Vistex is a third party tool for better handling of rebates, sales commisssions, Billbacks, chargebacks

etc in SAP R3 environment.

The implementation duration depends on the scope but for example Incentive IP module takes appx 23 months in configuration( one resource). Bill back & chargeback takes same time.
Does Vistex implementation involve any Technical development efforts also along with configuration
activities OR it is only configuring vistex modules?
In SAP implementation project, Vistex consultant works in coordination with SD consultant. Is this
understanding correct?
our company is implimenting the billback module but i dont see good documents available for the
same even in config also.
I am working as SD consultant here.
do you haave any document which can be shared for specially Billback testing??
I recently read about SAP Compensation Management on a blog (sdmodule.com). Apparently it does
the same thing as Vistex but it's a standard module and doesn't require an additional license. I don't
see much documentation for it other than the enhancement package release notes. Here we
implemented the Vistex billback module but it took over 18 months to get it working and the consulting
resources were VERY expensive.
Did you know theres an SAP standard module for contract pricing and chargeback
management? It provides the same functionality as the popular Vistex add-on but there
are no license fees. Its called SAP Compensation Management and its part of the
standard Logistics / Global Trade modules. Take a look at this comparison:
Function

Vistex

SAP

Yes

Free

Contract pricing
Chargeback processing
Chargeback reconciliation
Rebates
Extra license cost

If you didnt know about Compensation Management, dont feel bad its one of SAPs bestkept secrets. You wont find it in SAP marketing materials or the training curriculum. Even
the online documentation is limited to just two pages, and theres a lot of confusion with the
HR module of the same name. And yet it offers critical functionality for SAP wholesale
distribution.
Its time to drag this shy module into the spotlight and give it the attention it deserves. Take
a look at the Key Features, then read on to learn more about the Compensation Management
module in detail. And of course,contact me with your questions, suggestions and comments.
Read the rest of this series:
1. Contracts and Chargebacks with SAP Compensation Management

2.
3.
4.
5.
6.

SAP Compensation Management Key Features

Business Process
SAP Process
Screenshots
Conclusion

Compensation Management is fully available is Enhancement Pack 4 (EHP4), although some of

the code seems to have been present earlier.

To see the menus, youll also need to activate some business function sets. Check the EHP1
EHP4 release notes (the wholesale distribution section) for the specific sets for your
implementation. I think you will need ISR_RET_COMPENSATION for the general functionality
and ISR_RET_AGENCY_3 if you want to use complaints processing.
Be sure to try this in a test system first activating the business function sets is generally
harmless, but it cannot be undone.

As for Pharma, if youre a manufacturer then I suggest using theCRM Pharma extensions for
manufacturers (inbound chargebacks). If youre a wholesaler or retailer then Compensation
Management will work better.

VISTEX

Contracts and Chargebacks with SAP

Compensation Management
Did you know theres an SAP standard module for contract pricing and chargeback
management? It provides the same functionality as the popular Vistex add-on but there
are no license fees. Its called SAP Compensation Management and its part of the
standard Logistics / Global Trade modules. Take a look at this comparison:
Function
Vistex
SAP
Contract pricing
Chargeback processing
Chargeback reconciliation
Rebates
Extra license cost

Yes

Free

If you didnt know about Compensation Management, dont feel bad its one of SAPs bestkept secrets. You wont find it in SAP marketing materials or the training curriculum. Even
the online documentation is limited to just two pages, and theres a lot of confusion with the
HR module of the same name. And yet it offers critical functionality for SAP wholesale
distribution.
Its time to drag this shy module into the spotlight and give it the attention it deserves. Take
a look at the Key Features, then read on to learn more about the Compensation Management
module in detail. And of course,contact me with your questions, suggestions and comments.
Read the rest of this series:
1. Contracts and Chargebacks with SAP Compensation Management
2. SAP Compensation Management Key Features
3. Business Process
4. SAP Process
5. Screenshots
6. Conclusion
Sep 04, 2009 | Compensation Management, Pricing, SAP Chargebacks, SAP Contract
Pricing, Vistex, Vistex Documentation | 18 Comments

