SAP RAR Optimized Contract Management: Intercompany Billing Based Fulfillment Business Use Case
In this blog post I will be focusing on SAP Revenue accounting and reporting (RAR) Event-Based Fulfillment Type – Intercompany Billing of Performance Obligations. A performance obligation (POB) can be fulfilled when a specified event happens which is Event-Based Fulfillment. A performance obligation can be fulfilled over a period of time which is Time-Based Fulfillment.
Performance Obligation Types
The goods or services that are promised in the contract represent a single performance obligation. SAP RAR has performance obligation types, and this represents data which addresses queries on fulfillment type; if it is Time or Event Based, and also specifies about the duration.
Fulfillment Event Types
On the occurrence of an event, Performance obligations can be fulfilled. They can also be fulfilled over a period of time, starting from the occurrence of an event.
IMG Path – Financial Accounting > Revenue Accounting > Revenue Accounting Contracts > Define Fulfilment Event Types
Intercompany Billing Based and Time Based
One can fulfill performance obligations (POBs) when Intercompany Billing gets generated.
Time-based fulfillments for performance obligations involve subscriptions, for example contracts, where services are provided on a regular basis for the duration of the contract.
Company places a sales order with customer (17100003) for 35,500 USD for providing Material (EWMS4-50) together with Consumable Spare Parts (TG12) and Warranty (SM001) of during contract validity from 1st October 2022 to 31st December 2022 (3 months).
|Items||Qty||SO Rate||SSP||Contractual Price||Total SSP||Allocated Amount||Allocation Effect|
Calculation Check Points:
- Allocated Amount = Standalone Selling Price of Item X Complete Contractual Price / (Sum of all Stand-Alone Selling Price (SSP))
- Allocation Effect = Allocated Amount – Contractual Price of Item
Step 1: Creation of Sales Order
Firstly, we proceed with Sales Order creation where condition type PR00 gets updated, Standalone Sales Price (SSP) will be manually updated at every item level for testing but without SSP system will not save the Sales Order.
Step 2: Process Revenue Accounting Item’s related to Sales Order (Step 1)
View RAR Contract and Performance Obligations (POB’s) (Step 2)
RAR Contract – Price Allocation (Step 3, 4)
As per IFRS 15 prerequisite, RAR component will automatically perform the allocation amount and allocation effect against each Performance Obligation. This determines transaction price and allocate to the separate POB’s level.
Step 3: SD – Outbound Delivery and Post Goods Issue
Step 4: Revenue Accounting Item’s related to PGI
Step 5: Customer Billing
Step 6: Revenue Accounting Item’s related to Customer Invoice
Step 7: Intercompany Billing
Step 8: Process Revenue Accounting Item’s related to Fulfillment Process
RAR Contract – Revenue Schedule (After Fulfillment) (Step 5)
Summary of RAR Contract – Revenue Schedule (After Fulfillment)
This brings us to end of test case of RAR Use Case for Event-Based Fulfillment of Performance Obligations – Intercompany Billing Document Process.
Hope you find this blog informative and helpful.