W40 - Order to Cash Processing

Introduction
Introduction

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1. Order to Cash
2. Overview

The SAP Best Practices scenario for Order to Cash supports the entire process chain for a typical sales process with a
customer. The business process encompasses all steps from creating an order and optionally, based on a quotation, creation
of a delivery, to the billing procedure.

During the Sales Order generation, a credit check for the customer is executed and subsequent handling of blocked sales
documents is demonstrated. An availability check is done followed by product allocation. Product allocations represent an
ordered allocation of production for certain periods, so that a partial quantity can be delivered if enough stock is not available
for further orders.

Additionally, Service Charges are entered manually in the Sales Order, depending on the quantity of goods ordered.

In delivery processing, the delivery is created, the goods are picked, kitted, packed, shipped and the goods issue is posted.
In the billing process that follows, an invoice is created and released to financial accounting. To complete the process, the
customer payment is posted to clear the accounts receivable.
3. Business View - Order to Cash

Here is the Business view for Order to Cash.

There are many benefits of the Order to Cash process. You can create a Sales Order directly from the quotation saving
redundant data entry and time of entry. During the Sales Order creation process, a credit limit check is performed to alert the
Wholesale Distributor that their customers have a high risk of exceeding or have exceeded their allowable credit limit. The
Sales Orders can still be saved, but they can be blocked until the credit issues are resolved. Another benefit is the
integration of all documents within one document flow.
4. Order to Cash

You can see that all the processes are linked so that they can be tracked through out the entire process. The Order to Cash
process covers the Quotations, Sales Order Creation, Picking, Packing, Shipping, Billing and Payment Processing which will
be demonstrated.
5. Unit Contents/Objectives

The contents of this session will cover Quotations, Sales Orders, Logistics Execution, Billing and Payment execution as just
described.

At the end of this unit you will be able to explain the business process of Order to Cash.
Sales Quotation
Sales Quotation

6. Order to Cash - Quotation Processing

The sales process begins with the creation of a Quotation. During the initial call, it may not be immediately clear whether
the customer would just like a Quotation or would like to place a Sales Order immediately. During the creation of the sales
document, it is possible to change the document type during document processing.
Additionally, a Sales Order can be generated based on an existing Quotation. The Quotation serves as a reference for the
creation of Sales Order in which all assigned materials, quantities and delivery dates are copied to the Sales Order.
7. Create a quotation
Double click where shown.

To create a quotation, click Logistics -> Sales and Distribution -> Sales -> Quotation -> Create -> VA21.
8. Choose Enter
Click where shown.

On the Create Quotation: Initial Screen, you enter the Quotation type. The Quotation type QT represents a Quotation for
materials. You can also create a Quotation for things such as Service, Sales Information or Repairs.

Enter the relevant organizational data and choose Enter.

9. Confirm your entries
Click where shown.

On the Create Quotation: Overview screen, you enter in the Sold-to party and Ship-to party. On the Item overview tab, you
enter the Valid from and Valid to dates to indicate the dates this quote will be valid . Finally, enter in the Material and
quantity and confirm your entries.
10. Choose Enter

A credit check is automatically performed. A pop-up may appear which shows the following message: “Static credit check:
credit limit exceeded”

If this warning appears, you can accept the message by choosing "Enter".

After confirming your entries, you see an information message stating "Static credit check: credit limit exceeded." At the time
of confirmation of your entries and at the time you save the Quotation or Sales Order, a credit check is performed for the
Sold-to party to ensure that they have available credit for the materials and quantities requested. Choose Enter.
11. Save
Save the Quotation.

Choose "Save".

You are now ready to save the Quotation. Choose Save.

12. Choose Enter
A credit check is automatically performed when you save. A pop-up may appear which reminds you that the credit limit has
been exceeded.

If so, accept the message by choosing "Enter".

Upon saving, you again see a reminder information message stating that the credit limit has been exceeded. Choose Enter
to continue.
13. Choose Back
Message appears: Quotation 2xxxxxxx has been saved. Note the created Quotation number and go back.
Choose "Back".

You see below that the Quotation has been saved. Choose Back or Exit to return to the main menu.
Sales Order
Sales Order

14. Order to Cash - Sales Order Processing

When you enter a Sales Order, the system automatically performs the following actions:
 checks availability of the material
 checks against product allocation
 again checks the credit limit of the corresponding customer
 determines the shipping points
Depending on the customer and material, special events may be triggered on order entry. In the next steps, we will use 3
different types of materials that are assigned to the Sales Order which demonstrate:
 batch management
 credit limit check in general
 product allocation
 explosion of BOM for a sales kit, including special handling during shipping and a service material for special maintenance
within the warehouse
15. Create a sales order
Create a standard sales order.

Double click where shown or choose "Enter".

To create the sales order, click Logistics -> Sales and Distribution -> Sales -> Order -> Create -> VA01.
16. Create with Reference
Click on "Button".

Just like the Quotation, on the Create Sales Order: Initial Screen you enter the order type. The order type OR represents a
standard sales order for materials. You can also have order types for things such as Returns, VMI, Rush orders, delivery
order and so on.

