How SAP SD module is integrated with

SAP Finance module

Automatic generation of accounting document due to sales activity is referred
as SD FI integration.

Below article will help you understand SD FI integration in Order To Cash

cycle (sales cycle).

Lets understand accounting document generation at

the time of goods issue/ dispatch.
When goods are dispatched, finance document as shown below is posted
automatically. Question is how system determines the GL account and
amount to post the accounting document?
Since goods are moved hence material document is created. Corresponding
finance document gets created as a result of MM-FI integration. GL account
for inventory account is picked from OBYC setting (transaction key BSX).
GL account for COGS is picked from OBYC setting (transaction key GBB
and account modifier VAX).

Inventory & COGS is always valued at standard cost of the material.

Amount calculated = Quantity * standard cost of material per unit.

Let's understand accounting document generation

when billing document is released to accounting.
When billing document is released to accounting, accounting document gets
posted automatically. Question is how system determines GL account and
amount to post accounting document?
Let’s understand how SD-FI integration enables GL account and amount
determination for posting accounting entry.

SD FI integration in detail
Price determination procedure or pricing procedure:

Price determination procedure is basically combination of multiple condition

type. Condition type represents different prices that are put together (addition
or subtraction) to arrive at net sales price.

Net price = Base price –Discount + surcharge + tax

Each of these prices “Base price, Discount, Surcharge, Tax etc. is created as
condition type in sap.

Once pricing procedure is selected, list of all condition types involved is

known. Now for each condition type system has to determine the condition
value.
Each condition type is linked to an access sequence. Access sequence is
basically sequence in which condition tables are to be accessed to search for
condition record (Condition records are maintained in condition table).

As per sequence maintained in access sequence, system starts with table 1. If

condition record is found then system picks the condition value and stops
searching any further. If condition record is not found in table 1 then system
starts searching for table 2. If condition record is found then system picks the
condition value and stops searching any further, if not found in table 2 then
system starts searching in table 3.

If no condition record is found in all the tables, system issues message no

record found. Condition type gets zero value.

Similarly value for each & every condition type is determined. System
calculates (addition & subtraction of condition values) to arrive at net sales
price. This net price is basically the price which is charged to customer.
Hence GL account for account receivable is debited with this net price.

Note: Condition types can be real or statistical. Only real condition types are
included in price calculation. Statistical condition types are not included in
price calculation and are only for information/ reporting purpose.

GL account determination for each condition type:

Till now system has calculated condition type value but GL account needs to
be determined for posting accounting entry.

Now business might require to record sales price & discount separately. This
can be done by assigning condition type to account key and mapping account
key to GL account.

Sap provides large number of predefined account keys. Below are just two
examples of account key

ERL – Sales
ERS – Sales deduction or sales discount

All those condition types whose value needs to be posted to sales account are
assigned account key ERL

All those condition types whose value needs to be posted to discount account
are assigned account key ERS.

We understood how pricing procedure works. How system determines the

GL account and amount for posting accounting entry. Now let’s understand
how pricing procedure is selected.

Pricing procedure selection process:

Selection of pricing procedure plays a big role in calculation of sale price.

In practical business scenario, sale price depends upon:

Customer:

Company offers different prices to different customers depending upon the

kind of business relation that the customer has with company. Hence
company categorizes the customers into different categories and customers in
a particular category can be offered special discount.

Hence customer play role in selection of pricing procedure.

Distribution channel + Division + Sales organization

Price for online order might be different from showroom price. Wholesale
order might be eligible for additional wholesale discount. (Hence distribution
channel play role in selection of pricing procedure.)

If you are buying car, price may be composed of base price, insurance
charge, road tax etc. But if you are buying bicycle, price may not have
insurance charge & road tax. Goods which are being sold play role in
selection of pricing procedure. (Hence division play role in selection of
pricing procedure)

If you purchase product directly from company or if your purchase from

marketing agency (selling on behalf of company), price may differ. (Hence
sales organization play role in selection of pricing procedure).

Above examples are given just to help you understand that selection of
pricing procedure depends upon combination of Sales organization +
Distribution channel + Division

Order type:

Different business scenarios (sales order, return sales order, free samples,
rework order etc.) will have different nature of prices involved. Price
components involved in sales order can be different from price component
involved in return sales order.

Hence, order type play role in selection of pricing procedure.

Overall, selection of pricing procedure depends upon combination of

Order type + Customer + Sales area (sales organization + distribution

channel + division)
→ When a sales order is created, sales order has all information (order
type, customer, sales area) necessary for selection of pricing procedure.

From pricing procedure system determines GL account & amount for

accounting entry. When billing document (sales document) is released then
accounting document (finance document) gets generated automatically. This
is referred as SD FI integration.