Explaining the integration between Sales Order and Receivables Management


After completing this lesson, you will be able to:

  • Understand the integration between Sales Order to Receivables

Sales Order to Receivables Integration

Michael wants to expand his knowledge and learn how the Sales Order to Cash process works in SAP S/4HANA. Where does the process start and how does Receivables Management get updated with the customer invoice? Also, where do the financial impacts take place in the process and what gets updated in financial accounting?

Press the play button to learn about the Order to Cash process in SAP S/4HANA Cloud, public edition system.

In SAP S/4HANA, the Sales Order to Cash process is facilitated using a suite of applications and automated processes. Below are the key steps involved in the Sales Order to Cash process:

  1. Quotation: Presales activities can commence with a sales quote which is an optional step.
  2. Order Creation: A sales representative or customer directly inputs the sales order (or created with reference to the quotation) into the system, triggering the automated process.
  3. Order Confirmation: The system confirms product availability, and the customer receives automatic confirmation of the order and expected delivery date. The system can perform credit checks if necessary.
  4. Production and Delivery Planning: SAP S/4HANA integrates with production planning and supply chain modules. Upon order confirmation, it auto-triggers the production planning or initiates delivery planning from warehouse stock.
  5. Shipment of Goods: Once the products are ready, the system facilitates delivery planning and execution. Delivery details along with the tracking information are updated in the system and communicated to the customer.
  6. Invoicing: After the goods are scheduled for delivery or have been delivered, the system generates an invoice, which is sent to the customer.
  7. Payment and Receivables Posting: The system records the payment when it is received and automatically updates receivables management. The order is then marked as complete.
  8. Reporting and Analysis: All data is stored and analyzed in SAP S/4HANA, providing a real-time view of your sales process. This can be used for monitoring and reporting purposes and to gain insights for improvements.

This seamless integration of sales, production, logistics, and finance modules allows for real-time tracking, efficient workflow, decreased manual input errors, and faster 'Order to Cash' cycles.

The General Ledger in Financial Accounting is kept in sync with these transactions. This ensures that financial statements like the balance sheet and income statement are accurate.

Goods issue: The goods to be delivered are posted as a goods issue in materials management (MM), and an accounting document is created to reflect the accounting entries in the General Ledger.

Billing: A billing document is created in sales order management (SD), and an invoice is sent to the customer. At the same time, a document is created in financial accounting (FI) so that the receivables and revenue can be posted to the correct accounts.

Document flow: This is a tool that allows you to view the related documents in the process.

With this app you can display the relationships between Receivables documents, including quotations, sales documents, delivery documents, billing documents, journal entries, and clearing entries.

You can display the process flow from an individual document and access the details for individual documents.

Press the play button to learn about the Sales Order to Receivables Document Flow in SAP S/4HANA Cloud, public edition system.

Sales Order Integration to Receivables

Customer invoices are not usually posted directly in accounting, but are posted to accounts receivable accounting from the sales order management component. A normal sales process consists of receiving a customer order, creating a sales order, processing an outbound delivery, and customer billing. These steps usually occur over several days, however, you will complete all the steps within this exercise.

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