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Analyzing the Process from Consumption Items to Customer Invoice

Objectives

After completing this lesson, you will be able to:

Define Convergent Invoicing and its functions.
Analyze the subscription contract process.
Process and store usage-based items.
Aggregate and Enrich Consumption Items in Deferred Rating Scenario.
Rerate consumption items and determine invoice process steps.

Convergent Invoicing and its Functions

Business Example

A person operating a control panel in a broadcast control room with multiple monitors displaying various scenes and technical information.

CutAbove uses the three services - CPU, RAM, and Bandwidth for their cloud selection service. The consumptions are stored in SAP Convergent Invoicing and triggered to be rated in SAP Convergent Charging. For the first invoice, a recurring fee together with the usage of the service is created in SAP Convergent Invoicing. Let’s see how it is done.

A persona of Karen with shoulder-length dark hair wearing a white turtleneck and an orange cardigan.

Recurring fees for the billing plans for CutAbove's new provider contract are managed by Karen, theO2C Company's billing specialist. Later, she runs a rating for consumption items from the cloud storage usage. All billable items from consumption and recurring are consolidated into one invoice for CutAbove. It’s important to understand SAP Convergent Invoicing capabilities before going into the details on how Karen manages the recurring fees.

SAP Convergent Invoicing Overview

Two people sit at a table with a laptop and documents, discussing paperwork. On the table are some plants and a tablet. The room is bright with natural light from a window in the background.

As you explore new markets and new digital business models, regardless of industry, being able to accurately invoice your end customers, while compensating your partners in creative and sometimes complex revenue sharing agreements, is critical. Both customers and partners are asking for the same invoicing capabilities: Accuracy, personalization, comprehension, flexibility, and availability at every touchpoint. Customers want to easily check their invoices and to monitor their consumption in real-time, on any device.

When they subscribe to multiple services, they want to consolidate them into a single (= convergent) invoice overview, including discounts, taxes, and other billing variations as itemized details, for example.

SAP BRIM offers a flexible solution for automating the billing and invoicing process. Consolidate service pricing from multiple sources to produce easily understandable invoices and discounts that drive loyalty, enhance cash flow, and increase customer engagement. The invoicing component of SAP BRIM pulls rated events, or even complete bills, from several upstream, multivendor rating or billing streams, and then consolidates the information into a single converged invoicing document.

The resulting document can then be enriched with flexible discounts, multiple aggregations, different levels of detail, and notifications about prior payment activity or late payments.

SAP Convergent Invoice Functions

Bill and Settle process flow: Consumption Item Management & CI Triggered Rating, Billable Item Management & Billing, Invoicing, Partner Settlement, Master Agreements & Complex Discounting.

Consumption Item Management & Consumption Item Triggered Rating

The Consumption Item Management & Consumption Item triggered Rating in SAP Convergent Invoicing functions includes a flexible master data model for Business Partner, Contract Account, and Provider Contract. This system also allows for preaggregation of consumptions before rating. Also, the process includes SAP Convergent Invoicing triggered Rating.

Billable Item Management & Billing

In relation to SAP Convergent Invoicing functions, billable item management and billing involves the storage and enrichment of billable items. This process also includes account determination, ensuring that the correct accounts are associated with each billable item. Billing in a mass process allows for the efficient processing of a large volume of billable items at once. Also, linking between consumption and billable items enables the tracking and management of the relationship between the two, ensuring accurate billing.

Invoicing

Invoicing in SAP Convergent Invoicing includes the functionality of Invoice level: Itemized Bill, allowing for a detailed breakdown of charges. The Document Flow feature enables tracking of G/L postings all the way down to the single Event Document Flow, providing transparency and traceability. Also, the platform offers seamless Technical Integration with FI-CA with Invoice functions, streamlining the invoicing process and ensuring accuracy in financial transactions.

Partner Settlement

Under Partner Settlement, SAP Convergent Invoicing functions include Partner Agreements, which involve the rating of customer consumption in accordance with these agreements. Also, there is also a Partner Settlement Rule that helps to control revenue between the customer and the partner, ensuring fair and accurate settlements.

Master Agreements & Complex Discounting

Under the Master Agreements & Complex Discounting category, in relation to SAP Convergent Invoicing functions, there are specific features related to Invoice Agreements. Master Agreements are also included in this category, with their own set of capabilities and functions within SAP Convergent Invoicing.

Furthermore, this category encompasses the Complex Discounting functionality, which offers various options for managing and implementing discounts within the system.

Analyze Provider Contract and Billing Plan, and Request Billing Plan Items

Business Scenario

Customer BP## already has another provider contract in the system. The monthly recurring fee for the Cloud Selection Service is EUR1,000. Also, the Service Level Agreement Gold has a monthly fee of EUR3,000. The subscription contract was distributed to SAP Convergent Invoicing and a provider contract was created in SAP Convergent Invoicing.

