Introducing Condition Contract Management

Condition Contract Management provides a central, standardized solution for the administration of supplier and customer conditions. You can work with conditions that accompany an invoice (such as prices, quantity and value conditions) and with conditions that require subsequent settlement. The latter differ from conditions that are valid with immediate effect in that they are agreed on during logistics processes, but are settled at a later date. They are relevant during processes such as procure-to-pay or order-to-cash.

You can use Condition Contract Management (CCM) to create and settle all types of conditions for the relevant contract partners (suppliers or customers). These conditions are not settled directly with the actual invoice, but are settled at a later date. In addition to the condition data, settlement dates, data used to determine the business volume as a basis for the settlement amount, and the scope of validity are entered in the condition contract for these conditions.

You can post accruals for conditions requiring subsequent settlement. Accruals can be created when you post source documents, like SD billing documents, or you can post them in a delta accruals settlement run.

Condition contracts can be settled automatically or manually. A distinction is made between a situation where settlement documents are to be sent to a business partner, and a situation where a partner's settlement document has to be used as the basis for settlement.

Condition Contract Management supports automated processes, such as those for condition contract extensions or for copying documents as well as corrections to accruals, following changes to conditions. You can also enter and settle contracts with a validity date in the past. This means that a condition contract does not necessarily have to be entered before the documents making up the business volume are posted.

The configuration of Condition Contract Management comprises three main steps:

1. Configure Pricing including Condition Contract Conditions:

   In this step, you define pricing conditions that are relevant for the calculation of the settlement amount during the condition contract settlement.

   In particular, you make specific settings for the so-called condition contract conditions which you enter in the condition contract maintenance in the Conditions screen area. Contract conditions usually comprise the rebate and accrual conditions.

2. Configure Condition Contract Maintenance:

   In this step, you first define and configure parameters for condition contract types and then the condition contract types themselves.

3. Configure Condition Contract Settlement:

   In this step, you first define and configure parameters for condition contract settlement. Then you enhance existing condition contract types with these parameters.

The standard configuration comprises settings for the basic sales rebate scenario and settings for several variations of this basic scenario. The basic scenario concerns the sales rebate agreement with one customer. The settlement documents that you create in the different settlement runs (partial and final settlement, delta accruals settlement) are directly transferred to Financial Accounting. This basic scenario is related to condition contract type 0S01 Sales Rebate.

As variations, the standard delivery also contains settings for contracts valid for several customers (for example, condition contract 0S02 Sales Rebate - Multiple Customers) and the collection of settlement documents before the transfer to Financial Accounting is posted.

Another variation concerns how taxes for the rebate amount are determined for which there are two options. The first option is to regard sales rebate agreements as a kind of service for the customer. Under this perspective, you apply the usual value added tax for services.

The second option is to regard subsequent sales rebates as normal revenue reductions. Then you must apply the tax valid for the sales of a material (goods-related taxation). In the standard delivery, there are four scenarios with a taxation as service (condition contract types 0S01 to 0S04) and four scenarios with good related taxation (condition contract types 0SG1 to 0SG4).

In addition, special settings have been made for the integration of Condition Contract Management with Trade Promotion Management (TPM). There are four condition contract types, 0ST1 to 0ST4, which conform with the condition contact types 0S01 and 0S02 for the taxation as a service. The standard delivery does not contain settings for the TPM integration for goods-related taxation, as they can simply be derived from the settings for 0SG1 and 0SG2.

The configuration settings of the different scenarios are almost identical. The following sequence of sub-topics reflects the logical sequence for maintaining the settings for Condition Contract Management and Settlement.

You find the relevant customizing settings in Customizing:

IMG: Logistics - General → Settlement Management → Condition Contract Management → Condition Contract Maintenance → Define Condition Contract Types.

Complex data formatting is no longer necessary and the contracts can be settled as soon as they have been released. As a rule, aggregates are created in specific database fields when the business volume is determined, and simple calculations may be carried out. Calculations belonging to the "aggregation" category can be delegated to the SAP HANA database to ensure optimum system performance with the maximum of flexibility.

