Manage Rental Contracts with Help from Sales and Distribution Functionality

  • by Anton Karnaukhov, Senior IT Manager, Pacific Coast Companies, Inc.
  • December 7, 2009
Learn the necessary sales and distribution (SD) configuration to create and manage rental contracts in your SAP ERP solution.
Key Concept
A periodic billing plan type is meant to be used with contracts and customer agreements that require predefined periodic invoicing. For example, an agreement might call for the customer to be billed on the 10th of every month or once every two weeks. In contrast, milestone billing plan types are meant to be used with customer agreements that require billing to occur only after a particular portion of the contract or job has been completed. For example, you might need to bill the customer at 20%, 60%, and 100% completion. An SAP system is capable of handling both types of billing plan types. Rental agreements are typically best suited for periodic billing plan types.

Many companies have assets (including real estate and equipment) that they rent or lease to their customers for a set monthly payment. Usually these rentals are a small portion of the overall company's revenue and are not part of what is considered the core set of products and services. Instead, these rentals are in place so that those assets are not just sitting idle. There are other cases in which such rental agreements are purely internal. For example, a parent company could be the owner of all offices which in turn are rented to the various business units. Few companies that have such business scenarios are actually aware that standard sales and distribution (SD) functionality can make the management and processing of such rental agreements quite a bit easier.

The following is the process of configuring a new sales document type for a rental contract and a detailed configuration of the periodic billing plan. The periodic billing plan allows you to schedule a periodic background job that reviews all relevant rental contracts with upcoming payments and generate billing documents for the appropriate amounts. I also cover scenarios in which the payment for one of the periods/months has to be pro-rated and show how standard SAP functionality can easily deal with such scenarios. This article applies to anything in Release 4.0 and above.

Anton Karnaukhov

Anton Karnaukhov is a senior IT manager at Pacific Coast Companies, Inc., in Sacramento, California. He earned an MBA degree at Heriot-Watt University and a BS/BA degree with a specialization in computer information systems at Western Carolina University. Anton has more than eight years of SAP implementation and development experience focusing on business intelligence and logistics modules in the manufacturing and resale industries.

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