The billing plan is assigned to the provider contract Item in SAP Convergent Invoicing.

Find the assigned billing plan, analyze the billing plan, and request billable items for February 2021 to create a first invoice for the customer.

For this exercise, you use the provider contract that is already created in the system and assigned to the user.

Starting the Exercise

To start the exercise choose the Start Exercise button below.

A pop-up opens.

On this pop-up you have two options:

Demo: the simulation shows the steps of this exercise. No activity from your side is required.
Practice: you must enter values, whenever requested.

Make your choice.

ExerciseStart Exercise

The Subscription Contract Process

Flowchart of the SAP billing process, starting from Subscription & Contract Management to Rating & Charging, and ending with Billing & Invoicing. Shows processes, fees, contracts, ratings and documents generated.

Note

The following numbered list relates to the preceding subscription contract graphic.

A subscription contract can contain items that have to be billed one-time, on a regular basis like monthly, or based on usage.
One-time fees are created immediately out of the solution quotation.
Recurring fees are created based on predefined billing plans.
The billing plan is defined in SAP Convergent Invoicing and assigned to the provider and subscription contract. The billing plan items include the price, billing cycle, and accounting information.
The third fee type is usage fees. Usage fees are created based on usage events when the customer is using the service. Usage fees are created in SAP Convergent Charging.
For all types of fees (one-time, recurring, and usage) billable items (BITs) are created and stored in SAP Convergent Invoicing for billing and invoicing.
BITs are aggregated in billing documents during the billing process and then included in the invoicing document during the invoicing process.

Processing and Storing of Usage-Based Items

Let's have a deeper look on the processing and storing of usage-based items.

Business examples of usage data are like in our business example of the usage of CPU, RAM, and Bandwidth for the storing of data in the cloud.

In the telecommunications industry, it is the call and data records when using the phones. In the postal industry, it is the sending of parcel and mailing. In the tolling industry, it is the usage of highways by the different vehicles. Another example is the consumption of electricity in the utility industry.

Usage data are collected from the network or other source systems and can be passed as raw data to be staged before their movement into billable status as consumption items.

To rate and bill them during the follow-up process, rating, charging, billing, and invoicing data must be stored with different fields that describe the usage volume. For CPU usage, the consumption is recorded in the number of CPUs and hours. For bandwidth usage, it is recorded in Gigabytes. In the parcel industry, the relevant sizes are length, width, and weight. In the telecommunications industry, the start time and end time must be stored in the consumption and the calculated duration.

After rating and charging, consumption items are converted into billable items for billing and invoicing.

Consumption Item

The consumption item is created when a customer consumes a service and contains source information about this service. From SAP Convergent Invoicing, unrated consumption items can be subjected to rating, and the system accesses rated items during rerating to rate the source information again.

Also, a consumption item is a charged event transaction record received by SAP Convergent Invoicing from a source system. Often, with these transactions originate in technical systems such as Mediation engines based on the customer active use of a service. Finally, rated consumption items lead to the creation of billable items.

Consumption Items Use Cases

In SAP Convergent Invoicing, we have the option to store billable items and consumption items.

The storage of billable items is the starting point in SAP Convergent Invoicing, while the decision to store consumption items in SAP Convergent Invoicing is a solution architecture decision depending on the use cases. Business cases for data storage of consumption items include:

Support Scaled Price Models

Scaled price models, also known as tiered pricing or volume-based pricing, are a strategic approach to setting prices based on the levels of use or consumption. For example, collecting all bandwidth consumption for one month, calculate the sum of minutes to find the suitable tariff. RAM Usage monthly volume is summarized at the end of the month to determine the scaled price.

Allow Aggregation of Consumption Items Before Rating

The preaggregation of CITs streamlines the billing process, makes handling large data volumes more manageable, improves efficiency, and helps maintain data integrity. It is a critical step in ensuring accurate, timely, and scalable billing operations in many industries. For example, RAM Usage Consumption Items are aggregated per day before Rating.

Support Partner Rating

Partner Rating is a concept commonly used in complex billing and revenue-sharing environments, such as telecommunications, utilities, and media industries, where multiple partners or entities are involved in providing a service or product. Creation and storage of partner consumption items out of billable items is the input for partner rating. For example, if an IT Department uses software integrated into Cloud Service, the O2C Company, as a Cloud service provider, has to share the licensefFee for the software with the intellectual property owner of the software.

Support Partner Rerating

Rerating is a specialized process in billing and revenue management that involves recalculating the charges for previously rated consumption items (CITs). This process is often necessary when there are changes to pricing rules, errors in the initial rating, updates to customer plans, or regulatory changes that retroactively affect billing.