SAP Compensation Management Key Features

SAP Compensation Management is an ECC module that offers the following functionality:

Contract pricing
Contract membership management
Chargeback processing (chargeback submission and tracking)
Chargeback reconciliation

 Online processing and support for EDI (844/845/849)

Compensation Management is intended for wholesalers. For example, it
provides outbound chargeback processing (chargeback submission). If you are a
manufacturer you may want to consider SAP CRM instead, since it provides contract pricing
and inbound chargeback processing (Ill post a future series on that topic).
Even if you already have Vistex or another add-on package, SAP Compensation Management
is worth a look. The provided functionality is superb and its even possible to combine the
two: for example you can use contract pricing from Compensation Management module along
with chargebacks from Vistex, or vice-versa.
Contract Pricing Functions
Contract Loading and Prioritization
Inbound EDI 845 support
Multiple overlapping pricing contracts for a customer/product
Customizable contract prioritization (best-price, contract type, etc.)
Contract Header
Multiple contract validity dates at header, customer and product level
Track internal contract reference number and vendors contract number
Set "assignment" number that will appear on all contract-related FI documents
Special payment terms or additional value days at contract header and product level
Create contracts in "pending" status
Configurable contract status management and workflow
Instantly find SD documents and chargebacks related to a contract
Configurable texts for notes about contract
Attach source documents (spreadsheets, emails, faxes, etc.)
Configurable contract output including EDI, ALE, print, fax, Excel, email, etc.
Contract Customers
Add and search for customers by DEA number, HIN number, vendor reference number or identifiers
Load customers in "pending" status until released
GPO roster management
Class-of-trade and other customer lists
Add GPO rosters and customer lists to contract
Filter (exclude) customers or lists of customers from contract
Export contract customer list to Excel, print, email, etc.
Manage contract customers that are not loaded in the wholesalers SAP system
Configurable texts for notes about customer

Contract Pricing Functions

Contract Products and Pricing
Add products by NDC number
Search for products by name, number, NDC number, vendor part number, etc.
Contract pricing, discounts and surcharges by contract, customer, product, etc.
Contract rebate conditions
Contract prices by customer, GPO, product or other criteria
"Tiered" (scaled) contract pricing based on sales quantity
Validity period management (for example, price validity cannot exceed contract validity)
Export products and pricing to Excel, print, email, etc.
Manage contract products that are not loaded in wholesalers SAP system
Search for conditions across multiple contracts
SD Integration
Display eligible contract and contract determination directly on SD document
Contract pricing, discounts and surcharges by contract, customer, product, etc.
WAC pricing
Accrue expected chargeback revenue
Other
Standard extractors for BW
Standard archiving functions
Full change log and audit history
Search for contracts by member, product, vendor, dates, etc.
Report to submit chargebacks when a contract is loaded retroactively

Chargeback Functions
Chargeback Creation
Outbound EDI 844 and inbound 849 support
Automatic and manual creation
Create chargebacks in batch, periodically or immediately
Combine multiple chargeback requests into a "collective chargeback request" to reduce transaction
volume
Full chargeback workbench integration (all document display and processing can be done without
leaving workbench)
Generate chargebacks when a contract is loaded retroactively
Chargeback Document

Chargeback Functions
Chargeback pricing procedure and account determination (can be used to adjust chargeback amounts,
accrue rebates, post to specific accounts, etc.)
View contract data in chargeback
Track vendors reference number
View vendor data in chargeback
Output and/or re-submit chargebacks using EDI 844, print, fax, email, etc.
Document flow including chargebacks, SD documents and contracts
Chargeback linked to all source EDI transactions
Full change log and audit history
Standard extractors for BW
Standard archiving functions
Reconciliation
All chargeback rejections, statuses and paid amounts visible on chargeback document
Track requested and paid chargeback amounts separately
Track rejection reasons
Customizable rejection processing including custom fields, validations and workflow
Reverse and reopen posted chargebacks as a result of subsequent reconciliation
Web portal for manufacturers to enter chargeback response into your SAP system
Read the rest of this series:
1. Contracts and Chargebacks with SAP Compensation Management
2. SAP Compensation Management Key Features
3. Business Process
4. SAP Process
5. Screenshots
6. Conclusion
Sep 04, 2009 | Compensation Management, Pricing, SAP Chargebacks, SAP Contract
Pricing, Vistex, Vistex Documentation | Leave A Comment

