Use of Settlement Material in SAP S/4HANA Condition Contract

[drahul]

Overview

Entering a settlement material in a condition contract is optional. However, in scenarios such as those involving product groups, where multiple materials are assigned to a specific product group, it is more efficient to perform settlement using a “settlement material” rather than settling each individual material. In such cases, specifying a settlement material in the condition contract becomes necessary.

Key Process Consideration

The material will always be transferred from source document to settlement document if you are using a profile of business volume with a split criteria MATNR (material number). When creating a condition contract, you can enter a settlement material that represents a group of products. Then, when you run the final settlement, system uses this single reference instead of listing every product.

If you want system to use the settlement material instead of the actual product from the original document, you must do following additional settings:

# In split criteria for settlement of profile for BV determination change usage control to “1: Is used – Unless Deactivated via process variant”

# Create a new process variant & define a field MATNR in the split criteria and select “1: Do not use as a split criterion” in usage as split criteria”.

Then, create the condition contract and enter the settlement material. define which product group it applies to in business volume selection criteria. Then run the settlement using transactions like WB2R_SC or WB2R_SV. The system will show the settlement material in the final document.

To get the best results make sure your product groups are well set up. Test your setup in a sandbox system to avoid issues. Use clear names for settlement materials so reports are easy to understand. Also, make sure your setup matches how your business tracks volumes and sales.

Using settlement material also helps simplify accounting because you don’t need a separate rule for each product. It makes reporting easier since you can track performance using one reference. You can even automate the selection of settlement materials to save time. And if business handles thousands of products, this feature can really speed things up.

Conclusion

Settlement material is a powerful tool in SAP S/4HANA that can make contract and settlement management much easier. It helps you work faster, stay organized & get clearer insights. With the right setup and testing  it can be a big help for both customer and vendor settlements.

Happy Learning!

[MichaelWerner]

Hi @drahul ,

great article. I agree that the use of the settlement material makes some things easier: Reduction of dependencies on material master data; different types of transactions / settlements can be easily distinguished ...

For most of my clients the material number of the underlying transaction is a very important characteristic in CO-PA, margin analysis, analytics and reporting. This includes the business processes that are covered by settlement management, like rebates, commissions ... In other cases conditions in the settlement contract are specific for a material.  Therefore it is many cases a must to use the material number as split criteria.

It is possible to combine both, settlement material and material number as split criteria. This requires that the settlement item is extended with a custom field "Material number of underlying transaction". For the material number this field is used as target field in the split criteria.

[drahul]

HI @MichaelWerner ,

Thank you for your thoughtful and detailed feedback. I completely agree that the material number plays a crucial role in CO-PA and margin analysis, especially for clients where transaction-specific reporting is vital. Your point about extending the settlement item with a custom field to combine both settlement material and the underlying transaction’s material number as split criteria is very insightful. This hybrid approach does indeed offer flexibility to meet diverse business needs and ensures more granular analytics.

[Suphaphong]

Hi,

Sorry to bother you, but I have configured it according to your instructions, but I am still unable to complete the transaction. Could you please give me some advice or show step in picture?

Thank you so much

[drahul]

Hi @Suphaphong 

If all configurations have been done correctly, the functionality should work as expected. Please briefly describe the issue you are encountering so i can assist you further.

Thank you

[Maurizio65]

Hi Drahul

Thank you for the detailed report.
I have had various experiences with billing billing material instead of material from logistics documents. The disadvantage of this is splitting by tax rate. This is because settlement via settlement material is only possible with one tax rate. As soon as you have material movements with different tax rates as the sales basis, you have to intervene technically in pricing and transfer management if you want a split in the settlement per tax rate.

[MichaelWerner]

Hi @Maurizio65 ,

SAP offers a standard solution for "Goods Related Taxation":
"You can consider sales rebate agreements as a service for the customer. Under this perspective, you apply the usual value added tax for services. Alternatively, you can regard subsequent sales rebates as normal revenue reductions. Then you must apply the tax valid for the sales of a material (goods-related taxation)."

"Goods Related Taxation" and the use of the settlement material are compatible. 

Further information can be found in:

• Document "Condition Contract Management - Sales Rebate Processing - Delivered Standard Configuration" from 2535889 - CCM - Description of delivered configuration - SAP for Me
• Document "Sales Rebate Variations of the General Process" from 2564353 - Condition Contract Management: Product Overview Documents - SAP for Me

[Maurizio65]

Hi @MichaelWerner 

Thank you for your reply. I'm not sure if I can do much with the information. I am already familiar with the settings for the linked documents. If such a solution exists, I would be very interested to learn more about its practical applications.

[MichaelWerner]

"Goods Related Taxation": "Based on the special condition type AS01 the tax code is derived from the business volume data, and the tax is calculated using this tax code."
The tax code is copied from the transactional document. Within the settlement document no tax code determination is executed.

You might think that it is easy to determine the tax code in the settlement document. And in most cases this is right. But in some cases this either gets complicated or will determine the wrong tax code and rate. 
Examples are:

• Changes of the tax rate
• Cases in which the value of transaction has to be considered. Example: Umsatzsteuer, Wechsel der Steuerschuldnerschaft / 5.12 Lieferung bestimmter Metalle | Haufe
• Selling a service, e.g. repair, together with physical materials, e.g. spare parts. 
• ...

I think in all these cases "Goods Related Taxation" is the better starting point. My lesson learned: Discuss this early with the department / person that is responsible for tax.