Aggregation and Enrichment of Consumption Items in Deferred Rating Scenario

Flowchart showing the SAP S/4HANA Convergent Invoicing process, including mediation, charging, rating, and billing management steps. Key components: UDR, CIT, BIT, and billing progression.

Acquisition Process

Enrichment of incoming technical data with business data, such as:

Business Partner
Contract Account
Provider Contract

Upstream systems only deliver some technical information, such as installation or device number, which must be matched to Customer Master Data.

Enrichment of Consumption Items

Enrichment of Consumption Items enables:

Scaling of prices
Items can be enriched with the overall quantity of a consumed service
Prices depend on special market maker agreements, such as football goals
Enrichment of items with non-price-relevant information
New pricing models can be created

Aggregation of Consumption Items

Aggregation of consumption items reduces:

Database usage in Convergent Invoicing
Network traffic between rating systems and invoicing modules
Load on rating transactions
Less billable items mean less technical resources and costs

SAP Convergent Invoicing Triggered Rating

Rating requests can be triggered from Convergent Charging. By integrating and triggering rating directly from SAP Convergent Invoicing, organizations can use enhanced operational efficiencies, greater accuracy, and improved customer satisfaction. This approach ensures that all processes—data collection, validation, rating, and invoicing—are tightly coupled, providing a cohesive and streamlined billing ecosystem.

Rating

The rating process involves calculating the charges for the usage of services or products based on predefined pricing rules, tariffs, or contracts. The process ensures that each consumption item (CIT) or event is correctly charged, forming the basis for generating accurate invoices and revenue reports.

As a result of this rating, billable items are created that process billing further. The consumption items are then transferred from Rateable status to Rated.

Execute the Rating Process for CPU and Bandwidth Usage

Business Scenario

You are a rating expert in your company, and you have implemented the new tariff model for the new Cloud Selection Service. To check if the designed price models are working correctly, you perform rating checks for the first provider contract.

For your provider contract starting at 01.02.2021 (the same provider contract as you used in exercise 7), assigned usage for CPU and Bandwidth was already uploaded to SAP Convergent Invoicing consumption item management.

CPU Usage is rated daily while Bandwidth usage is rated once at the end of the month, because of the price model that needs a calculation of the total usage quantity before Rating.

Rating is triggered by SAP Convergent Invoicing with two different rating groups for both usages. Rating is done in SAP Convergent Charging and billable items are sent to SAP Convergent Invoicing for Billing and Invoicing.

To check if the process is working as planned, you do it before you schedule mass runs for the next month.

Price Model for Cloud Service Product BSU_CLOUD_SEL_SERV Cloud Selection Service, Service Level Agreement Gold:

For the CPU and Bandwidth usage the following price and free units are defined:

Item	Price
Counter for free CPU:	10.000
Price for additional Usage:	0.035 EUR/CPU hours
Counter for Free Bandwidth usage:	1.200
Price for additional usage:	EUR4

For the Bandwidth usage, aggregation rules have been defined to aggregate the usage based on the consumption date (Baseline Date). The nine Consumption Items will be aggregated after rating into three Billable Items based on the Consumption Dates: 02/03/2021, 02/04/2021, and 02/05/2021.

Cons Item ID	Consumption Item Class	Business Partner	Consumption Date
3001	HT BANDWIDTH Usage	BP##	02/03/2021
3002	HT BANDWIDTH Usage	BP##	02/03/2021
3003	HT BANDWIDTH Usage	BP##	02/03/2021
3004	HT BANDWIDTH Usage	BP##	02/04/2021
3005	HT BANDWIDTH Usage	BP##	02/04/2021
3006	HT BANDWIDTH Usage	BP##	02/04/2021
3007	HT BANDWIDTH Usage	BP##	02/05/2021
3008	HT BANDWIDTH Usage	BP##	02/05/2021
3009	HT BANDWIDTH Usage	BP##	02/05/2021

Note

The value in the date cell is given in the format: mm/dd/yyyy. Use the correct format, depending to our settings in your system.

Starting the Exercise

To start the exercise choose the Start Exercise button below.

A pop-up opens.

On this pop-up you have two options:

Demo: the simulation shows the steps of this exercise. No activity from your side is required.
Practice: you must enter values, whenever requested.

Make your choice.

ExerciseStart Exercise

Rerating Consumption Items

Diagram showing the process of SAP S/4HANA Convergent Invoicing, including steps of Mediation, Rating & Charging, CIT & BIT Management, and Billing, with detailed interactions among UDR, CIT, and BIT.

Rerating is often necessary when there are changes to pricing rules, errors in the initial rating, updates to customer plans, or regulatory changes that retroactively affect billing. Rerating ensures that billing remains accurate, fair, and compliant with current policies and agreements.