Business Process
SAP Compensation Management covers many different wholesale distribution scenarios. Any
any business that uses sophisticated pricing contracts or chargebacks (or chargeback
variants, such a price protection or bill-backs) needs a way to manage those processes.
For this series, Ill present the business process for pharmaceutical wholesalers as an
example, and show how Compensation Management can be used for contract pricing and
chargeback management.

The diagram below shows the pharma wholesale business process from contract negotiation
through chargeback reconciliation.

The contract pricing and chargeback process begins when a drug manufacturer negotiates a
pricing contract with one or more customers. The contract defines discounted pricing for
certain products. The Contract may be signed with an individual customer, but more often it
is an agreement with a Group Purchasing Organization (GPO) that represents multiple
customers.

The manufacturer sends the pricing contract information to wholesalers that carry its
products. The contract is sent via EDI 845, email or fax. Contracted products are identified by
NDC number. Eligible customers may be listed explicitly by DEA or HIN number, or the
contract may just indicate that some customer group is eligible (for example, a GPOs
customer membership or a particular class of trade).
When an eligible end-customer purchases a contracted product, the wholesaler invoices the
customer at the contract price. Contract prices are generally below the Wholesale Acquisition
Cost, or "WAC" (the standard price that a wholesaler pays to purchase a product from the
manufacturer). This means that the wholesaler is often in a position where it must sell
product below at a price below its own acquisition cost.
To make the wholesaler "whole" again a chargeback request is submitted to the
manufacturer. The chargeback request is a request for a credit of the difference between
WAC and contract price. For example: if WAC for a product is $100 and the contract price is
$90, the wholesaler will sell the product to an eligible end customer for $90 but it will also
submit a chargeback request to the manufacturer for the $10 difference between WAC and
contract price. The wholesalers profit margin is derived from marking up the contract price,
or other means (such as collecting a cash discount from the manufacturer).
The chargeback request is sent via EDI 844 or EDI 867, email, or fax. The request includes
detailed information about one or more sales to end customers (called the "line items" of the
chargeback). This information includes: the sale date, customer identifier such as DEA or HIN
number, the product NDC code, and pricing information such as quantity, WAC price, contract
price, and requested chargeback amount.
The manufacturer validates the chargeback request against its own contract pricing system. If
the request is approved, the manufacturer issues a credit to the wholesaler, or, if the
chargeback is determined to be invalid, it may be partially paid or not paid at all.
The manufacturer then sends the wholesaler a chargeback response via EDI 849, email or
fax. The response lists the payment amount for each chargeback line item. If a line item was
rejected or partially paid, the response also lists rejection reasons explaining why it was not
accepted.
Read the rest of this series:
1. Contracts and Chargebacks with SAP Compensation Management
2. SAP Compensation Management Key Features
3. Business Process
4. SAP Process
5. Screenshots
6. Conclusion
Sep 04, 2009 | Compensation Management, Pricing, SAP Chargebacks, SAP Contract
Pricing, Vistex | Leave A Comment

SAP Process
In the last post in this series I covered the general business process for contract pricing and
chargeback processing using SAP Compensation Management instead of Vistex. This time Ill
explain how the contract pricing and chargeback process is handled within Compensation
Management.

