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Grasping the Master Agreement Process in Convergent Invoicing

Objectives

After completing this lesson, you will be able to:

Understand Master Agreement process in Convergent Invoicing.
Understand Invoice and Invoice List Agreement.
Understand Discount agreements and discounting process.

The Master Agreement Process in Convergent Invoicing

SAP Convergent Invoicing has four main agreements that you must be aware of. They are Master Agreements, Invoice Agreements, Invoice List Agreement, and Discount Agreement. This lesson defines these agreements, going into more detail on discount agreements at the end, as it is more complex.

Master Agreement

Person pointing at a section of a document while another person signs it, with additional paperwork visible on the table.

A master agreement is a contract between a provider and another party (usually a large company) in which common terms for future contracts are defined. The common terms can cover aspects of invoice creation (layout, recipient, payer, and so on) as well as discounting (which services have a reduced price and who benefits).

The master agreement in SAP S/4HANA concentrates on the processing/billing side of provider contracts which reference a master agreement. Billable items which belong to such a provider contract have to be treated as specified and agreed upon in the master agreement. For instance, for which invoice and which discount(s) should the billable item be considered.

The reason for having a master agreement in place is for the customer to benefit from the common terms. With them, a consolidated and harmonized processing of billable items is possible. One business partner can have multiple master agreements.

The Invoice and Invoice List Agreement

Invoice Agreement

Two individuals are seated at a table with a laptop, paperwork, and a wallet. The table also has a plant and other small items. One person is holding a document while the other points to it.

With the master agreement in place, it is now possible to bring billable items of several provider contracts and different business partners on one invoice.

The processing of billable items checks whether a master agreement must be considered for the given billable items. The check is performed based on the validity area of an agreement of the master agreement. The validity area can be defined based on any field of the billable Items.

The agreements are built up out of a rules part and an area of validity part. The rules part is specific for each type of agreement. It outlines what has to be done when a billable qualifies for an agreement (for example, the rules part of an invoice agreement tells who the invoice recipient is). The area of validity specifies the conditions under which the rules are applied.

The conditions can be set up based on business partners, products, and further selections based on filters and function modules.

Invoice List Agreement

A person holds a tablet displaying various graphs and charts while another person holds a document in the background.

If invoices are sent out in a decentralized way but the headquarters want to have an overview, more invoicing lists can be used for this. They are similar to an invoice copy but can also be set up in such a way that only final amounts are displayed and not billable items. They can depend on business partners and invoice agreements.

The agreements are built up out of two parts. They include:

A rules part
An area of validity

The rules part is specific for each type of agreement. It tells what has to be done when a billable qualifies for an agreement (for example, the rules part of an invoice agreement tells who the invoice recipient is). The area of validity specifies the conditions under which the rules are applied. The conditions can be set up based on business partners, products, and further selections based on filters and function modules.

Discount Agreements and the Discounting Process

Discount Agreement

Two people are seen shaking hands in a modern office setting, signifying a professional interaction. One person is wearing a blue blazer and white shirt, while the other is clad in a red outfit.

Dependent on business partners, products, and further selections, it can be decided what kind of discounts are applied to the billable items.

For a more convenient maintenance of the agreements’ area of validity, it is possible to define business partner and product groups. By those groups the single records are bundled together and can be assigned to an agreement more easily (instead of entering each entry separately, which can become cumbersome).

The agreements are built up out of a rules part and an area of validity part. The rules part is specific for each type of agreement. It tells what must be done when a billable qualifies for an agreement (for example, the rules part of an invoice agreement tells who the invoice recipient is). The area of validity specifies the conditions under which the rules are applied. The conditions can be set up based on business partners, products, and further selections based on filters and function modules.

Alternative Business Partner

The Alternative Business Partner for Posting of Discount is the business partner, to which the credit memo for the discount from the current agreement is posted.

If no Alternative Business Partner is given, then the system credits the discount according to where it originated. The system distributes the discount mathematically to the items where it originated and proportionately to the business partners and contract accounts belonging to the items.

Discount Agreement Process Overview

A flowchart showing the discount calculation process in SAP S/4HANA FI-CA. It illustrates the steps from billing to contract accounting, including billing BITs, discount BITs, billing documents, and posting documents.

In master agreements, you can make agreements regarding discounts (discount agreements). These discount agreements specify overarching rules for calculating and distributing discounts for the individual contracts (provider contracts) that are signed regarding a master agreement.

You create discount agreements for master agreements in the ERP system and assign a discount/charge key to the discount agreement. The discount/charge key specifies the calculation rules.

You specify the level at which the calculation is made in the discount agreement by entering the calculation level. The calculation level controls how the base amounts for this discount are determined: for each contract, for each contract partner, or for all partners and contracts that participate in the discount agreement.

The system determines the discount/charge keys during billing of consumption for the individual contracts belonging to a master agreement. The following prerequisites are required:

The billable items reference provider contract items and the master agreement.
To be considered for a discount, billable items have to be within a defined validity area of the discount agreement.

If a billable item qualifies for a discount agreement, then billing applies the discount/charge key entered in the discount agreement and the billable item is processed by the filter defined for the discount/charge key.

Billing creates the base items as billable items after the determination of the discounts and charges. In addition, Discount billable items are created to calculate the discount. During this calculation, the system also applies the calculation level entered in the discount agreements and the calculation rules of the discount/charge key.

During the Discount calculation process, the system creates a discount/charge calculation document. One document is created for each discount agreement. This document is intended solely to document the calculation of the discount or charge, and it references the discount log. The system does not create an invoicing order. The billing document is designated as a technical document and is blocked to invoicing. During the creation of the discount calculation document, the system distributes discounts (and charges) to those who are to receive them. Base items are created that are considered when the recipient is billed.

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