Next, enter the relevant organizational data and choose Create with Reference. This will create the Sales Order with
reference to the Quotation that was created previously.
17. Choose Copy
On the selection screen you would enter the quotation number from the previous chapter.

Then, choose "Copy".

You can see that on the Create with Reference transaction, you can create an order with reference to many different
documents. Here we will choose the Quotation tab, enter the Quotation number and choose Copy.
18. Choose Enter to continue
The pop-up informs you about the credit check: Static credit check: credit limit exceeded.
Accept it by choosing "Enter".

When you create an order with reference, the system confirms the Sold-to party, so you are reminded that this Customer has
exceeded their credit limit. Choose Enter to continue.
19. Confirm your entries
Click where shown.

The materials and quantities that were entered in the Quotation are assigned to the Sales Order. It is possible to enter
additional materials or change the quantity. For demonstration purposes, we will add additional materials to this Sales Order.

First, enter the PO number from the Customer. This field is a freeform text field to accommodate different formats from
different customers.

Then, enter the material numbers and quantities to be added to the order, and confirm your entries.
20. Accept the message
Click on "Button".

If you were expecting to see the Credit Limit exceeded message, don't worry; that comes next.

The material that we entered is configured with Product allocations so you see an information message concerning the
product allocation: "Product allocation check found changes to the confirmation." This means that the product allocation
check found that the quantities you confirmed exceed the agreed quotas. The confirmed quantities have been adjusted to
the product allocation quantity that remains available. Product allocations are typically used when a certain amount of
available stock is allocated to a certain customer or order. While stock is available to fill this order, it is not available for use
since it is pre-allocated elsewhere. Accept the message by choosing Enter.
21. Product allocation
This screen shows the Availability Control for the corresponding material (W40002). To see the contingencies you can
review the Product Allocation.

Choose "Product Allocation".

The following screen shows the Availability Control for the corresponding material (W40002) which has product allocated.
Enter the product allocation screen showing the contingent assignment by pressing the ‘Product Allocation’ button.
22. Choose Enter to continue
In the Contingent: Confirmation invoice screen, the required quantity is shown in the third column. The quantity that can be
delivered in the current period is assigned and the quantity which cannot be delivered to the customer for the required
period. The system shows also the quantity which will be committed for the next period.

Accept by choosing "Enter".

The required quantity of 1,200 is shown in the third column. The quantity that can be delivered in the current period is
assigned, in this case 600. The system also shows the quantity which will be committed for the next period. Choose Enter to
continue.
23. Accept the quantity
You enter again the screen for Standard Order: Availability Control. Here also the ordered quantity the confirmed quantity is
shown. The system proposes the quantities for the current and the next period.
To accept the quantity which is assigned as ‘Confirmed quantity’ , choose "Copy".

Again, you see the Standard Order: Availability Control screen which also shows the ordered quantity and the confirmed
quantity. The system proposes the quantities for the current and the next period.
Accept the quantity which is assigned as ‘Confirmed quantity’ by pushing the button ‘Copy’ for this selection.
24. Choose Enter
Click on "Button".

The information message appears: "Product allocation check found changes to the confirmation." Accept it by choosing
Enter.
25. Goto
Bill of Materials
Material W40001 is a sales kit. This sales kit is composed of 3 separate components. By entering material W40001 the 3
component of its bill of material (BOM) are added in the order as additional lines. Material W40001 is assigned for Lean WM
and the shipping point differs from the other materials.
Before proceeding, you need to enter the Storage location for each of the components in the Sales kit. The following steps
will be repeated for each component under W40001.

Click where shown to highlight the row for W40001.

Note that the confirmed quantity for W40002 for the required delivery date will remain as 1,200. The new quantity of 600 will
not be considered since the Sales Order has a block on it due to the exceeded credit limit. The confirmed quantity for the
required delivery date will NOT be considered until you release the block on the Sales Order. Before the confirmed quantity
and delivery date can be accepted by the system, the order has to be released by the responsible person. This will be
demonstrated in a few moments. But first, let's complete the Sales Order.
We have added an additional material W40001. Material W40001 is a sales kit. This sales kit is composed of 3 separate
components. By entering material W40001 and confirming the entry, the 3 components of its bill of material (BOM) are
added to the order as additional lines.
We are not finished yet. In order to demonstrate shipping from different shipping points later in the process, the Material
W40001 is assigned for Lean WM and the shipping point differs from the other materials.
For this reason, Select the line item for material W40001 and choose menu path Goto -> Item -> Shipping.
26. Choose the Next button
On this screen, in the shipping tab, for material ' W40001' you would enter Storage Location '0005'.

To advance to the next component, click where shown.

You are now in the Item Data screen. This is where you will enter the Storage location ‘0005’ for this item. This will need to
be done for each item in the sales kit. Choose the Next button.
27. Choose the Next button
On this screen, in the shipping tab, for material ' WSDCOMP01' you would enter Storage Location '0005'.

To advance to the next component, click where shown.

