Sales: Contract Processing (SAP Library - Release Notes for Release 3.0A)

Sales: Contract Processing

Description

Contract processing involves services (for example, maintenance tasks) and rented objects for which no change in ownership occurs.

The sales document forms the basis of contract processing. As a result, the functionality of order processing is available for contract processing. Customer requests can, for example, be entered as inquiries, and offers for contracts as quotations.

Contract processing is integrated into outline agreement processing in the sales menu. The following contract types can be edited there for Release 3.0:

Rental contract (MV)

Maintenance contract (WV)

Contract data needs to be maintained in the contract document on header and item level in the same way as the business data. Header data applies to all subordinate items as long as no alternative data is entered for an item.

Services in maintenance contracts

The material master forms the basis for service processing in contracts. You can use variant configuration to define a service with different characteristics in the contract. The various services are represented as characteristic values of a standard product and are configured by object dependency. When you create a maintenance contract with the material to be configured, the configurator is automatically called for characteristic value assignment.

Contract data

Data on the validity period

Contracts can be created for a certain basic validity period which is monitored by the system. The beginning and end of the contract can be determined by means of different rules for date determination which can be controlled in Customizing. In Customizing, a contract type with data relevant for the contract such as validity period and cancellation can, for example, be assigned to every sales document type.

You can distinguish between two types of contracts by the validity period:

For contracts with a limited validity period, the end of contract is automatically determined or specified manually when the contract is created.

Contracts for which no end date is defined are extended automatically by a defined cancellation period if no cancellation is received by the provider of the service within the period of notice before the end of the current cancellation period. Contracts of this type can only be ended by a valid cancellation request.

The contract document contains the following data for the validity period:

Dates which can be automatically determined

Start and end of the contract

The start and end of the contract can be determined and automatically proposed using a rule for the date determination (see below). The contract end date can also be copied from the requested cancellation date, if the check for the cancellation rule has confirmed that the cancellation has been carried out correctly. Where a separate cancellation request is made, this must be entered manually. It takes effect immediately and is not checked.

Validity period category and contract validity period

Depending on the settings, a validity period category from which the contract validity period can be determined, can be proposed in the document when you create a contract. The validity period category can, for example, be used in pricing. The specifications for the validity period category and the contract validity period need not agree. The actual contract validity period can be shorter than the period defined in the validity period category. This could occur if the contract were cancelled prematurely.

Dates which can be entered manually

The installation date refers the date on which the installation was completed.

Contract signed date refers the date on which the contract was signed.

The acceptance date refers to the date on which the customer accepted the installed machinery.

The dismantling date refers to the date on which the installed machinery was removed.

Data on cancellation

During contract entry, a cancellation procedure with the relevant cancellation rules can be allocated to a contract or a contract item. On the detail screen Cancellation, the valid cancellation dates are displayed.

Cancellation rules can be created with and without a period of notice:

For cancellation rules with a period of notice, the customer may make use of their right of cancellation and cancel the contract within this period.

Cancellation rules without a period of notice specify the earliest possible date for cancelling the contract.

If a cancellation request is not received by the cancellation date, the next possible cancellation date is determined on the basis of the specified cancellation period.

The contract document contains the following data on cancellation:

Dates relevant to cancellation

The cancellation procedure which is allocated to a contract specifies the valid cancellation rules with the dates on which cancellation may occur.

The requested cancellation date specifies the date on which the customer wants to end the contract.

If the customer cancels the contract, both the requested cancellation date and the cancellation receipt date must be entered. The cancellation received date refers to the date on which the customer's letter of cancellation was received.

The system checks whether the requested cancellation date is valid on the basis of the cancellation procedure. Cancellation request is accepted if at least one rule in the cancellation procedure allows it. If the system determines that a cancellatiion request is not valid, it determines the next possible cancellation date. After confirmation, this can be transferred to the field 'Contract end date'. If no next possible cancellation date is determined, an error message appears. If the requested cancellation date check is positive, the date is automatically adopted as the contract end date.

Further cancellation data which can be maintained for information purposes:

The cancellation reason gives the reason for a cancellation.

The document number of the contractual partner's cancellation is specified in the contractual partner's letter of cancellation.

The cancellation party is the contractual partner terminating the contract. Either side, that is, the service provider or the contractual partner can cancel the contract.

The date of the cancellation document contains the issue date of the contractual partner's letter of cancellation.

Follow-up actions

You can store at the header level of contract data specific actions which follow on from a contract cancellation. Two fields need to be maintained to do this:

The action field specifies the actions which are to be carried out following a cancellation.

The date for the action can be automatically determined.

Pricing and billing

In contract processing, you can distinguish between two types of billing on the one hand by the underlying conditions, and on the other hand by the type of billing transactions used:

Pricing and billing of contract items

The system carries out pricing for contract items on the basis of price conditions. The condition records required for this are created in the sales and distribution master data menu. When you enter a configured standard product in the contract, the variant conditions are copied into the contract.

