Different Billing processes in SAP- Transformation from Product Based Billing to Subscription based

In SAP while dealing with Customer, we have to Bill Customer for different goods and services we offer to him

When selling goods from SAP SD, we create Commercial Invoice on the quantity sold

When dealing with Services , we bill the customer for Repair Hour, Accommodation, Travel Hours , Training

When dealing with Projects offered to Customer, Billing similar to services is used

When dealing with Utility sector, we use Consumption based billing to customer

When dealing with Subscriptions we used, Convergent Invoicing to Customer

Altogether the billing process depends on the industry sector and type of goods/Services being offered to the customer

Lets discuss in Detail each process

Commercial Billing for Goods

We normally use this process of billing for Goods we sell to the customer, and billing generally depends on the quantity sold to the customer. This normally takes Sales and Billing route. This is required for Legal process as well, depending on rules and Regulation prevailing in the Sales area

Below figure show basic Sales and Distribution flow with Main Components

 

 Resource Related Billing:

This process is used in SAP Customer Service and In SAP Project Systems,, while we offer services to the customer.

In this kind of Billing, we bill the customer on Actual hours utilized for the service. This service can be Repair, Maintenance, Travel, Installation, Accommodation and Training or support

Normally we use this billing when we have planned some Activities and executed them with different hours. For example, we have planned an 8 hours of Activity  while performing the task it is realized for 10 hours or 6 hours ( different than Plan) which is actual hours. In such scenario where there is always a discrepancy between Plan and Actual is called to billing using Dynamic Items and in SAP CS and in PS it is called as Resource Related Billing.

Consumption Based Billing:

This is used mostly in Utility sector. Assume a scenario of Water and Power Consumption.  Customer is billed based on the usage of utilities. Usage is calculated based on Meters or Network Elements

We use Contract Account as Customer for Billing and it is slightly different to SD Billing

Here we use Contract Account Concept instead of Customer and Billing is based on the Usage

Subscription Based Billing.

This is mostly Commonly Known and has gained a very significance in recent times.  Netflix, Amazon Prime , Microsoft, Adobe, Retail are best examples of such billing. Here we are not selling customer any products, instead we are selling subscriptions .

Customer Pays a recurring fee at the end of the Period  for using services offered by the company.

I will discuss in detail about Consumption and Subscription based Process in next article