Enter the Storage location ‘0005’ for this item. Choose the Next button.
28. Choose the Next button
On this screen, in the shipping tab, for material ' WSDCOMP02' you would enter Storage Location '0005'.

To advance to the next component, click where shown.

Enter the Storage location ‘0005’ for this item. Choose the Next button.
29. Choose the Next button
On this screen, in the shipping tab, for material ' WSDCOMP03' you would enter Storage Location '0005'.

To advance to the next component, click where shown.

Again enter the Storage location ‘0005’ for this item. Choose the Next button.
30. Back
Click where shown to go back to the Create Standard Order: Overview Screen.

You have completed entering the Storage location for all items of the sales kit. Choose Back to return to the Sales Order
screen.
31. Scroll to the right
You should enter the service material as follows in the last row of the order.
Material WSDSERV01
Order quantity 100

Then scroll to the right to enter in the price per each. Click where shown.

We are almost done. The Customer has ordered a sales kit, which needs to be labeled. This is a special service that the
Wholesale Distributor offers. The service charge needs to be captured in the Sales Order as service material WSDSERV01.
It will be charged with 0.05 USD per each sales kit. The full amount of the service charge is manually assigned to the Sales
Order. You cannot see the prices on the screen. You will need to scroll to the right.
32. Choose Enter
To complete the service material, enter the price as follows:
Amount 0.05
By pressing the Enter button the system calculates 0.05 USD per 100 pieces and assigns the full amount in the Net value
column.
A message appears that PR00 = 0.05 USD is OK.

Then, choose "Enter" to confirm the new line item.

Here you can see the prices for each one. Enter the service charge amount of 0.05 to label each sales kit, and confirm your
entry by choosing Enter.
33. Save
Choose "Save".

You see a confirmation of the price below. We have now completed all the necessary entries in the Sales Order. Save the
Order.
34. Choose Enter
The system displays the message ‘Static credit check: credit limit exceeded’.

Accept the message by choosing "Enter".

Again, we see the reminder that the credit limit is exceeded. Choose Enter to continue.
35. Back
After the Save, the message appears ‘Standard Order xx has been saved’. Note the order number for future reference.

Click where shown to go back to the SAP Menu.

As you see below, the Sales Order has been saved. Choose Back or Exit to return to the main menu.

As a review, a sales document was created with 3 materials. Each material represents a different functionality:
C20010 considers Batch management delivered from plant BP02, shipping point BP02.
W40002 considers Product allocation delivered from plant BP02, shipping point BP02.
W40001 is a sales kit and includes 3 components to demonstrate the Kitting process. Additionally, these sales kits are to be
handled differently within the warehouse to demonstrate Lean WM and will be delivered from plant BP01, shipping point
BP01 with storage location 0005.
WSDSERV01 is a service material that is used to include a variable service such as labeling within the warehouse. This
demonstrates how Wholesale Distributors can charge for value added services not directly related to the material condition
record.
Shipping - blocked
Shipping Blocked Due to Sales Order Block

36. With Reference to Sales Order

For demonstration purposes, access the activity to create an outbound delivery.

Double click where shown.

The next step in the process is Delivery, however, no delivery can be created because the credit limit has blocked the
creation of deliveries.
As already seen in previous steps, the credit limit check can run for each sales document to see whether the customer
passes the credit limit check. To demonstrate the possibilities of the credit limit check, we have saved the Sales Order in this
example. Because the credit limit has been exceeded, we need to remove the delivery block manually to enable the
document to be processed further .
To demonstrate how the system will stop the order from being processed further, click Logistics -> Sales and Distribution ->
Shipping and Transportation -> Outbound Delivery -> Create -> Single Document -> With Reference to Sales Order ->
VL01N.
37. Choose Enter
Click where shown.

Enter the Sales Order that we just created and choose Enter.
38. Back
The message appears: Order blocked for delivery as a result of credit check.
Go back by clicking where shown.

You see the message stating that the order cannot be delivered and that it is blocked for delivery as a result of the credit
check. Choose Back.
Release Blocked Sales Order
Release Blocked Sales Order

39. Blocked SD documents

Double click where shown.

To make this order deliverable, you must remove the block on the Sales Order. In this process, the Sales Order block should
be removed manually by accessing following path: Accounting -> Financial Accounting -> Customers -> Credit
Management -> Exceptions -> Blocked SD documents -> VKM1.
40. Execute
Click on "Button".

Enter in the control area and the credit representative group and choose Execute to display a list of the Sales Orders that
are blocked within these parameters.
41. Select the blocked document
Select the blocked document in the display by clicking the checkbox at the left of the line.

Click where shown.

Here you see the Sales Order document that we created previously. Select the blocked document in the display by clicking
the checkbox at the left of the line.
42. Environment
You can review the customer’s credit master data before choosing to release the block.

Choose "Environment".

To see the details of the credit responsible for the Sales Order block, from the menu, choose Environment.
43. Control area data
Choose "Cust master credit", then "Control area data" from the menu.

Choose Customer master credit -> Control area data.

