Settling Freight Charges and Distributing Freight Costs

Using the Monitor Accrual Postings - Freight Documents app, you can monitor your freight orders and freight bookings to post accruals. You can confirm a freight order / booking for accruals posting. The confirmation confirms that the charges for a freight document are a correct reflection of the planned costs to be paid to the carrier. In a second step you post the transportation costs to Financial Accounting.

The system sets the posting status to Posted when the posting is successful or to Posting Failed if it encounters errors during posting. In the Errors view, you can show the list of freight documents that have a posting status of Posting Failed. In the Posted view, you can see the list of freight documents that have a posting status of Posted.

The Monitor Accrual Postings - Freight Documents app allows you to perform the following tasks:

• Confirm transportation costs for posting to financial accounting for accruals

• View freight documents that are successfully posted to financial accounting

• Cancel postings for freight documents that are successfully posted to financial accounting

• Monitor freight documents that have errors when you post them to financial accounting

• Display the errors that the system encountered when it posted your freight documents

• Post or cancel posting for freight documents for which the system encountered errors during posting

In a freight order or freight booking, charge calculation results are stored in a hierarchical table on the Charges tab. The charge items and charge lines in the hierarchical table correspond to the level at which the system determines the freight agreement and calculation sheets. The system specifies various attributes corresponding to the charge lines and thereby allows you to analyze which and how charges have been calculated.

In the posting process the system creates a service purchase order (PO) and service entry sheet (SES) in MM for carrier settlement and at the same time the system also posts the freight cost to material valuation for an inbound process or expense for an outbound process.

If you receive invoices with unplanned costs associated with freight orders, you can capture the same in the invoice document for the business user to be able to review the invoice and be able to do the further processing associated with the invoice (i.e. review the unplanned costs in the invoice, approve or reject the invoice or perform invoice reduction and post the invoice to financial). However, you cannot change or delete an existing invoiced charge.

You can add an independent freight charge for a freight document and carrier or service provider combination, even after you have verified the existing charges in an invoice. You can subsequently confirm the newly-added freight charge for posting accruals. However, you cannot change or delete an existing invoiced charge. Also, you cannot include a dependent charge for a charge that is already invoice verified.

Watch the simulation Settle Freight Order to learn more about the system-related activities.

For the carrier settlement, the invoice received from the carrier is finally verified against the costs calculated in the freight document, or for the carriers, that agreed to the automated invoice settlement - you can use the Evaluated Receipt Settlement (ERS) scenario. A credit memo can be issued for the carrier in this scenario:

• Invoice verification:

  As soon as the carrier invoice is received, the accounts payable accountant can post it with reference to the freight order. The expected transportation costs calculated in the freight order are compared with the amounts of the carrier invoice. Blocked invoices (due to discrepancies) can be released by the purchase manager using a workflow.

  In the invoice verification process, the verification is done against the following references:

  • Reference document category: Freight Order
  • Freight order: <Freight Order Number>

  Another option to locate the freight order is to use the search help and enter the carrier.

  When the carrier invoice is created, the posting status in the freight order changes from Posted to Invoice Verified.

• Evaluated receipt settlement (ERS):

  For carriers that have agreed to the automated invoice settlement, the ERS scenario is used where a credit memo is issued.

The Accounts Payable Accountant (Freight Cost) can post an invoice for a freight document and carrier or logistics service provider combination at the level of a charge element. They can review the amounts and quantities associated with a freight charge element during invoice processing. When they post an invoice for any charge, the system changes the posting status of the freight charge to Invoice Verified. For a price variance, the system automatically distributes the price difference at the level of logistics document and delivery item in the freight document. The system creates a freight cost allocation document for a price variance in a freight invoice. It then automatically posts the price difference to an expense or material account depending on the business scenario. You will automatically get a price variance when you enter an unplanned freight cost for an invoice. This price variance is managed similar to price variances of planned costs. Note, that the system doesn’t update the freight document with the unplanned freight charge.

In the area of freight settlement there are two configuration activities:

1. Assign MM integration settings to charge types

   In this configuration step, you assign a valuation class, an account assignment category, and a condition type to a charge type. The system uses this assignment when it creates a service product from a charge type. The valuation class helps in the account determination process when you post freight cost accruals.

