Part-1: SAP S/4 HANA- Rebate Settlement Process- “Condition Contract Management”.

SAP-S/4-HANA Rebate Settlement Management Condition Contract Management

As we have moved from the traditional ERP Business suit to the world of S/4 HANA, there are many things which have been changed in various modules like FI, SD, PP, Output management etc. and Rebate Management has also been changed which has moved from SD to a separate module “Settlement Management” but before going to start configuration of Rebate Settlement Process in S/4 HANA, we need to understand “Condition Contract Management” which is a kind of pre-requisites to understandt the configuration of rebate settlement in S/4 HANA that is why I have divided this topic into 2 parts that is Part-1 & Part-2.

Part-1 : Which will help you to understand “Condition Contract Management” in Rebate settlement process.

Part-2 : Configuration of Rebate Settlement Process.

Introduction

New Rebate Agreements are no longer available for creation and new Rebate Agreement ,you can not extend existing ones then the question is “How can we provide rebates to customers ?”

The answer is via Settlements Management.

Now, here we need to understand but why Rebates Management has been replaced with settlement management in S/4 HANA?”

The answer lies in the difference between the architectures of S/4HANA and traditional ERP business suite. So, before we move into Settlements Management, let’s review on how the traditional Rebate processing works which will help us for better understanding of Settlement Management.

Traditional Rebate Processing

As a reference from help.sap.com

A rebate is a special discount which is paid retroactively to a customer. This discount is based on the customer’s sales volume over a specified time period. You define the details of the rebate in a rebate agreement. In the agreement you specify, for example

  • who receives the rebate payment
  • on what criteria the rebate is based (customer, customer and material, and so on).how long the rebate agreement is valid
  • Within the rebate agreement you create separate condition records for each product the customer buys. These records specify the rebate amount or percentage for each product. You can also specify a pricing scale so that the customer can earn a better rebate by ordering more. Because rebates are always paid retroactively, the system keeps track of all billing documents (invoices, credit and debit memos) that are relevant for rebate processing. The system can, if you wish, automatically post accruals so that the accumulated value of a rebate is recorded for accounting purposes.
  • A rebate agreement is finally settled when you issue a credit memo to the customer for the accumulated rebate total.

Comparison between Old rebate V/s New Rebate (Settlement Management)

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"
Architecture of Rebate Management in Traditional ERP Vs Settlements Management in S/4.

Table VBOX stores all rebate relevant invoices. The customer runs transaction VBOF to apply the rebate conditions in the invoices.

Please find the below problems with traditional rebate processing-

  1. Size: This Rebate index table could contain hundreds of thousands to millions to billions of entries in the system In fact for one of the customers we noticed 1 TB of data being occupied in total DB size of 5 TB. It won’t not take long for our BASIS, DB & ABAP colleagues to understand the repercussions of such a situation.
  2. Locks: If changes in one customers’ conditions occur the table needs to rebuild; while this rebuild is going on, all rebate data is locked throughout the organization

The solution to these issues lie in the Settlements Management

  1. The table VBOX itself has been done away with in S/4 HANA because the rebate conditions are applied instantly due to power of HANA. Hence Rebate Index need not be rebuild when new customers become eligible for rebates and previous business can be retroactively considered.
  2. This significantly reduces data footprint and memory.
  3. Sales document no longer reduce operations impairment in sales processes

General Process

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

The general process in the Condition Contract Management differs from the standard Rebate processing in the sense that there are no rebate Agreements at the first step. There are Condition contracts which need to be created and released.

Steps to create Condition Contract

1. Execute transaction WCOCO and click on ‘Create’.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

2. Select the type of contract you would want to create.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

3. Enter the customer and period for which you want to create the condition contract.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

4. Enter the Sales data on the 2nd tab.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

5. Enter the business volume selection criteria. This steps defines which invoices are relevant for application of this condition contract.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

6. Enter the settlement Material .

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

7. Enter the Settlement Calendar. This step defines when you would like to carry out partial/final settlements.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

8. Create Rebate Accrual condition.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

9. Change condition Table.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

10. Create Rebate condition.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

11. Save the Condition Contract .

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

12. One thing is of utmost import is to release the contract. Hence release the contract in WCOCO.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

13. Once done the light will become ‘Green’. Save it.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

Sales Flow

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

I won’t be explaining how to create a Sales document, Delivery, PGI, Invoice etc but what needs to be mentioned is that either these documents can be created before the condition contract creation or after the condition contract creation. In case Sales document is created after the contract creation, REBA accrual condition would be available in the conditions tab.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

In case the Sales document is already created before the contract creation, the rebate would be provided as part of the settlement process and rebate condition would be visible in Credit memo which will book the correct accrual amount to the respective accounts. So there is no need to adopt the Sales order anymore.

Actual Settlement

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

Run transaction WB2R_SC and enter relevant values. Please note that Run Type ‘Check Run’ does not post any data. For actual settlement use ‘Live Run’.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

Once executed, you will get a message like shown below

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

Credit Memo

In WCOCO, you can see a credit memo created with relevant values

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

In the Header conditions, you will find the Rebate condition we had created as part of the condition contract.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

Business Volume

Run transaction WB2R_BUSVOL,

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

As you can see below, business volume 1.5 is updated against the condition contract

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

Important Transactions

There is a whole list of important transactions for the new Settlement management solution.

SAP S/4 HANA- Rebate Settlement Management "Condition Contract Management"

Useful tips and Links

  1. Condition contract settlement is also available in the SAP Business Suite. Therefore you use condition contract settlement if you are planning to create new rebate agreements before you upgrade to SAP S/4 HANA.
  2. SAP Business Suite customers can move from various releases to SAP S/4 HANA, on-premise edition and still process the existing rebate agreements. It is not possible to create or extend the existing type rebate agreements.
  3. Help SAP – Condition Contract LINK
  4. Help SAP – Condition Contract Based Settlement LINK
  5. S/4HANA OP1610 simplification list LINK
  6. Settlements management is also available on FIORI apart from SAP GUI.

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