44. Back
Click where shown to go back to the list of blocked sales orders,

Here you can see that the total credit limit amount assigned was $100,000.00.
The total of all order values which have not been transferred to FI but which are taken into consideration when checking the
credit check is shown beside the outstanding order value. That amount currently exceeds the allowable credit limit.

If you need additional information to decide whether or not to release the block, you can choose Environment -> Line items
-> In control area to display the customer's past due invoices. The decision has been made to release the block on the Sales
Order. Choose Back to return to the previous action.
45. Choose Release
You decide to release the block on the sales order.
Click the Release Flag to release the blocked order.

The line for the Sales Order has been selected. To release the block, choose Release.
46. Save
You must save in order for the release to hold.
Choose the save button to save the release.

The Sales Order line item turns green, however, the order is not released until you Save.

Save the document.

47. Back
The new screen informs you about the release status of the SD document:
‘Doc. Xxx - has been released’

Go back by pushing the BACK button.

Now, the Sales Order has been released. Choose Back to return to the main menu.

The delivery block due to the credit limit is removed, and the Sales Order is now deliverable.
Confirm Product Allocation
Confirm Product Allocation

48. Change
Double click where shown to change the Sales Order.

Confirmation of allocation quantity needs to be carried out before we can proceed to delivery. If you recall, the confirmed
quantities due to product allocation were not saved since there was a delivery block on the Sales Order.
After releasing the blocked Sales Order based on the credit check, the required quantity for the reserved material contingent
for the customer CWSD1 (product allocation) can be confirmed so that the ordered materials can be delivered by the
requested date.
To proceed, access the following path, Logistics -> Sales and Distribution -> Sales -> Order -> Change -> VA02 to change
the Sales Order.
49. Choose Enter
On the Change Sales Order: Initial screen enter the order number from the previous chapter.
Choose "Enter".

Enter the Sales Order number and choose Enter.

Note: The system can remember the last Sales Order created and will populate the fields for you to reduce data entry
requirements.
50. Check item
First, select the line item for W40002.
Then, click where shown to " Check item availability".

Here you see the details of the Sales Order. Choose the line item for the material W40002 which is configured for product
allocations. This time we need to trigger the availability check manually by choosing the Check item availability button as
shown. You can also choose from the menu path, Edit -> Check availability.
51. Choose Enter
An information pop-up concerning the product allocation appears: Product allocation check found changes to the
confirmation.

Accept by choosing "Enter".

As before, an information message concerning the product allocation appears: "Product allocation check found changes to
the confirmation." Accept the message by choosing Enter.
52. Choose the Copy button
As you have seen previously, you enter the screen for Standard Order: Availability Control. Here the ordered quantity and
the confirmed quantity are shown. The system proposes the quantities for the current and the next period.

Accept the 'Confirmed quantity’ field by choosing the "Copy" where shown.

You again see the screen for Standard Order: Availability Control. Here the ordered quantity and the confirmed quantity are
shown. The system proposes the quantities for the current and the next period in the same way as before. Again, accept the
‘Confirmed quantity’ fields by choosing the ‘Copy’ button as shown.
53. Choose Enter
You receive the message that ' Product allocation check has found changes to the confirmation.
Accept by choosing "Enter".

As before, an information message concerning the product allocation appears: "Product allocation check found changes to
the confirmation." Accept the message by choosing Enter.
54. Save
You enter the overview screen for the sales order and the system informs you that the 'Availability check was carried out’.

Click where shown to "Save".

This time you see a confirmation message "Availability check was carried out". Choose Save.

Note the quantity on the Sales Order does not change from 1,200 to 600 since the customer will still be invoiced for 1,200
items, but the delivery will be split based on product availability and delivery date confirmations.
55. Choose Exit
Click where shown to exit.

Choose Exit to return to main menu.

Display Output
Display Output

56. Display
Now that the Sales Order is complete with no credit check blocks, we can display the output.
Double click where shown.

Before we proceed to the next step in the process, we will display the final Sales Order.

To display the sales order, access the following path: Logistics -> Sales and Distribution -> Sales -> Order -> Display ->
VA03.
57. Sales document
From the menu bar, choose Sales document.

With the Sales Order number pre-populated for you, choose Sales Document from the menu path.
58. Choose Issue output to
Choose "Issue output to" from the menu.

Choose Issue output to.

59. Print Preview
On the Output output dialog box, make sure that the line containing BA00 is selected.

To display the document, choose "Print Preview".

The system displays the configured message output types. In this case, there is only one type from which to select.

Select the line item and choose Print Preview.

60. Back
The system displays the print preview.
Click where shown to exit.

The system displays the print preview. If you want to print the order confirmation document, choose Print. Otherwise, choose
Cancel or Back to return to the main menu.
The order confirmation can be mailed or sent via fax or EDI to the customer as a confirmation that the order has been
placed.
Delivery and Picking
Delivery and Picking

61. Order to Cash - Delivery Processing

Now that the Sales Order block has been released and the order confirmation has been sent to the customer, the ordered
materials must be delivered. A delivery document can now be created using the Sales Order as reference. However, as
mentioned previously, different shipping points are assigned to the materials so the system has to split the delivery for the
sales order. The order will be picked from inventory. This procedure shows the picking process through the delivery
document. The system will automatically create a WMS Transfer Order and confirm it. It will then be packaged and shipped
to the customer. A goods issue will be completed and a shipping notification will be sent.
62. Create a delivery document
Double click where shown create a delivery with reference to the sales order.

