5.8 Condition Contract Management: Contracts, Business Volume, Accruals, and Settlement

Condition Contract Management: Contracts, Business Volume, Accruals, and Settlement

Many customer agreements cannot be settled on the invoice. A customer who reaches 25,000 USD of purchases in a quarter receives a 4% rebate, but nobody knows on the first invoice whether the threshold will be reached. Such conditions requiring subsequent settlement are agreed during the logistics process and settled later. In SAP S/4HANA, Condition Contract Management (CCM), part of Settlement Management, handles them. It replaces classic SD rebate processing, which is not the target architecture in SAP S/4HANA. The S46200 course spends 170 minutes on CCM.

What CCM Provides

According to the course, CCM is a central, standardized solution for administering supplier and customer conditions:

• It handles conditions that accompany an invoice (prices, quantity and value conditions) and conditions that require subsequent settlement.
• A condition contract stores the conditions, the settlement dates, the data used to determine the business volume that forms the basis of the settlement amount, and the scope of validity.
• Accruals can be posted for conditions requiring subsequent settlement, either when the source documents (such as SD billing documents) are posted or in a delta accruals settlement run.
• Contracts can be settled automatically or manually, either by sending settlement documents to the partner or by using the partner's own settlement document.
• Automated processes support contract extensions, copying documents, and correcting accruals after condition changes.
• Contracts can be entered and settled with a validity date in the past, so the contract need not exist before the documents that make up the business volume are posted.

The condition contract is maintained with transaction WCOCO and is the single point of entry for the contract data and its conditions. It shows all documents in which a contract condition was determined and accruals were posted, and it offers a detailed settlement overview (list and graphical) with the FI status of all settlement documents.

Configuring CCM: Three Steps

1. Configure pricing including condition contract conditions: define the pricing conditions used to calculate the settlement amount, especially the condition contract conditions that are entered in the contract (usually rebate and accrual conditions).
2. Configure condition contract maintenance: define the parameters for condition contract types and then the types themselves (IMG: Logistics - General → Settlement Management → Condition Contract Management → Condition Contract Maintenance → Define Condition Contract Types).
3. Configure condition contract settlement: define the settlement parameters and add them to the contract types.

Delivered Condition Contract Types

Pricing Procedures and Condition Types

SAP delivers pricing procedures for settlement: A10005 (Rebate), A10006 (Rebate Delta Accrual), A10007 (Rebate, goods-related), and A10008 (Rebates Manual). SAP Note 2535889 describes the delivered configuration. The key condition types are:

Settlement pricing procedures contain as few condition types as possible to keep run times short. In the contract you can select the calculation rule and the scale base indicator at condition record level, independent of the condition type's defaults, which further reduces the number of condition types needed.

Business Volume Determination

Settlement is usually not done per document item but on cumulative key figures, the business volume, determined from the transactional data:

• The field selection and field combinations used for business volume determination can be defined without restriction, with inclusive and exclusive criteria.
• The source of the business volume is defined in Customizing: purchase orders, deliveries, billing documents, point-of-sale data, or agreed fixed budgets.
• The key figures can be quantity, monetary sales, weight, volume, or points (the business volume base).
• Business volume determination is independent of the condition record.

In the order-to-cash process, the basic scenarios are rebates based on billing documents, rebates based on cash sale data, and rebates based on agreed budgets. Rebate amounts can be distributed to eligible partners, such as plants or customers, according to their share of the business volume, down to the level at which the business volume is stored (for example, plant, cost center, or material).

Accruals

Legal requirements demand accruals for customer settlement processes. Accrual conditions are defined independently of settlement conditions: they support different calculation types, can be determined in the source documents, are cleared in the settlement run, and are not affected by changes to settlement conditions. If accruals are not posted with the billing documents, the delta accruals settlement determines the pending accruals periodically and posts them to FI, taking existing accruals into account, so billing documents never need to be re-evaluated.

The Settlement Calendar and Settlement Types

Settlement dates are defined in a settlement calendar in the contract, each with a settlement type; dates can be derived automatically from calendars, and the execution date can be set per date.

Worked Example from the Course

A condition contract is valid from October to December, with a scaled rebate (2% from 5,000 USD of business volume, 4% from a higher level) and monthly partial settlements.

The final settlement calculates the rebate on the whole period and deducts what was already paid: 4% of 27,000 USD is 1,080 USD, minus the 140 USD from November, leaves 940 USD. Accruals are updated with each run. The document flow of the contract shows all delta accruals, partial, and final settlement documents.

Reporting

Predefined reports for condition contracts are built on CDS views and IDA ALV, support customer-specific fields and flexible selections, and are optimized for SAP HANA.