By means of a billing plan, the dates for contract billing can be specified. In the sales document, a detailed billing plan which specifies what amount or percentage rate is to be billed and when, can be stored instead of a single billing date at item level. This form of invoice creation plays an important role, for example, in rent settlement where invoices are created periodically and for the milestone billing of projects.

Please refer to the separate release note for further information on the billing plan.

Pricing and billing of services

The conditions for service and maintenance activities (for example hourly wage for a technician and materials used) which are necessary for pricing, can be entered as price agreements in the contract on header and item level. Price agreements are contract-specific conditions.

A service order is created for service and maintenance activities. Since the price agreements for the plant maintenance activities are stored in the contract, the confirmed items can be settled in the service order on the basis of the corresponding contract. For resource-related billing of services, a billing request is created from the items in the service order on the basis of the price agreements.

Example

A maintenance contract is drawn up with customer A for a photocopier. The contract item contains the photocopier for which a corresponding condition record has been created in the system (e.g. $200/month). The settlement can be carried out with periodic billing using a billing plan. For monthly maintenance of the photocopier by a technician (for example 1 hour labor and parts), resource-related billing is carried out on the basis of the price agreements. The hourly wage for the technician and the parts would in this case be stored as price agreements in the contract. A service order (PM order) is created for the services of a technician.

Status management

General status management enables you to document the stage of processing a sales and distribution document has reached in the form of a status. The active statuses of a sales and distribution document determine which business transactions may be executed for it.

The user statuses can be freely defined by the user. The system statuses are set automatically depending on certain transactions and are defined exclusively by SAP. The definition of a status specifies which business transactions are allowed or prohibited if the status is active.

As many statuses as required can be set both on header and on item level in the sales and distribution document. If a certain transaction is carried out for a sales and distribution document, the system checks the statuses to find out to what extent the transaction is allowed or prohibited.

The user statuses are defined in a status profile which can be set on header level for each sales document type and on item level for each item category. The status profile itself should be maintained in Customizing.

Selection of sales documents by object status

Selection according to sales documents

Serial numbers

In contract processing, it is necessary to clearly identify the contract objects by means of serial numbers, pieces of equipment, or functional locations. The identification occurs on item level where, depending on the field, you can maintain serial numbers, pieces of equipment, or functional locations.

Example:

A maintenance contract is drawn up with customer A for a photocopier. As customer A also has other maintenance contracts for other photocopiers, every maintenance contract item contains the serial number of the respective photocopier. When the photocopier is being maintained, the relevant maintenance contract can be identified and the service terms can be checked.

Change system parameters in customizing

Document types and item categories

Two new sales document types have been included in Customizing with corresponding item categories:

Rental contract (MV) and rental contract item (MVN)

Maintenance contract (WV) and maintenance contract item (WVN)

Settings for contract processing

1. Contract types

The contract type represents a profile with default values that are relevant to contracts (for example validity period category, cancellation procedure) for entering the contract. They can be allocated to the sales document types.

2. Validity period categories

The validity period category is a user-defined key which can be used, for example, for statistical evaluations. In the contract document, the contract validity period can be determined from the validity period category. The validity period category is defined by a validity period and a specific unit (for example 12 months, 4 weeks). This can be proposed automatically in the document using the contract type.

3. Cancellation reasons

The reasons for the cancellation of the contract are user-defined and are entered in the document in the contract data.

4. Rules for date determination

A rule for date determination defines a specific point in time on the basis of a baseline date and a specified time period. A rule can also consist of just a baseline date, or, use a calendar ID instead of a time period. In the contract document, indirect date determination is carried out using such a rule.

5. Cancellation procedures

During contract entry, a cancellation procedure can be allocated to a contract or an contract item. It specifies the valid cancellation rules for this contract.

6. Cancellation rules

The cancellation rules contain control data for indirectly determining the cancellation date:

The cancellation date specifies the baseline date for the calculation formulas.

The period of notice gives the period - starting from the baseline date - in which a cancellation is allowed. A cancellation rule can be defined without a period of notice.

The cancellation period specifies the period in which the cancellation date or the period of notice can occur.

The cancellation rule can be defined for a certain validity period.

7. The allocation of cancellation procedures and cancellation rules makes it possible to copy the valid cancellation rule into the document using the cancellation procedure.

Pricing

The condition types PPAR and PKAR as well as the corresponding access sequences PPAR and PKAR and the pricing procedures PABR01 and PABR02 have been set up for defining price agreements.

Text determination

The following texts have been included in the standard SAP R/3 System for contract processing:

V001 General contract terms

V002 Sales text

V003 Note on external staff

V004 Note on responsible person

V005 Note on extension

V006 Note on cancellation

0014 Warranties

Incompletion procedure

The standard SAP R/3 System contains an incompletion procedure for both the document header and for the item.

incompletion procedure 18 (header)

incompletion procedure 35 (item)

User status profile

In the user status profile, you can define separate statuses.

Proceed

To work with user statuses in sales documents you must enter the user statuses in the required sales document types and item categories.

Further notes

Please refer to the Implementation Guide under the section "Contract" for more information on the setting of contract processing in Customizing. Please refer to the corresponding release note and to the Implementation Guide under the section "Billing Plan" for more information on the billing plan.