To create a delivery document, access the following path: Logistics -> Sales and Distribution -> Shipping and Transportation
-> Outbound Delivery -> Create -> Single Document -> With Reference to Sales Order. Then double-click -> VL01N.
Or, choose ‘Deliver’ from the menu path within the Sales Order overview screen.
63. Choose Enter
Click where shown.

Enter the shipping point BP02. Only the materials that are assigned shipping point BP02 will appear for this order. The
materials that are assigned a different shipping point, such as BP01 (for Lean WM process), need a separate delivery
document. This will be created next. For now, choose Enter to continue with the creation of the delivery document for the
items in shipping point BP02.
64. Highlight the line item
Select line item with material C20010.

If you recall, items C20010 and W40002 were assigned shipping point BP02. Only those two items are displayed. You may
recall that item C20010 was configured for Batch management. This scenario demonstrates batch determination within the
delivery (as opposed to batch determination within a Sales Order). The batch determination may be carried out automatically
(as in this scenario) or manually. Usually batch determination is carried out automatically. However, if no batch matches the
selection criteria, you can trigger batch determination manually.
Highlight the line item for C20010 which is configured for batches.
65. Picking
On the Delivery create: Overview screen, choose the "Picking" tab page.

Choose the Picking tab.

66. Expand the Batch Split indicator
Highlight the line item.

Choose the "Batch Split Indicator" button where shown.

Here you see that the Batch Split indicator is present for this item. Expand the Batch Split indicator by clicking where shown.
67. Collapse the Batch Split indicator
Enter in the Pick Quantities to match the Delivery Quantities for each batch.
Then, click where shown to collapse once all quantities have been entered as shown.

Here you can see that the batch determination has been automatically carried out for you for the order quantity totaling
1000. You have the option to change the delivery quantities at this point. However, we will accept what the system has
suggested and collapse the Batch Split indicator by clicking where shown.
68. Save
Click where shown.

While still on the Picking tab, we will carry out the picking for the next item in shipping point BP02. Select the line item for
W40002.

You will notice that based on the product allocation, only 600 of the 1,200 items will be delivered on this date. The
remaining 600 will be delivered at a later date. Enter the quantity of 600 in the Pick quantity field and choose Save.
69. Back
You see the message that the 'Outbound Delivery has been saved'.
Click where shown to "Exit".

You see below that the Outbound delivery for those items in shipping point BP02 has been saved . Choose Back to return to
the main menu.
Post Goods Issue
Post Goods Issue

70. Single Document

Double click where shown.

To complete this delivery, a Post goods issue will be completed. This can be done at the same time you create the delivery,
but the steps will be shown here for demonstration purposes.

To Post goods issue, access the following path: Logistics -> Sales and Distribution -> Shipping and Transportation ->
Outbound Delivery -> Change -> Single Document -> VL02N.
71. Choose Enter
Enter the delivery no. 8xxxxxxx from previous chapter.
Choose "Enter".

Enter the delivery document number you just created. Again, the system will pre-populate the last saved delivery. Choose
Enter to continue.
72. Save
You would choose the 'Post goods Issue' button.
Then, Click on "Save".

Choose the Post goods issue button and choose Save.

73. Go back
You will see the message 'Outbound Delivery has been saved'.
Click where shown to exit.

This action posts all the items on the delivery. You see below that the outbound delivery has been saved and the goods
issue has been posted.
Outbound Delivery with Lean WMS
Outbound Delivery with Lean Warehouse Management

74. Double click where shown.

We will now create a second delivery from the same sales order, but this time for a different shipping point.
Double click where shown.

OK, let's repeat the same delivery process, but this time for the shipping point BP01.

To create a delivery document, access the following path: Logistics -> Sales and Distribution -> Shipping and Transportation
-> Outbound Delivery -> Create -> Single Document -> With Reference to Sales Order. Then double-click -> VL01N.
75. Choose Enter
Click where shown.

This time, enter BP01 for the shipping point and the same Sales Order number and choose Enter.
76. Go back
Click where shown to "Save" the delivery.

As before, you will only see the materials for the shipping point BP01. Since this shipping point is configured for Lean
Warehouse Management, it is important to add the storage location from which the items must be picked.

When you implement the Warehouse Management System (WMS), you manage goods movements and stock changes in
the warehouse at storage bin level. However, if you implement Lean WM, inventory management takes place solely at
storage location level. The system does not update the stock data at storage bin level.

You use Lean WM solely for processing goods receipts and goods issues. Using Lean WM, you process warehouse
movements in basically the same way as if using the Warehouse Management System: you work with deliveries and create
Transfer Orders for these deliveries. These Transfer Orders serve as pick lists. You would implement Lean WM if you wish
to pick deliveries in a warehouse where you are not using WMS.
Since this is the second time through the process, some steps have been eliminated; however, you would enter the storage
location for each item and choose Save, then exit to the main menu.
Create and Confirm Transfer Order
Create and Confirm Transfer Order

77. Single Document

Double click where shown to create a transfer order.

