that can be set in various ways. This sequence checks whether specific price agreements were met (for example, for each contract or for each customer and
product). If it does not find any particular agreements, it automatically converts
to general selection criteria (for example, product group or product).

Access
to Pricing

9-1

Billing of Services

Fig. 9-1: Conditions and Access Sequence for Pricing

Configurable Service
Products

There is often a diverse range of services required by customers. This is because a

specific service can consist of a combination of many different characteristics and
attributes.
For Example:
Characteristic

Possible attributes

Response time

2hours
4hours
8hours

Service availability

Monday Friday, 8:00 - 5:00

Monday to Sunday, 24 hours

The SM component of the R/3 System provides the option to represent these services as configurable service products.

Examples of Service
Descriptions

The selected attributes of the service characteristics for the service product play a
key role in pricing. This is because the price of the service product is not based on
a single value, but is a summary of a freely definable number of pricing elements.
Service products of this type are often found in service contracts and warranty
agreements.
As an example, a basic price of $1,000 per month could be charged for a service in
which a response time of four hours is guaranteed excluding any services performed at the customer site itself. Reducing the response time to two hours would
entail a surcharge of 20 percent and the option to carry out work at the customer
site would entail a mark up of $100 per month.

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Billing of Services

Periodic Billing
Contracts define not only the right of a customer in relation to services, they also
describe when payments are due. A billing plan defines the mode of payment,
including:

Billing Plan

The base date for the start of billing (for example, contract start date, installation date, or date of acceptance)
The horizon for billing deadlines (for example, three months in the future or
one year in the future)
The periodicity of billing deadlines
Whether to bill in advance, or in arrears
The system automatically generates the bills due on the basis of these parameters.

Price Agreements
A contract can define not only the scope of services to be provided, but also specific prices and conditions for materials and services. These contract-specific price
agreements can refer either to individual products or to entire product groups.

Contract-Specific Price
Agreements

The following example illustrates some of the various options that can be covered
by price agreements.
The flat rate for maintenance in a maintenance contract covers biannual inspections. Any additional maintenance carried out between these dates, is based upon
the following contract-specific price agreements:

Example

A discount of 30% is offered for articles in the product group spare parts.
Articles in the product group electrical parts are free of charge.
Technician hours are calculated based on a price of $75.00 per hour.
In this case, a service can be recognized as being a contract-related service at the
time that a customer makes a request. The contract-specific price agreements are
then automatically taken into consideration during the resource-related billing
process.

9-3

Billing of Services

Fig. 9-2: Price Agreements

Resource-Related Billing
Pricing Options

For the resource-related billing of services, the resources actually consumed (materials, time taken, other expenses in the form of travel expenses, or direct costs)
are calculated and invoiced to the customer. The following options can be used in
the calculation of services:
Charging on the basis of the actual quantities of resources used and their sales
price
Charging based on the actual costs incurred plus a percentage surcharge

Conversion to Sales Products

The internal or external view of services is not always identical to the sales view.
The SM component provides an option to translate the services delivered by internal and external service providers into sales products.

Transparency of
Calculation

Using separate identification on the invoice, the R/3 System transfers materials,
external service, and internal service components to the customer invoice in a
way that is easy to understand. This ensures transparency of the calculation.

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Billing of Services

Fig. 9-3: Conversion of Internal and External Services into Products

Warranty checking is performed automatically during the calculation of an invoice. The result provides the decision-making basis for the complete or partial
recognition of a warranty claim.

Automatic Warranty
Check

Invoices are automatically transferred to accounts receivable in the form of an

invoice document. The resulting open items are cleared upon the receipt of a
customer payment.

Automatic Transfer to
Accounts Receivable

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