2. Assign default plant for company code

   In this configuration step, you specify a default plant for a company code. When you post a transportation cost, the system creates a service purchase order and a service entry sheet to pass the cost to Financials. When you have a freight order that combines deliveries out of multiple plants belonging to the same company code, the system requires the default plant information to create the service purchase order item.

Transportation Management (TM) in SAP S/4HANA Cloud Public Edition supports transportation planning, execution and its financial settlement. Typically, freight to several customers is consolidated in a freight order. This leads to the question of how to allocate the freight costs invoiced by the carrier for the freight order to the delivery items that have been transported with the freight order.

In an outbound process thereafter, only the relevant part of the freight cost needs to be billed to the customer for each of his or her delivery items. For this purpose, you need to break down the aggregated freight cost of the freight order to the level of a delivery item. The system posts the costs to a material valuation in an inbound process, and to an expense account (general ledger) in an outbound process.

Costs can be distributed in a freight order when the following criteria are met:

• Freight units in a freight order originate from an order or a delivery

• Charges are calculated with no calculation errors

After confirmation of the freight order or freight booking for accruals posting, a service purchase order and a service entry sheet is created automatically in a background process. These documents are the basis for the invoice verification. Additionally, freight cost allocation documents are created as follows depending on whether the underlying base process is an inbound or outbound process:

• Freight Cost Allocation (Expense)

  in all the legal ledgers for outbound transportation scenario (sell from stock, freight costs in the delivering company for ICO stock transport order and ICO intercompany sales process)

• Freight Cost Allocation (ML-Account)

  in all legal ledgers for inbound transportation scenario (procurement of material, inbound transport costs related to the ICO Stock transport order by the receiving company)

To see the details of the freight cost allocation document, you can use the Monitor Freight Cost Allocation documents app. Depending on the selected freight cost allocation document, the freight cost allocation (expense) or the freight cost allocation (ML-Account) screen appears. Among others, following details are displayed:

• Posting Status
• Posting Date
• Company code
• Net Amount
• Settlement Document Type

In the Items table of the freight cost allocation document, you can identify which products were shipped in the freight document and the allocated freight costs per product. The same information is also displayed in the Monitor Accrual Posting, Manage Freight Orders, or Manage Air/Ocean Freight Bookings apps on the Cost Distribution tab of the respective freight document. In case of errors in the release of the freight cost allocation documents to Accounting, you find these freight cost allocation documents in the Not Released Documents, which must be released after detailed evaluation of the errors. To evaluate the specific error in the freight cost allocation document, you select Freight Cost Allocation Document in Error.

The following example illustrates the cost distribution logic.

The cost distribution status of a freight order is either Not Performed, if any of the prerequisites have not been met for the freight order or Successful. You can review the relevant freight cost allocation document in the Manage Freight Cost Allocation Documents app. The system automatically releases the freight cost allocation document to accounting.

Transportation costs may need to be part of the billing document and can be invoiced to the customer. You can check details in the Pricing Elements section while creating the billing document. Locate the condition type, which lists the freight costs. The amount shown there should be equal to the respective amount in the freight order under Cost Distribution → Distribution Items. For transportation management scenarios that are initiated from a sales document, the freight cost of the freight order can be taken into account when the corresponding billing document is created. This requires an integration to be set up between the transportation management, pricing, and billing processes, so that the freight costs can be added to the final amount due.

A typical use case for this scenario is when you want to charge the buyer back for the freight cost incurred for you as the seller. In effect, this allows the costs for a delivery that are initially paid by the seller to be passed on to the buyer by adding them to the invoice for the sales transaction.

The following prerequisites need to be met for this process:

• The Order-Based Transportation Consolidation (3EP) scope item needs to be activated (please check the setup instruction guide) and charges need to be calculated in the freight order.

• To enable the integration on the sales billing side, a key user must make settings in the Define Copying Control for Delivery Document to Billing Document configuration step within the Copying Control for Billing Documents configuration item.

  In this configuration step, the setting for price source for the relevant document types must be set to the value I (order / freight order).