Settling Freight Charges

An FSD contains the following information:

• General data: Document type, the purchasing organization, payment terms, document currency, and so on.
• Business partner information: Invoicing party, payee, additional business partners, which can be entered manually or automatically determined by the system.
• Orders: The business documents or the business document items that are being settled using the FSD.
• Charges: For each FSD item, the Charges tab page has the charges relevant for settlement with the carrier.

The FSD can be created in the following ways:

• You can create an individual FSD for one freight order, or freight booking, or a collective FSD for multiple freight orders, or freight bookings. To do this access freight orders, or freight bookings from the worklist, in the relevant document overview, or in the freight settlement overview. The system automatically creates the FSD based on the data in the freight orders, or freight bookings and calculates the transportation charges.
• You can create FSDs directly out of the freight booking or freight order apps.
• You can create multiple freight settlement documents using the mass creation of FSD report.

When the FSD creation is triggered for a freight booking/freight order (FB/FO), the corresponding document type is used to determine the FSD type used.

The purchasing organization specified in the FB/FO is used to determine the settlement profile. All of this information is then used to create FSDs for the selected FO/FB.

As you can see in the figure, Supplier Freight Processing - Process Flow, the typical freight settlement process flow is as follows:

Based on a delivery, the planner carries out several planning steps and creates a freight order or a freight booking to subcontract to a carrier.

On settlement, the system creates a Freight Settlement Document (FSD). This document contains all relevant logistical data, charges, and other commercial data. The charges can be copied from the freight order or booking (most commonly), or another charge calculation can be triggered based on the freight agreement between the purchasing organization and the carrier. It is possible to change charges in the FSD manually. FSDs can be created online or in batch. It is possible to do a collective settlement (several freight orders or bookings are settled with one FSD). The FSD can then be posted to MM.

A purchase order and a service entry sheet are created in MM. This constitutes the worklist for invoice verification. You also have the option of self-billing.

You can add charges to an invoiced FO, but removing them is impossible. In the latter case, a credit memo must be created based on the FSD.

Each service entry sheet is based on an external service order. Determining a valid purchase order is required for transfers to Financial Accounting and for settlements. Important criteria for the service order include carrier, purchasing organization, purchasing group, plant, and item category.

When the system has automatically determined a valid purchase order, a service entry sheet is created that refers to the purchase order. During posting, you accept services and, in Financial Accounting, an accounting document for generating accruals is created.

During account assignment, the system determines the correct G/L account in Financial Accounting for each cost item and the assignment for Controlling. Account assignment can be carried out at different levels, depending on the level of detail at which you want to track costs.

The transfer to Financial Accounting to establish accruals requires entering and accepting the services rendered. The system automatically creates a service entry sheet. Using the credit memo procedure, also referred to as the evaluated receipt settlement (ERS) procedure, you can settle the freight costs with the carrier without having received invoices. You can choose from different settlement periods. You transfer the calculated freight costs to Financial Accounting. The carrier verifies the invoices. In case the carrier discovers variances, you can post these variances as subsequent debits or credits.

If you receive invoices from the carrier, you can verify them manually and create them manually. Invoice verification can be done with reference to the freight order, carrier, bill-of-lading, air waybill, flight number, and voyage number.

Watch the simulation Create and Post a Freight Settlement Document and Verify the Invoice to learn how to create and post a freight settlement document and verify a freight invoice.

As a requester of transportation services, such as a shipper, you can have one of the following freight settlement processes in place with a provider of transportation services, such as a carrier:

• Self-billing:

  Your service provider does not submit an invoice. Instead, you settle automatically based on the information in your freight order. Self-billing is also called evaluated receipt settlement (ERS).

• Submission of an invoice by the service provider:

  You pay the service provider the amount contained in the invoice.

In both processes, there can be differences and potential disputes between what you expect to pay and what the service provider expects to be paid. To keep good business relationships, you must work closely with your service provider to resolve these differences collaboratively. It would be best to clarify the differences and agree with the service provider on resolving them.

In TM, you can use the invoice submission settlement process with enterprise services. You are a shipper who requests transportation services from your service provider. You can enable your service provider to use enterprise services to submit invoices for the freight orders the service provider executes. The service provider creates an invoice document in their external system and uses enterprise services to send you the invoice. You use the external invoice to create a carrier invoice in TM.

Your service provider may have included additional unplanned freight costs or may have charges different from what you expect to pay in your freight order. Your TM system automatically evaluates the external invoice. It automatically creates a dispute case when your service provider submits an invoice with values different from what you expect. The system captures these differences in a dispute case. The system captures the individual differences in charges as dispute items.

On the dispute case screens, you, as a shipper, can approve or reject a dispute case. If you approve a dispute case, the system updates the freight order with information for the charge type, such as rate and quantity information. However, the system does not update logistics information, such as gross weight, gross volume, and total distance of the freight order.

When you resolve disputes early, you have the following business advantages:

• Inclusion of changes and unplanned costs in one invoice

• Accuracy in payment to the service provider

The following are the typical steps that can happen in a dispute case:

• Your service provider uses enterprise services to submit an invoice in line with the terms you have agreed with your service provider. TM creates a carrier invoice in the shipper's system. The carrier invoice captures the invoice details submitted by your service provider. TM produces a dispute case if your service provider submits an invoice with charges that differ from those in the original freight order. The system links the dispute case to the carrier invoice.

• You work closely with your service provider and either accept or reject the dispute case for the carrier invoice. When the carrier invoice is successfully posted to Materials Management (MM), the lifecycle status of the carrier invoice is set to Accepted.

  • You reject the carrier invoice when you disagree with the service provider on the carrier invoice. If the carrier invoice has an associated open dispute case, the system closes the dispute case when you reject the carrier invoice. You can add a note to the carrier invoice to record the reason for your rejection.

    The lifecycle status of the carrier invoice is set to Rejected.

  • You accept the dispute case for the carrier invoice.

    TM updates the freight order with the new or changed charges in the carrier invoice. You can use the background processing function Creation and Transfer of Freight Settlement Documents to update the new or altered charges for the freight orders to MM.

• You use the background processing function Posting of Carrier Invoices to transfer the carrier invoices ready for posting to Materials Management (MM). The system creates an incoming invoice in MM. The system posts the carrier invoices to MM for posting only when the following conditions are satisfied:

  • No dispute case exists, or the dispute case has a lifecycle status of Resolved.

  • The carrier invoice has a lifecycle status other than Rejected.

  • All the freight orders associated with the carrier invoice have the invoicing status Completely Invoiced.

  • All the freight settlement documents associated with the freight orders have the lifecycle status Accruals Posted.

  • The carrier invoice has a block status of Not Blocked.

  • The carrier invoice has a consistency status of Consistent.

There can be late changes in the freight order requiring changes to logistical data, which may result in a change in the charges (an increase or decrease). These changes can occur when the old values have already been transferred to settlement documents and/or the settlement documents have also been transferred to financials.

Business example:

Accruals are posted when the financial liability is known (for example, departure or confirmed freight pickup by the carrier). However, there can be mid-execution changes (for example, diversions (consignee changes), loss of cargo (in transit), unavailability of cargo, unplanned costs due to detention, demurrages, loading and unloading activities, tolls, and so on).

These changes may only be known after execution or during the invoicing process (when the carrier sends the invoice). The configuration of the FSD change process is done in the Settlement Profile. When an order changes and the invoicing status changes to Over Invoiced, the system automatically applies the reverse and repost strategy.