In this blog you will learn about the end-to-end service process from service quote to financial reporting for Ad-hoc or corrective Service with T&M billing (Time & Material). This service process flow is based on SAP S/4HANA Cloud Private Edition, release 2023.
Step 1: Create service quote
Enter services, service parts and expenses. Service Quote items can be entered manually, or selected from a product proposal or service template. Prices in the quote will be calculated based on product list prices, customer-specific pricing conditions or service contract-based price agreements. Initially the quote is in status Open with no items accepted.
Step 2: Send the Quote to Customer and Accept the quote
The quote can be sent for approval to the customer. The status of the quote and quote items changes to Released.
After customer feedback, the quote can be Accepted. This will change the status of the quote to Completed and will automatically create a follow-up service order. All accepted line items are copied into the service order, including all pricing details and assigned contract. The purchase order number that was received from the customer can be entered in the External Reference. This external reference will be copied through the end-to-end process and will also be included in the customer invoice.
The follow-up service order can be found in the Transaction History of the service quote.
Step 3: Review and Release Service Order
To start scheduling and execution, the service order needs to be released. The service order can either be released completely or individual items can be released.
Follow-up logistics processes will be triggered, depending on the item category of the different items. In this example, we can see in the Transaction History that a Material Reservation has been created for the service part.
Step 4: Create Service Confirmation(s)
A service confirmation is created as a follow-up of a service order. Confirmation-relevant service order items can be copied into the service confirmation.
The planned data from the service order is taken over into the confirmation and can still be adjusted. In case of goodwill or warranty, an Accounting Indicator can be selected per line item in the service confirmation. The accounting indicator can influence the price calculation.
After review, the service confirmation can be set to Completed. And if no additional confirmations are needed, also the Final Confirmation flag can be set. This will automatically set the status of the service order to Completed.
Follow-up processes are triggered for each of the items, depending on the type of item:
- Goods movements for the service part consumptions
- Timesheets for the service items
- Cost postings for the expense items
Step 5: Review cost postings
In the Display Line Items - Margin Analysis app, you can review the different resulting cost postings. You also see that the cost postings have resulted in matching revenue recognition and WIP postings.
Step 6: Release for Billing and Billing
In the Release for Billing app, you can search for the service confirmation and trigger the billing process. Release for Billing will create a Billing Document Request (BDR).
This BDR is included in the Billing Due List.
Step 7: Review revenue postings
In the Display Line Items - Margin Analysis app, you can review the resulting revenue postings. You see that the revenue postings have also resulted in matching revenue recognition and WIP postings, depending on the revenue recognition method.
Step 8: Analyze Product and Service Margins
Profitability reporting based on many different market segments is possible.
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