SAP SD
Sales & Distribution
Complete Guide to Order-to-Cash Processes
SAP ERP | S/4HANA Edition
© 2024 SAP Reference Series
Table of Contents
1. SAP SD Overview ...................... 3
2. Organizational Structures ............ 5
3. Master Data .......................... 9
4. Sales Order Processing ............... 14
5. Pricing .............................. 20
6. Shipping & Delivery .................. 26
7. Billing & Invoice .................... 32
8. Credit Management .................... 37
9. Special Business Processes ........... 41
10. Key Reports & Transactions .......... 47
1. SAP SD Overview
SAP Sales and Distribution (SD) manages all activities involved in selling products and services — from
customer inquiry and quotation through order fulfillment and invoice collection. SD integrates closely with
MM (stock availability), PP (production), FI/CO (revenue and credit management), and WM/EWM
(warehouse).
1.1 Order-to-Cash Cycle
Step Transaction Description
Pre-sales VA11/VA21 Inquiries and quotations
Sales Order VA01 Customer places order
Availability Check VA01 Checks stock / production capacity
Picking & Packing LT0A/HU Warehouse processes
Outbound Delivery VL01N Goods issue from warehouse
Billing VF01 Invoice creation & posting to FI
Payment F-28 Incoming payment in FI
2. Organizational Structures
Org Element Description
Sales Organization Highest SD unit; responsible for sales negotiation & revenue
Distribution Channel How goods reach customers: wholesale, retail, direct
Division Product group for which sales are made
Sales Area Combination of Sales Org + Dist. Channel + Division
Sales Office Geographical sales office within sales org
Sales Group Team of sales representatives
Shipping Point Physical location from which goods are shipped
A Sales Area uniquely defines the selling entity and is the central SD organizational concept. All customer
master data, pricing, and sales orders are assigned to a sales area.
3. Master Data
3.1 Customer Master
Segment Key Fields
General Data Name, address, language, tax number
Company Code Recon account, payment terms, tolerance group
Sales Area Data Customer group, pricing procedure, shipping conditions, Incoterms
Key Transactions: XD01 (Create all), VD01 (Sales only), FD01 (FI only)
3.2 Material Master (SD Views)
• Sales: Sales Org 1: Delivering plant, tax classification, item category group.
• Sales: Sales Org 2: Material statistics group, profit center, product hierarchy.
• Sales: General/Plant: Availability check rule, loading group, transportation group.
3.3 Condition Master (Prices & Discounts)
Pricing conditions are maintained in VK11. Access sequences determine how the system searches for
valid conditions (customer-specific → customer/material → price list → base price).
4. Sales Order Processing
4.1 Sales Document Types
Type Code Description
Standard Order OR Standard customer order
Rush Order RO Same-day delivery required
Cash Sales CS Immediate payment + delivery
Consignment Fill-up KB Replenish consignment stock at customer
Returns RE Customer return of goods
Credit Memo Req. CR Request for customer credit
Debit Memo Req. DR Request for additional billing
4.2 Sales Order Structure
• Header: Sold-to party, purchase order number, requested delivery date, payment terms.
• Items: Material, order quantity, delivering plant, pricing, item category.
• Schedule Lines: Confirmed delivery dates and quantities from availability check.
• Partners: Sold-to, ship-to, bill-to, payer (may differ).
4.3 Availability Check (ATP)
Available-to-Promise (ATP) checks if requested quantities can be delivered on the required date,
considering: current stock, planned receipts (POs, production orders), and planned issues (other sales
orders, reservations).
5. Pricing
5.1 Pricing Procedure
The pricing procedure is a sequence of condition types that the system evaluates to determine the final
price. It is assigned to a sales area + customer pricing procedure + document pricing procedure
combination.
Step Cond. Type Description
10 PR00 Base price
20 K004 Material discount
30 K005 Customer/material discount
40 K007 Customer discount (%)
50 KF00 Freight
60 MWST Output tax
100 NETWR Net value
5.2 Condition Tables & Access Sequences
Condition tables define the key fields for pricing records. Access sequences define the order in which SAP
searches condition tables. For example, access sequence for PR00 might search: 1) Customer/Material,
2) Price List/Currency/Material, 3) Material.
6. Shipping & Delivery
6.1 Outbound Delivery (VL01N)
An outbound delivery is created from a sales order. It controls the goods issue process, warehouse
activities (picking, packing), and shipping.
Delivery Field Description
Shipping Point Departure point — drives scheduling and route
Route Determines transit time, transportation mode
Pick/Load Date When warehouse must start picking
Goods Issue Date When stock ownership transfers to customer
Delivery Type LF (standard), LO (rush), NL (replenishment)
6.2 Post Goods Issue (PGI)
PGI is the most critical step in delivery processing. When goods issue is posted: stock is reduced in MM,
COGS is posted to FI/CO, billing becomes eligible, and delivery status turns 'Complete'.
7. Billing & Invoice
7.1 Billing Document Types
Type Code Description
Invoice F2 Standard customer invoice
Pro Forma F5/F8 Non-accounting informational invoice
Credit Memo G2 Credit to customer
Debit Memo L2 Additional charge to customer
Cancellation S1 Cancel previously posted billing doc
Intercompany IV Invoice between company codes
7.2 Billing Process
• VF01: Create individual billing document from delivery or order.
• VF04: Billing due list — batch creation of multiple billing documents.
• VF02: Change / re-issue billing document.
• Upon billing, an FI document is automatically created: Dr Accounts Receivable, Cr Revenue + Tax.
8. Credit Management
SAP credit management prevents sales orders from being processed when customers exceed their credit
limits.
Check Type Trigger
Static Total open AR + open deliveries + open billing
Dynamic Static check + open orders within horizon period
Maximum Doc. Single document value exceeds threshold
Credit-blocked orders must be released by an authorized credit controller via transaction VKM1/VKM3.
9. Special Business Processes
9.1 Third-Party Processing
Customer orders goods → SAP creates a purchase requisition → vendor ships directly to customer →
invoice verification triggers customer billing. Item category TAS drives this process.
9.2 Consignment Processing
Step Doc Type Description
Consignment Fill-up KB Send stock to customer warehouse
Consignment Issue KE Customer uses consignment stock
Consignment Return KR Customer returns unused stock
Consignment Pick-up KA Retrieve stock from customer
9.3 Intercompany Sales
Sales from one company code to another. The ordering company code posts a customer invoice; the
supplying company code posts an intercompany billing document (IV). Both sides automatically update FI.
10. Key Reports & Transactions
Transaction Description
VA05 List of Sales Orders
VL06O List of Outbound Deliveries
VF05 List of Billing Documents
VD59 Customer-Material Info Record List
V.02 Incomplete Orders
VKM1 Blocked SD Documents (Credit)
SD01 Sales Information System
MC+2 Incoming Orders Analysis
In S/4HANA, the Order-to-Cash process is further streamlined through SAP Fiori apps, providing real-time visibility
into open orders, delivery status, and customer outstanding balances.