1. The process begins with the creation of a pricing contract in the Compensation
Management module. The contract is sent from the manufacturer to the wholesaler by
EDI 845, email or fax, and a Compensation Management contract is created in SAP.
The contract lists all of the customers and products that are eligible for contract
pricing. Each contract is assigned to a manufacturer. The manufacturer is represented
as a vendor in SAP. If a GPO was involved in the contract negotiation then it is also
assigned to the contract. The GPO may be stored just for reference, or to drive special
pricing or special contract prioritization.
2. When a sales order is created in the SD module the system determines for each
product whether the customer is eligible for a pricing contract. If so, the contract is
assigned to that order line and it is given a contract price. The determination logic may
be simple, such as assigning the lowest contract price from a group of contracts, or it
can be more complex, such as prioritizing certain contract types or GPOs over others.
3. Normal SD processing then continues and the order is delivered.
4. Normal SD processing continues and the customer billing document is created. For
contracted products the customer is invoiced at the contract price. The billing
document also includes several other pricing conditions that are necessary for
chargeback processing, including WAC price and expected chargeback revenue. When
the billing document is saved and released to the FI module, the expected chargeback
revenue is posted as an accrual.
5. A chargeback request document is created. This chargeback is linked to the billing
document and to the pricing contract. It contains all of the data needed to submit a
chargeback to the manufacturer.
6. Individual chargeback request documents can be combined into a "collective
chargeback request" to reduce chargeback volume with the manufacturer. The
individual or collective requests are submitted via EDI 844, email, or fax.
7. The manufacturer reviews the submitted chargebacks and responds with a
chargeback reconciliation document via EDI 849, email, or fax. The reconciliation
includes the paid amount and any rejection reasons for each chargeback line item.
8. Once the chargeback document has been reconciled, it is released to FI. The
accrual for the chargeback amount is reversed and the actual chargeback amount is
posted as a vendor credit.
Read the rest of this series:
1. Contracts and Chargebacks with SAP Compensation Management
2. SAP Compensation Management Key Features
3. Business Process
4. SAP Process
5. Screenshots
6. Conclusion
Sep 04, 2009 | Compensation Management, Pricing, SAP Chargebacks, SAP Contract
Pricing, Vistex | 1 Comment

Screenshots

In prior posts, Ive presented the business process and the SAP process for chargeback
processing and contract pricing, using the SAP standard Compensation Management module
instead of Vistex.
This time Ill cover the process in more detail and work through an example in an SAP system.
Ill reference the diagram below and provide some screenshots for each step (note that you
can click on the thumbnails to see a full-size image).
One thing you may notice immediately from the diagram is that all contract pricing and
chargeback data is available in SAP BW. SAP provides standard BW extractors and key figures
for detailed contract and chargeback reporting.

Step 1. Condition Contract

The first step in the process is to create a pricing contract. Figure 1 shows the SAP
Compensation Management contract entry screen. In this example the contract was received

from vendor 3818 and it represents an agreement to sell material "MS" to customer
CMS0000031 for $90.00 per piece.
Figure 1: SAP Compensation Management Contract
(click for larger image)

Ill also enter a comment about how this contract was received and attach a spreadsheet
received from the manufacturer. The texts are fully customizable and a separate "attachment"
button allows source documents such as spreadsheets, emails, and so on to be attached
directly to the contract.

Figure 2: Contract Comments and Attachments

(click for larger image)

Step 2. Sales Order

Now Ill switch over to the SD module and enter a sales order for the contracted customers
and material. For contract-priced items, the order line item can be double-clicked to see the
"Compensation Management" tab, which shows the contracts that were considered for pricing.
The user can view the details for a contract by clicking on it.

Figure 3: Sales Order Contracts Tab

(click for larger image)

Switching to the pricing conditions for the line item, we can see that SAP determined the WAC
(condition ZWAC), contract price (condition PCHB) and expected chargeback amount
(condition CHBK). The conditions are configurable, so its easy to create additional condition
types such as discounts, surcharges or rebates.
In this example, the normal price for the item is $110.00 but the contract price is $90.00 so
the sale is made at $90.00. WAC is $100.00, so the expected chargeback amount is the
difference between WAC and contract price, or $10.00.

Figure 4: Sales Order Contract Pricing

(click for larger image)

Step 3. Billing Document

Once the order is delivered, the wholesalers end customer is invoiced. The billing document
has the same pricing conditions as the sales order. When its released to accounting the
expected chargeback amount is posted as an accrual.
Like the sales order, the billing document has a Compensation Management tab at the line
level for contracted items, but it also has a Compensation Management tab at the header
level. This tab provides an overview of all chargeback "PPF actions" (outputs) generated for
the billing document. Here we can see that the system automatically created a chargeback
request when the billing document was saved.

