Applies to

SAP ECC; Sales and Distribution; Billing.

Summary

Retro-billing is a process of issuing credit or debit memos after retroactive price adjustments

Created on

07 May 2013

Author(s)

Jyoti Prakash

Author Bio

Jyoti Prakash is SAP Certified Associate and works as Senior Resource for Order Management & After Market. Currently, focused in providing consulting services to their customers for support project on SAP Order Management, After Market, Project System, and Logistics Execution.

Table of Content

1. Introduction
2. Overview
3. Prerequisite for using on Retro-Billing
   1. Billing Document for Retroactive pricing adjustment
   2. Condition record
   3. Order Reasons
4. How Retro-Billing works on SAP
   1. Invoice & condition record - Existing
   2. Condition Record - Change
   3. Executing of Retro-Billing
5. Related Content

1. Introduction

Out of those various business processes in billing is accommodates & reconciliation of the retroactive prices adjustment for number affecting existing invoices. The retroactive prices adjustment can be due:

• Strong bargaining power of customer over
• New pricing agreement between supplier
• Volatile/change is price of essential commodities for manufacturing

to name a few.

This kind of prices adjustment can be handled by Retro-Billing. For instance, a new pricing agreement that you agreed with your customers may affect billing documents that have already been processed and settled. If that pricing agreement is effective before the pricing date of the billing documents, you can perform retroactive billing to call up a list of these documents and revaluate them with the new price. You can then create additional billing documents to settle any differences.

So, by definition & example of retro-billing, it can have a life cycle of months or sometimes beyond a year. Therefore this makes it a unique process.

2. Overview

Figure 1. Retro-Billing Process

On Jul 01, 2011, Supplier ships & sells 10 units of Material ABCD to Customer XYZ for $100 per unit (valid from 01.04.2011 to 31.03.2011), total amount $1000.

On Jul 07, 2011, invoice is sent to Customer for $ 1000.

Now on Aug 17, 2011, due to negotiations price may change to $120 w.e.f. 17.08.2011 (valid till 31.03.2012). Thus you will update your condition type in TCode VK12 for this Material ABCD & Customer XYZ to $120 with validity from 02.04.2011 to 31.03.2012. But as you have already invoiced the customer in past so, to take care of this retroactive price adjustment you have an extra billing. 

So, standard SAP platform provides the retro-billing transaction VFRB. This transaction provides basic retro-billing functionality enabling identification of invoice documents affected by retroactive price changes and execute creation of multiple documents.

In Retro-billing, enter the selection criteria like Payer, Sales Organization, Billing date from & to, Pricing type, Currency, Sold-to Party & Material.

By this system will provide you the list of invoices to which this retroactive price changes is applicable and hence you can simulate or even execute retro-billing & system will accordingly generate Credit/Debit memo type based on differential amount.

For positive retroactive price changes, i.e., $ 20 per unit price from former as $ 100 & revised as $ 120. In this case system will generate Debit Memo for the differential amount to be collect receivable from Customer. Whereas, for negative retroactive price changes, i.e., $ 15 per unit price from former as $ 100 & revised as $ 85.For this case system will generate Credit Memo for the differential amount to be pay back the differential amount to Customer.

These documents will get be in document flow of the original invoices.

3. Prerequisite for using on Retro-Billing

A. Billing Document for Retroactive Pricing Adjustment

1. Retro Debit Memo
2. Retro Credit Memo
3. Corresponding relevant Copying Control
4. Pricing procedure for capturing price change

B. Condition Record

1. The value for base price should determined automatically in the invoice through condition record
2. It should be maintain on the bases of Material & Customer combination
3. It should be a have valid validity from & to date

C. Order Reasons

You need to maintain proper order reasons specific to retro billing document type for Credit/Debit memo.

4. How Retro-Billing Works on SAP

A. Invoice & Condition Record - Existing

You can use TCode VF05N for list of billing documents or invoices based on 

• Billing Document Date (to & from)
• Billing Type,
• Customer & Payer,

To view desired invoices with current base prices use TCode VF03.

In invoice, check item data – condition tab to view pricing.

In the invoice, to view corresponding maintained condition record for condition type, say, ZPR0. Selecting the condition type and click on button to view the maintained condition record.

B. Condition Record - Change

For changing in the existing condition record for base price condition type use TCode VK12. Choose key combination as Customer/Material.

Provide the desired parameter for execution the condition records.

Maintain the change in price difference. Say, positive difference of 10.00 from former price 58.00/- and revised price 68.00/-.

C. Executing of Retro-Billing

Use TCode: VFRB for exercising retro-billing option. Provide following parameter based on your requirement, but keeping mandatory fields in mind:

• Payer (Mandatory)
• Sales organization(Mandatory)
• Billing date from(Mandatory)
• Billing date to (Mandatory)
• Pricing type(Mandatory)
• Currency(Optional)
• Sold-to party(Optional)
• Material (Optional)

You have a option of include Invoices with the Same Net Values. This indicator defines whether invoices whose current net value is the same as the post-calculated net value should be included in the retro-billing list.

• If the indicator is set, invoices with the same prices are included.
• If the indicator is not set, invoices with the same prices are not included

For instance, Invoice was created with a price of 100 Units. After the unit price is reduced to 50 Units, the retro-billing list is used to create a coupon for 50 Units. If you discover later that this price reduction was incorrect and you set the price back to 100 Units, a retro-billing list only appears if this indicator is set.

Below you can find details of entries without error

Select the desire invoice/invoices for the list of entries without error and click on button for simulation run.

Then following screen will appear for simulation run.

For generating Retro Debit/Credit memo click on button.

You can click on button for viewing the generated retro billing. Green indicator confirms that the document generated without any
errors.

Subsequently you can view the generated Debit memo from retro billing by using TCode VF03.

5. Related Content

• SAP Library: Retro-Billing
• SCN Message ID9537098: Retro Billing - Normal Sales Process
• SCN Thread ID 874041: Retro Billing
• SCN Thread ID 1793527: Retro-Active Billing - Config. Guide
• SAP Note 1263240 - VFRB: Performance during mass processing
• SAP Note 81382 - Notes on the retro-billing list with examples

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