A delivery document for shipping point BP01 (from plant BP01) has been created. The shipping point BP01 was assigned to
the sales kit material and its components and to the service material.
For this example, the Transfer Order for the warehouse movements and the confirmation has to be created manually for
BP01. This was done automatically for shipping point BP02 previously, however, within the Lean WM process Transfer
Orders are to be created manually. The Transfer Orders are based on the delivery and its data, like quantity.
To begin the Transfer Order process, access the following path: Logistics -> Sales and Distribution -> Shipping and
Transportation -> Picking -> Create Transfer Order -> Single Document -> LT03.
78. Choose Enter
Choose "Enter" to confirm entries.

The creation and confirmation of the Transfer Orders and Posting of goods issue via the Outbound Delivery Monitor is
usually used by customers because of the possibility of mass maintenance and work lists.
However, we will show the manual system guided process so you can see what normally happens in the background.
Enter the location information for the materials and the delivery document number. Choose to activate the items upon
execution and choose Enter.
79. Back
The components which are to be kitted for the sales kit are shown as line items.

Click where shown to save the transfer order for delivery.

The components which are to be kitted for the sales kit are shown as line items.
Choose Save and then choose Back to exit to the main menu.
A Transfer Order for the delivery for shipping point BP01 has been created. The material is taken from its storage location
and will be moved to the outbound destination within the warehouse. The receipt of the goods in the outbound destination
has to be confirmed in the next step.
80. In One Step
Double click where shown to confirm the transfer order.

When confirming the Transfer Order, you can accept the quantity. It is also possible to change the picking quantity if it
differs from the actual delivery quantity.
The sales kit W40001is on the way from the storage location to the outbound destination.
To confirm the transfer of goods from storage to the outbound area, access the following path: Logistics -> Sales and
Distribution -> Shipping and Transportation -> Picking -> Confirm Transfer Order -> Single Document -> In One Step ->
LT12.
81. Choose Enter
Choose "Enter" to confirm your entries.

Enter the Transfer Order from the previous step and the warehouse location and choose Enter. The process will be executed
in the foreground so you can see what is happening.
82. Back
Save the confirmation of the transfer order by choosing "Save".

Again, the components which are to be kitted for the sales kit are shown as line items. Here you see that the actual quantity
matches the orginal order quantity. We will assume this to be true and choose Save. Then, choose Back to exit to the main
menu.
83. Back
You see the message 'Transfer order xxxxxxxxxx confirmed'.
Note the transfer order number and click where shown to go back.

You see below that the Transfer Order has been confirmed. The items are now confirmed to be moved from the storage
location to the outbound location where the items are to be kitted and packed for shipment.
Packing and Status Overview
Packing and Status Overview

84. Outbound Delivery

Double click where shown.

Packing is part of delivery and shipment processing. When you process a delivery, you can select delivery items for packing
and assign them to handling units. It is possible to pack delivery items in boxes, pack the boxes on pallets for delivery to the
customer, and load the pallets onto a truck. The Packing component and related packing information enables you to:

 Update the stock situation of packing materials

 Monitor returnable packaging stocks at the customer's or forwarding agent's place of business
 Help you find what was in a particular container (for example, if a customer maintains that they have received an
incomplete delivery)
 Make sure that the weight and volume limits have been adhered to

 Ensure that products have been packed correctly

To start the Packing process, access the following path: Logistics -> Sales and Distribution -> Shipping and Transportation
-> Pack -> Outbound Delivery -> VL02N.
85. Choose Enter
Enter the second delivery no. (for shipping point BP01).
Choose Enter.

We are still working with the delivery for plant BP01 with Lean Warehouse Management. Enter the delivery number and
choose Enter.
86. Edit
In the delivery Overview screen, choose menu path Edit.

Select Edit from the menu path.

87. Choose Pack from the menu.
Choose "Pack" from the menu.

Choose Pack from the menu path.

88. Choose Pack
Mark all items that are to be packed.
Choose the button Pack where shown.

All items from the delivery will be displayed. Select those that will be placed in the same unit. In this case, all items will be
packed together.

Select all line items and choose Pack.

89. Choose Yes
The system displays a pop-up: ‘Should the system search for allowed packaging material?’.

Accept the message by selecting "Yes".

Choose Yes for the system to display the allowable and available packaging materials.
90. Choose the gift packaging materials
In the following dialog box all allowed packaging materials appear. The packaging material ‘WSDPACK01' is selected.

Select ‘Copy’ where shown to continue.

Choose the gift packaging materials for these items so that they can appear as a kit and be labeled.
91. Choose Back
You can see that all materials that were to be packed have disappeared from the ‘to be packed’ worklist. It is now packed in
the available handling unit that is assigned above in the worklist for ‘All existing HUs (available for packing)’.

Click where shown above to go back to the overview screen.