The Rerating process includes:

Identification of Affected Data
Identify the CITs that must be rerated based on the triggering event (for example, pricing change, error). It could be a pricing error, a new contract, promotional activity, or regulatory requirements. Determine the scope of rerating, including the specific time period, customer segments, or types of usage affected.
Data Extraction
- Extract the relevant usage data and initial rating results for the affected period.
- Restore Counter and reset the activation date of Recurring Charges.
Configuration of New Rating Rules
Configure the new rating rules, tariffs, or pricing models that are applied during rerating.
Rerating Execution
- Apply the new rating rules to the extracted data.
- Recalculate the charges based on the new rules and compare them against the original charges.
Update Billing Records
Update the billing system with the new charges. Generate adjustment entries to reflect the differences between the initial and rerated amounts. Original billing documents and billable items are going to be reversed.

Rating, Billing, and Invoicing Process Overview

Flowchart showing the process from Rating (CIT), Billing (BIT), Invoicing (Billing Document, Invoice Document), to Contract Accounting (FI-CA Document). Steps include selection, grouping, aggregation.

The billing process is a preaggregation of billable Items before Invoicing in order to reduce the volume in invoicing processing. The billing process can be run immediately after billable item upload, if all billable items of the same billable item type are available for billing.

Steps in the Billing Process

Data Selection of billable items.
Grouping into billing units.
Aggregation of billable items.
Updating of database tables: billable items are moved into table-billed items.

Invoice Creation

Invoice Generation: Generate invoices based on the aggregated and rated data, including detailed charges, discounts, taxes, and surcharges.
Invoice Format: Customize invoice formats to meet customer preferences and regulatory requirements, including layout, language, and currency.
Invoice Items: List all relevant billing items, usage details, subscriptions, and ad-hoc charges clearly on the invoice.

Convergent Invoicing Integration to Financial Contract Accounting delivers fully traceability with transparent document flow from G/L postings down to the single consumption item.

Creation of itemized bills is easily possible in industry-specific needs. Now, we go into more detail on the invoicing process steps.

Invoicing Process Steps

Flowchart showing the billing process from Billing and SD Billing to Invoicing and Contract Accounting. It includes invoicing functions, calculations, and generation of FI-CA Documents for charges and open items.

SAP Convergent Invoicing creates invoices with the following process steps:

Data Selection
Including structured billing information from billing documents for one or more services (such as Telco, data) that were generated in SAP Convergent Invoicing. Structured billing information from SD invoice documents is included. And additional information from contract accounts receivable and payable (FI-CA), such as a dunning charge that was posted, or late payment charges, credits, or interest.
Lastly, historical items (such as open items from previous invoices, payments made since the last invoice run) from contract accounts receivable and payable. Executing various invoicing functions, such as controlling the invoice amount limit as a function of clarification are included. SAP Convergent Invoicing then groups invoicing process inputs into different Invoicing units.
Applying Invoice Functions
Executing various invoicing functions, such as controlling the invoice amount limit as a function of clarification.
Printing
Use invoice documents as a base for the printing of invoices and creating print documents.
Accounting
Creation of posting documents in FI-CA. These documents can also be processed by invoicing as part of clearing control, for example, clearing payments on an account with receivables from invoicing.

Execute the Billing Process for February

Business Scenario

You are an invoicing expert in your company. It is your responsibility to check if the billable items for the provider contract and the Cloud Selection Service product are complete for billing and invoicing run at the end of February.

Check the following aspects before billing:

Are the one-time charges from SOM available?
Are the monthly subscription fees for Cloud Selection Service available?
Are Usages CPU and Bandwidth available?

Starting the Exercise

To start the exercise choose the Start Exercise button below.

A pop-up opens.

On this pop-up you have two options:

Demo: the simulation shows the steps of this exercise. No activity from your side is required.
Practice: you must enter values, whenever requested.

Make your choice.

ExerciseStart Exercise

Execute the Invoicing Process

Business Scenario

You are an invoicing expert in your company. It is your responsibility to check whether the first invoice for the new provider contract and the new Cloud Selection Service product are complete for the invoicing run at the end of February.

Check the following aspects during invoicing:

Are the one-time fees included in the first invoice?
Is the tax calculated?

Note

Dependency Information:

To successfully execute this exercise, you need an invoice that is overdue. The invoice in the Analyze Provider Contract and Billing Plan, and Request Billing Plan Items, Execute the Rating Process for CPU and Bandwidth Usage, Execute the Billing Process for February, and Execute the Invoicing Process exercises was created with the invoiced date 02/28/2021. The open items are due to 03/05/2021.

Starting the Exercise

To start the exercise choose the Start Exercise button below.

A pop-up opens.

On this pop-up you have two options:

Demo: the simulation shows the steps of this exercise. No activity from your side is required.
Practice: you must enter values, whenever requested.

Make your choice.

ExerciseStart Exercise

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