2854031 - How Contract Works with Different Item Types

• You can create and manage contracts related to materials and services.
• This Knowledge Base Article will explain how contract works with different Item Types in SAP Business ByDesign.

 SAP Business ByDesign

This Knowledge Base Article will explain how the following scenarios work with different Item Types.

Scenario 1: Create a Contract

1. On the General tab, Main Information enter relevant contract information: For contracts with item type Material, the Service Level field will be disabled.

2. On the Items tab, enter the product that you are selling. This can be a Material, a Service, an Expense, or an Entitlement.

• The Price per Period indicator can only be activated for the following item types. The field Price per Period can be activated in combination with an invoice schedule that was created for an item. This invoice schedule has to have the Schedule Type Period fixed price for a service which has a quantity unit which describes time (e.g. hours, working days etc.).

1. Service - fixed price
2. Service - fixed price without actuals
3. Expense - fixed price without actuals
4. Entitlement - fixed price
5. Entitlement - fixed price without actuals

• On the Entitled Products tab, list the products or product categories contained in the entitlement item and to which the account is privileged. This tab is only active for Entitlements; not for materials, services, or expenses. 
  • An Entitlement product is one type of product that can be sold in the contract. Entitled products are a list of products that break down, or detail, the entitlement product.

• On the Price Agreements tab, you review and maintain contract specific list prices, and discounts for materials and services. This tab is active only for Time and Material items. It is not displayed for fixed-price items.

• When maintaining price agreements in a contract item with the invoicing method Time and Material, the system proposes a list price automatically when you click Add Row. The system proposes list prices as follows:

1. For items of type Entitlement – Time and Material, the system proposes the list price of the corresponding service or expense.
2. For items of types Service – Time and Material and Expense – Time and Material, the system proposes the list price of the item.
3. For items of types Material – Product – contract, the system proposes the list price of the corresponding materials.

• On the Covered Products tab, enter the products secured by the contract. For contracts with item type Material – Product – contract, the system does not allow you to enter any information under the Covered Products tab.

Scenario 2: Determine Contracts in a Service Request

When an account requires support and a service request is created, the system checks if the affected product in the service request is covered under contract.

Scenario 3: Create a Service Confirmation

You can process contract items with standard service confirmation functions if you are working with confirmation-relevant service, expense, or entitlement items sold on a time and material or fixed price basis.

Note: Entitlement - fixed price w/o actuals is not confirmation relevant, no confirmation will be created for this item type.

Scenario 4: Invoice a Contract

There are several ways to invoice contract items:

1. Create an invoice request for Fixed-Price items that will then be the basis for a one-time invoice

• Choose the Invoice Requests view>Select an invoice request>Click Invoice or Invoice — Advanced>At the top of the new invoice click Release to release the new invoice.

2. Fixed-Price items, and Time and Material based items, with invoice schedule using an invoicing time frame

• On the Pricing and Invoicing tab, you can create an invoice schedule. For contracts with item type Material – Product- contract, you cannot create invoice schedules.

• Under Pricing and Invoicing choose Invoice Schedule > Click Edit Invoicing Time Frame. Now you can edit a new time frame or view an existing time frame with a monthly recurrence pattern for the actual year, for example. > Select the Applied check box to assign the selected invoicing time frame to the item.> Click OK button. The system creates monthly invoice dates for the applied items.

• For Fixed-Price items, the system creates a scheduled invoice request automatically three days before the invoice schedule date is reached. You can trigger this invoice request manually if you do not want to wait for the next job run.The system creates service confirmation invoice requests for Time and Material items.

3. Revoke Invoicing of Customer Contract Items.

• You can revoke invoicing of items in a contract, by selecting an item in Items and clicking Revoke > Invoicing. 

• You can revoke invoicing of an item, if it meets all the below criteria:

1. Item type as fixed price, fixed price without actuals or expense fixed price without actuals
2. Invoicing status as Finished
3. Associated with invoice schedule

Please Note: A Scheduled Invoice Request for an Item in a Contract with an Invoice Schedule will only be created if the respective Item has been released.

Scenario 5: Create a Follow up Sales Order from Contract

Currently a sales order with reference to a contract for service items is not supported. If you click Follow-Up > Sales Order to create a sales order with reference to a contract for Service items, the system will display the warning message "Copying item XX not possible; configuration from Service - Fixed Price to Service - fixed price missing".

Scenario 6: Complete a Contract

• For Items to be in status Complete the following 3 criteria have to be met:

1. Invoice Status has to be completed,
2. Item has to be expired,
3. Service has to be fulfilled.

        In general, for Services, the fulfillment must always be finished in the Contract.

• Unlike sales orders, there is no contract pipeline from which you can confirm service execution and you can create a service confirmation only directly from the contract.

• For confirmations created based on contracts, releasing items with or without completion is not possible as in standard service confirmations. There is only an implicit release without completion.

• For Services which do not require a Service Confirmation such as the item Type SEFL (SEFL - Service - fixed price without actuals) the service execution needs to always be done in the respective document (Sales Order and Contract). Therefore, you must finish the fulfillment in the contract itself.

• For the item type ETCS (Entitlement - contract sale), this is used for selling contracts in sales orders via entitlements. When you enter an entitlement with this item group in the sales order, a related contract template is determined and a contract automatically created when you release the sales order. The contract created is in status In Preparation. Only once the contract is released the Fulfillment Status in the sales order will change to Finished.

Scenario 7: Extension Scenario

1. The Extension Scenario to pass on the extension field from a Material to a contract line item is currently not available. This Extension Scenario is currently only available for Services and Entitlements. Here you need to activate the following Extension Scenarios:

• Service - General Information to Customer Contract – Item
• Entitlement - General Information to Customer Contract – Item

2. For Materials to Contract there are currently only the following extension scenarios available:

• Material - General Information to Customer Contract - Covered Product：

1. The extension field will be passed on to the Contract in the Covered Products tab.
2. You can add the extension field to the section Covered Products.

• Material - General Information to Customer Contract - Item Entitled Product

1. The extension field will be passed on to the Contract in the Items tab and the Entitled Products sub tab.
2. When you add an Entitlement to a contract you will get the sub tab Entitled Products.
3. You can add the extension field in this sub tab.

 

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