You now see one handling unit that contains all the items, its package weight, and a confirmation that the material was
packed.

Choose Back to return to the delivery document.

92. Save
Save the settings.

You now see the handling unit has been added to the delivery. Enter the storage location ‘0005’ for the newly assigned
material WSDPACK01 in the Picking view of the delivery. Insert the quantity from the sales kit (= 100 EA) into the
corresponding quantity column for material WSDPACK01. Choose Save.
93. Choose Enter
Now the goods issue has to be posted for the delivery for shipping point BP01. In this same transaction, with the same
outbound delivery selected you can post goods issue and save again to complete the transaction. You will see below the
Message: Outbound Delivery 8xxxxxxx has been saved.
Enter the Delivery again by choosing "Enter".

You see below that the Outbound delivery has been saved. There is one final step. Choose the Post Goods Issue button.
The items have now been loaded on the truck and the goods issues have been posted.

To view the status of the order and confirm all steps have been completed, with the Outbound delivery still populated,
choose Enter.
94. Status Overview

In the delivery Overview screen you will see the items appear with the assigned packaging material WSDPACK01
which was assigned as component for the corresponding item.

Select the Status Overview Tab.

Select the Status Overview tab.

95. Back
You can see that the system has assigned all delivery status with a "C" except the Billing status which is the next step in the
process.

Leave the delivery documents by choosing back twice.

The system should assign a status of ‘C’ to everything except the Billing Status.
Now that the items have been shipped, we are ready to proceed to Billing.
Choose Back to return to the main menu.
Billing
Billing

96. Order to Cash - Billing

Billing signifies the final step of the business transaction within the Sales and Distribution component. The Billing process will
create the billing documents necessary in Financials.
97. Create
Double click where shown.

To begin the Billing process, access the following path: Logistics -> Sales and distribution -> Billing -> Billing document ->
Create -> VF01.
98. Choose Enter
On the Create Billing document screen, enter both delivery numbers from the previous step. (The last delivery number
should be assigned automatically by the system).

To process the document, choose Execute.

On the Create Billing Document screen, enter both delivery numbers from the previous steps. (The last delivery number
should be assigned automatically by the system).

Choose Enter.
99. Edit
You get a message, “ Check the Log”.

To view the error log choose Edit.

The Billing document is displayed for the entire Sales Order, less the 600 items that are to be delivered at a later time.

You get a message, “Check the Log”. Choose Edit -> Error Log (F9).
100. Choose Log
Choose "Log" from the menu.

Choose Log.
101. Back
Review the errors. There are no errors in RED status, which means it is ok to continue.

Click where shown to go back.

You see that the sales kit items are flagged as not relevant for billing as you will only bill for the original item that had the bill
of materials assigned to it. Choose Back to return to the Billing document.
102. Create Overview of Billing Items
On the Invoice (F2) Create: Overview of Billing Items screen, verify that the line items and their calculation is correct by
pushing the Condition’ button .

Click on "Conditions".

On the Invoice (F2) Create: Overview of Billing Items screen, verify that the line items and their calculation is correct by
pushing the Condition button. This will display the pricing condition records for each material.
103. Back
Here you can review the pricing conditions as they will appear on the invoice.

Click where shown to go back.

Here you can review the conditions for each material, whether or not there are discounts applied, and freight charges based
on the weight of each package.

Once the items have been reviewed, choose Back to return to the overview.
104. Save
Click where shown to Save the billing document.

Assume that all data is correct and save the billing document.
105. Billing document
The system displays the message "Document 9xxxxxxx has been saved."
Once saved, you can review the accounting and controlling documents.
From the menu bar, choose Billing Document .

You see below that the billing document has been saved. From within the Billing document transaction, you can view the
accounting and control documents that were also created as a result of the creation of the billing documents. Choose Billing
document from the menu.
106. Choose Display
Choose "Display" from the menu.

Choose display.
107. Accounting
On the Display Billing Document field, in the Billing field, enter the billing document number.

Choose "Accounting."

Double-click on the Accounting button. Note that the system automatically displays the billing document number.
108. Accounting document
Double click on the accounting document where shown.

Here you can see all the subsequent documents that were created. Double-click on Accounting documents.
109. Back
The various accounts and offsetting entries are listed: a. Account which is debited to the customer b. Sales Revenue
account c. Taxes. Note the amount which is debited to the customer account.

Choose Back.

Here you see the general ledger account postings. You also see the appropriate sales tax rules as configured in the system.
The account for customer CWSD1 is debited with the corresponding amount. Only the incoming payment for the invoiced
amount will clear the item from the customer balance.
Choose Back.
110. Choose Cancel
Close dialog box for the Accounting documents by choosing "Cancel".

Choose Cancel.
111. Billing document
Lastly, time to preview the invoice before it is released to the customer.

On the Invoice 9xxxxxxx (F2) Change Billing Document screen, from the menu bar, choose Billing document.

Now let's take a look at the invoice that will be sent to the customer. Again, within the same billing transaction, choose Billing
document from the menu.
112. Choose Issue Output To
Choose "Issue Output To" from the menu.