The condition contract settlement is designed to optimize run times, which means that as few condition types as possible are used in the pricing procedures for settlement. The number of accesses is also kept to a minimum. When you create a condition contract, you can select both the calculation rule and the scale base indicator at condition record level, regardless of the settings and default values for the underlying condition types in Customizing. This also automatically reduces the number of conditions required in the pricing procedure and the access sequence.

You can use different condition types to define the amount of the accrual conditions and of the contractually agreed conditions. You can adjust the layout of the conditions to meet your company's needs. Accrual conditions can be maintained regardless of the legally binding external requirements.

Ideally, all the accrual-relevant aspects can be mapped by a single condition or by a small number of conditions in the calculation schema. Compared to the traditional rebate settlement, the number of condition types in the calculation schema is reduced and, as a result, the computational effort required to determine and calculate conditions is minimal.

The configuration of pricing in Condition Contract Management comprises two areas:

• Configure settings for pricing used in settlement documents as part of condition contract settlement

• Configure specific settings for condition contract conditions

IMG: Logistics - General → Settlement Management → Condition Contract Management.

Within the standard delivery, SAP suggests its own pricing procedures for the condition contract management.

Pricing procedures A10005 Rebate (Germany), A10006 Rebate Delta Accrual (Germany), A10007 Rebate (Goods Rel.) (Germany), and A10008 Rebates Manual (Germany).

According to this goal, pricing procedures A10005, A10006, and A10007 contain both the conditions for non-TPM sales rebate scenarios and TPM-related sales rebate scenarios.

However, in a non-TPM sales rebate scenario, you can simply ignore the TPM-related condition types and vice versa. As an example, the simplified A10005 pricing procedure is shown at the end of these explanations.

Pricing setting:

IMG: Logistics - General → Settlement Management → Basic Settings → Pricing → Sales (SD) → Define Pricing Procedures.

You can find the pricing procedure A10005 as well in SD customizing:

Sales and Distribution → Basic Functions → Pricing → Pricing Control → Define And Assign Pricing Procedures.

For more information, see SAP Note 2535889 Condition Contract Management - Sales Rebate Processing. It is a description of the delivered configuration.

RES1 Rebate and REA1 Rebate Accruals are the condition types for which you maintain data records in the condition contract maintenance.

Condition type RES1 Rebate:

You use this condition type RES1 in a condition contract to maintain rebate conditions in the sales rebate scenarios. This condition type uses the delivered access sequence RE01 Sales Rebate. It is set up as a discount, however you are going to create a credit memo with it, so you have to set the field Plus/Minus as positive.

Within the pricing procedure A10005 it contains the Base formula 214 in column Alt.Cond.Base Value controls that in case of a fix amount rebate condition the condition base value is positive (see formula documentation). The account for the FI posting is determined using account key 0S1. The calculated value is stored in subtotal 1.

Condition type REA1 Rebate Accruals:

You use this condition type REA1 in a condition contract to maintain accruals conditions in the sales rebate scenarios. Therefore, note that the Accruals indicator is selected in the Control Data 2 group box. This condition type uses the delivered access sequence REA1. This condition type is identical to the condition type for which you maintain records in the condition contract. It contains the amount of the accruals reversal. The system determines this amount in the settlement run and transfers it to the pricing procedure.

Condition type RED1:

You use condition type RED1 in a settlement run to determine the accruals amount for delta accruals (pricing procedure A10006). It is not an accruals condition type itself—the Accruals indicator in the Control Data 2 group box is not selected—but it uses the accruals condition type REA1 as reference. Such a condition type is required in the pricing procedure as accruals conditions are not considered in the net amount determination. The net amount is used for the accruals update.

RES1 Rebate and REA1 Rebate Accruals are the condition types for which you maintain data records in the condition contract maintenance.