In this post, we will start with business example to make it easier to understand for the reader.
Business example:
Customer Jingle Inc. has a contract with Bella Printing Inc., a company that provides print services. The contract details are as follows:
Monthly service fee = $25
A3 format - Colored @0.08 per page; Black @0.05 per page
A4 format - Colored @0.06 per page; Black @0.03 per page
A5 format - Colored @0.04 per page; Black @0.01 per page
The consume to cash process for this example starts with the printing of pages.
Jingle Inc. prints 1000 colored pages in A4 format and 1000 pages with black ink in A5 format in a particular month.
The monthly service fee is also charged on top of the print charges for the pages.
The payment terms contracted with Jingle Inc. are 30 days.
Now, we will visit the above example on a technical side:
Monthly recurring fee is charges automatically when the billing date is achieved
1000 usage items for colored print are loaded in the invoicing system (in our case- Convergent Invoicing). Similarly, 1000 usage items for black print are also loaded in Convergent Invoicing system.
Considering a simple example when all the charges are inclusive of taxes, the invoice should have three positions:
Monthly fee
Consolidated Colored print item and charge
Consolidated Black print item and charge
In the above example, the invoice should have the following positions:
Monthly fee - $25
A4 Colored print charges = $60
A5 Black print charges = $10
Total = $95
So, Jingle Inc. receives a printed invoice with reference to their contract ac count and invoice number requesting a payment of $95.00
Now the invoicing cycle for Jingle Inc. is monthly on 20th of every month. If the current month is July, then the invoice date should be July 20th and Jingle Inc. has to pay by Aug 20th failing which they will receive a dunning letter a week later.
Here are some of the terminologies in SAP BRIM that we will use to translate the above business process:
Business Partner:
Represents an organization or person with whom business relationships can be conducted.
Incorporates central data like name, addresses, communication details, bank or payment card details etc.
Contract Account:
Object for open item accounting in contract accounts receivable and payable
Contains control data like payment methods (outgoing/incoming), payment terms (due in 30 days, due in 15 days etc.), dunning procedures
Billable item:
A priced event transaction record received by SAP Convergent Invoicing from a source system
Now if we try to translate the above business process in SAP Convergent Invoicing, it will be as follows:
A recurring charge of $25 generated by the source system every month.
A usage based charge is generated every time a paper print is recorded and rated by the source system. In the case above, there will be 1000 usage based charges for colored paper print of type- A4 and 1000 usage based charges for black paper print of type - A5.
Therefore, SAP Convergent Invoicing will receive the charges and create the billable items as follows:
One billable item for $25 - monthly fee
1000 billable items for Colored print, type- A4, Charge on each billable item = 0.06
1000 billable items for Black print, type- A5, Charge on each billable item = 0.01
The above billable items will consist of a contract number and business partner number
The Business Partner data will have the name- Jingle Inc., it's address, language, phone number etc.
The Contract Account for Jingle Inc. will have payment terms = Net 30
Now the billing process in SAP Convergent Invoicing will consolidate the above items in a such a way that the following lines appear in the Invoicing document. This process happens in two steps:
Step 1. Billing
In this process, the individual items that belong to a summarization are linked with one billing document item.
Based upon the above business process example, there will be one billing document item for $25- Monthly fee, one billing document item for Colored print charges (adding up all the items, total of $60) and one billing document item for Black print charges (adding up all the items, total of $10)
Step 2. Invoicing
The Invoicing process in SAP Convergent Invoicing includes the following:
Additional information like dunning charge, late payment charge etc.
Historical items like open items, payments etc.
Posting for Contract Accounts Receivable and Payable (FI-CA)
In the above business process example, an invoice will be generated for Jingle Inc. that will have the following:
Monthly fee - $25
A4 Colored print charges = $60
A5 Black print charges = $10
Total = $95
It also says that jingle Inc. has to make a payment within 30 days of the invoice date.
An open item of $95 is posted on the contract account pertaining to Jingle Inc.
Like the above example, we can have billable items from multiple origins in SAP Convergent Invoicing. Some of the examples of sources based upon diverse business processes are:
Parking ticket
Train ticket
Toll road passing
Toll tunnel passing
Song download or/and subscription
Utility metered usage
Equipment lease monthly charges
Telecommunication call records
Telecommunications text message
Software download
Software subscription
Cell phone activation
Utility service activation
Electric car charging station
Managed Print Services
and many more.
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