Choose Issue Output to.

113. Print Preview
In the Output dialog box, make sure that the Output type is RD00. Choose Print Preview.

Select the message output type configured for Invoices and choose Print preview.
114. Back
Preview the Invoice.

When done, click where shown to go back.

Here you see an example of the invoice that is to be sent to the customer. The logos and layout are configurable.
Additionally, the invoice can be sent to the customer by mail, e-mail, fax or EDI depending on the type of message output
configured in the system.

Choose Back or Exit to return to the main menu.

A billing document has been created and the postings to FI and CO have been made.
Post Payments
Post Payments

115. Order to Cash - Payment Processing

The final step in the process is Payment execution. After the invoice creation in the previous steps, the customer account
still needs to be debited in order to complete the entire process. In this procedure the customer payment is received and the
corresponding account will be cleared.
116. Incoming Payments
Double click where shown.

We are now in the Financials component. To process the incoming payment from the customer, access the following path:
Accounting -> Financial Accounting -> Customers -> Document Entry -> Incoming payments -> F-28.
117. Process open items
Once data has been entered, choose "Process Open items" .

The assumption is that you have the customer payment information in front of you, whether it was received via check or
deposited directly into your system. Here you will enter all the relevant customer payment information including the account
number, payment amount and the account to which the payment applies.

Once all the relevant information is entered, choose Process open items. Notice the amount entered here matches the
amount of the invoice.
118. Press the Select all button
The document number of the invoice document of the previous chapter is assigned as account items of customer CWSD1
and the corresponding gross amount.
Depending on the user’s defaults some items may be selected.
If that is the case press the button Select all (the lines are marked in blue).

Depending on the user’s defaults some items may be selected. If that is the case, press the Select all button (the lines are
marked in blue).
The numbers below do not apply until you select and deselect all values.
119. Select the Deactivate items button

Then choose the button Deactivate items to deactivate all items (lines are marked in black).

Then select the Deactivate items button to deactivate all items (lines are marked in black).
Now that all the items are deselected, you can see that the amount entered is the original invoice amount, while the
assigned amount is the original invoice amount less the 2% cash discount of 513.02 for early net 15 days, plus 165.00 for
the previous payments due immediately.
120. Res.items
Select the tab residual item.

Click where shown.

Select the Residual items tab.

121. Select only the invoice
Go to the line item and select only the invoice from previous chapter with its amount of xx.xx $.

Double click where shown on the net amount of this invoice.

Select only the invoice from the previous chapter with the invoice amount. Double-click on the net amount of this invoice.
This amount is the invoice amount less a 2% cash discount.
122. Choose Enter
Double click on residual item field and the message appears: Check +/- sign of difference (overpayment).

Choose Enter and then Save to post the document.

The reason for this process is due to the overpayment of the promise to pay/invoice. Double-click on the Residual item field
and the message appears "Check +/- sign of difference (overpayment)."
Confirm by choosing Enter.
123. Save
Chose Save to post the document.

Once you have selected Enter, the system automatically populated the residual items with the difference between the
invoice amount and the payment amount. The customer account has a positive balance or a credit of 513.02. Note: There
are four documents to be posted.

Choose Save.
124. Back
You see the Message ‘Document 14xxxxxx was posted in company code BP01’.

Click where shown to go back.

You see below that the document payment was posted in company code BP01. You have now posted an incoming payment
for the invoices the customer promised to pay.
Customer Status
Customer Status

125. Display/Change Line Items

Double click where shown.

To close the cycle, the customer account should be checked. To check the status of the customer, access the following path:
Accounting -> Financial Accounting -> Customers -> Account -> Display/Change Line Items -> FBL5N.
126. Execute
Choose "Execute" where shown.

Enter the relevant customer account and the company code and choose Execute.
127. Back
Click where shown to go back.

A list is displayed with the invoice document and its corresponding account documents listed on the left. On the right, the
corresponding clearing documents from the previous chapter are shown. The amount in local currency shows the balance of
the customer account. Here you see the same four documents that were displayed in promise to pay in the previous step.
You can see the balance of the customer account credit was 513.02, but after three payments of 55.00, the balance of the
customer account credit is now at 348.02.

Choose Back to return to the main menu.

This completes the Order to Cash process.
Summary
Summary

128. Order to Cash

In summary, a quotation and sales document were created in order processing. In delivery processing, the delivery was
created, the goods were picked, kitted, packed, shipped and the goods issue was posted. In the billing process that followed,
an invoice was created and released to financial accounting. For the billing, several things were considered, like Incoterms.
Service Charges were also considered for a service material where the charge was entered manually in the sales order
based on the quantity. At the end, the customer paid and the incoming payment was posted to balance the outstanding value
of certain ledger accounts.
129. Summary

The SAP Best Practices for Order to Cash demonstrates the entire process chain in a typical sales cycle for a Wholesale
Distributor. You have now seen the standard process for Quotations, Sales Order processing, Delivery, Billing and Payment.
130. Unit Summary

Now, you are able to explain the business process of Order to Cash.