Special Topic: Derivation of SSP Standalone Selling price
SAP has introduced enhancements to SAP Business ByDesign to allow customers to comply with the accounting standard IFRS 15/ASC 606 revenue recognitions requirements. The series of case documents introduces the key requirements of IFRS 15 /ASC 606 along with steps to be taken by the client to implement the new functionality.
This special topic document focuses on:
- How the SSP standalone selling price can be set
- Can be changed during sales document inception
- Can be changed by the accountant
- Can be influenced by using the PDI partner development infrastructure
The Standalone Selling Price (SSP) is a key element of the IFRS15 / ASC 606 accounting standard. The SSP is used as a ‘weighting’ factor to allocate the total revenue accounting contract transaction value to the performance obligations (POBs) and underlying assigned sales document items. The standalone selling prices are to be determined at contract inception and thereafter to be kept fixed. SAP Business ByDesign provides multiple capabilities to set the SSP according to his business scenarios and needs.
|Overview on all options available to influence the SSP.|
Remark on the PDI scenarios mentioned at the right: While “set SSP via PDI” means setting it at CRM side at the sales order or customer contract, “set manual SSP via PDI” refers to the option to set it as a manual correction value in Financials.
Note: In general, the customer must put controls in place that prove that the entered values apply to the defined criteria for SSP stated by the IFRS15 / ASC606 standard.
Scenario 1: Determination via price list and discounts
– This is the standard and recommended scenario. –
In the system, price-, discount and surcharge lists are assumed to be maintained. When a sales document is created for a customer, products and quantities are entered and the available conditions are considered. The SAP Business ByDesign implementation considers these (derived) conditions as SSP and transfers those at release of the sales document automatically to financials as basis for allocation.
Sales Order 1987, Customer: Palo Alto Print House
|POB / Item||Product||Qty||Price||Regular Discount||Changed discount during sales document entry||Transaction Price||Standalone Selling Price|
|10||Printing Machine||1 ea||100.000 USD||10%||90.000 USD||90.000 USD|
|20||Paper Feeder||1 ea||15.000 USD||0%||10%||13.500 USD||15.000 USD|
|Total||115.000 USD||103.500 USD||105.000 USD|
|Sales order 1987, allocation result.|
Scenario 2: No pricelists available
A sales order or customer contract is entered into the system. The system has not determined a price for the given customer / product combination. This is a common case in business scenarios like:
- Fixed price professional service
(individually calculated for the requirement to be met)
- Make to order, engineer to order
( where a machine is made exactly to customer requirements)
To better support this type of scenario SAP Business ByDesign has implemented following SSP derivation logic.
- In case a price cannot be determined, the manually entered conditions during the creation of the sales document are considered to be taken as SSP.
- If discounts are entered, those are handled as deviation from the SSP.
The entered conditions are passed to financials after the release of the sales document.
Sales Order: 1988, customer: Palo Alto Print House
|POB / Item||Product||Qty||
(no price list – entered manually)
(no discount list – entered manually)
|Transaction Price||Standalone Selling Price|
|10||Consulting||1 ea||2.500 USD||2.500 USD||90.000 USD|
|20||Consulting||1 ea||1.500 USD||10%||1.350 USD||1.500 USD|
|Sales order 1988, allocation result.|
Note: In this scenario the customer must put controls in place that prove that the entered values apply to the defined criteria for SSP stated by then IFRS15 / ASC606 standard.
Scenario 3: Manual adjustment of the SSP by the accountant after sales document release
A financial accountant can overwrite an SSP manually at any time. This capability is available primarily for 2 scenarios:
- A wrong SSP was set in CRM
- Either wrong or outdated pricelist.
- Wrong manual entry without pricelist scenario
After a sales document is released, the revenue accounting contract gets released as well and the initial SSP derived from CRM is locked.
- Complex scenarios where the contract structure usually is handled in a backoffice department. Please refer to the see case document for sales bundles
The SSP can be changed in the Revenue Accounting Contract Details screen by entering an SSP price.The currency is defaulted to the company currency.
|A manual SSP can be entered at the Revenue Accounting Contract, tab Manual Changes.|
Entering a manual SSP changes following aspects automatically:
- The allocation base is automatically adjusted.
- A change log for auditing purposes is updated.
- The manually adjusted SSP can be compared to the originally passed SSP by CRM.
|In the allocation shown at the Revenue Accounting Contract, manual SSP amounts are displayed in the right column.|
Setting the SSP to 0,00 Curr
Now, it is also possible to set the SSP to 0,00 Curr. It might not be obvious, but a real need to be able to occasionally set an SSP=0,00 currency units exists. An example is highlighted in the sales bundle case document.
To do so: enter a Currency and no value, e.g. enter USD without a figure [Return]-è SSP = 0,00 USD.
The impact will be that no revenue will be recognized for these items.
|Example: Setting a zero-value manual SSP …|
|… results in an allocation of 0 USD revenue.|
Removing a manually entered SSP
In case the manually entered SSP needs to be removed, to make the system take the originally derived SSP the financial account just needs to remove his manual changes – by deleting amount and currency. The original SSP will get applied.
|Deleting both, amount and currency, results in allocation using the default SSP, which has been derived from CRM.|
The Allocation base is updates and a trace of these change activities is kept in the change log.
|Revenue Accounting Contract, tab Change Log.|
Set the SSP via PDI Partner development infrastructure or via API call
SAP Business ByDesign has also foreseen capabilities that customers can implement their own SSP derivation strategy using PDI.
- During sales document creation
Price component 9PR1 can be passed and is treated at the release of the sales document as SSP in financials and as allocation base.
- Later this SSP can also be overruled by an accounting entering a manual change.This scenario is useful in scenarios like:
- SSP based on commodity prices
- Specific rules agreed by the auditor
- Separate customer specific repository for SSP prices
- Complex scenarios with repetitive sales bundle agreements, which is the main usage at sales document inception.
Note: In this scenario the customer must put controls in place that prove that the entered values apply to the defined criteria for SSP stated by the IFRS15 / ASC606 standard.
- Changing the SSP in the financial view of the RAC
This capability is only intended to be used for ‘desaster’ recovery. It is not recommended to be used for regular SSP derivation.
Imagine a case when systematically a wrong SSP gets set in CRM, for thousands of sales document items, for example because someone forgot to activate the new price lists for the new year. In order to avoid manual adjustments, we’ve foreseen this PDI capability. Prior to applying these mass changes the implications must be carefully checked with your auditor.