Figure 5: Billing Header Contracts Tab

(click for larger image)

The second sub-tab "chargeback overview" shows information about all chargeback
documents related to this billing document. Its possible to "drill-in" to any chargeback
document directly from this screen.

Figure 6: Billing Document Header Chargeback Overview

(click for larger image)

Step 4. Post A/R and Accrue Chargeback

When the billing document is released to FI, the expected chargeback amount is posted as an
accrual.

Figure 7: Accounting Document for Customer Billing Document

(click for larger image)

Step 5. Chargeback Request

Chargeback processing begins as soon as a chargeback-relevant SD billing document is
saved. A chargeback request is automatically created from the billing document (its also
possible to group requests into a "collective request").
SAP calls a chargeback request a "remuneration request". Its represented in the system as
an Agency Business document of type "CHBK".
The "chargeback workbench" transaction is used to monitor and control chargebacks at any
point in the process. The standard workbench settings allow users to perform all document
processing without ever leaving the workbench.

In Figure 8 Ive listed some chargeback documents and selected the header and item data
for the chargeback I created previously.
Figure 8: Chargeback Workbench
(click for larger image)

The chargeback request looks a lot like an SD billing document: it has header data, item data,
texts, outputs, pricing conditions, and so on. Figure 9 shows a chargeback request.
The "invoicing party" is the vendor to whom were submitting the chargeback (3818) and the
"payment reference" field is used to store the chargeback reference number received from
the vendor in the chargeback response document (see below). Since I havent submitted the
chargeback to the vendor yet, this field is blank.

The chargeback document has its own pricing procedure along with configurable rules for
copying pricing conditions from the source billing document. This is a very powerful feature
because it allows all kinds of new pricing in the chargeback. For example, the chargeback
pricing procedure can be used to adjust chargeback amounts by vendor or product, to
automatically post payment differences to a write-off account, or to post additional conditions
such as rebate accruals.
Figure 9: Chargeback Request
(click for larger image)

Step 6. Send Chargeback to Vendor

The chargeback can now be submitted to the vendor. SAP provides a configurable output
procedure for chargeback requests, and outputs can be triggered based on business logic or
generated manually. Messages are entered on the chargeback document "output"
tab. Figure 10 shows an EDI 844 message sent to the vendor.

Figure 10: EDI 844 Output

(click for larger image)

Step 7. Record Vendor Response and Reconcile

The vendor reviews the submitted chargeback and provides a chargeback response (via EDI
849, email, or fax). A reference number is also included in the response and stored on the SAP
chargeback document for future resubmissions.
For each line item the vendor will approve it and pay it, or specify a partial payment amount
along with one or more rejection reasons.
For this example, well assume the item was partially paid with a rejection reason code "WAC
incorrect". The vendor expected WAC to be $99.95, but the WAC on the chargeback request
was $100.00. Based on a $90.00 contract price, the vendor expected a chargeback request
for $9.95 rather than the $10.00 that was submitted.

The system behavior for each type of rejection is fully configurable. In this example, the
system has been set to automatically post the chargeback difference to a write-off account.
Rejections are recorded on the chargeback document as a "complaint", which links the
chargeback to a "complaint document". Complaint processing is completely configurable: for
each reason code additional fields, validations, triggers, and workflows can be defined.
Figure 11: Chargeback Complaint
(click for larger image)

Step 8. Release Chargeback to FI

The chargeback is now complete and can be released to FI. Based on the chargeback pricing
procedure, the original chargeback accrual (for $10.00) is reversed and the actual amount
paid ($9.95) is posted to chargeback revenue and as a credit on the vendor account. The
difference of $0.05 is posted to a write-off account.

The chargeback release can be performed through various transactions. Ill use the
chargeback workbench just clicking on the "execute" button will release all selected
chargebacks to FI (see Figure 12).
Figure 12: Mass Chargeback Release to FI
(click for larger image)

Read the rest of this series:

1. Contracts and Chargebacks with SAP Compensation Management
2. SAP Compensation Management Key Features
3. Business Process
4. SAP Process
5. Screenshots
6. Conclusion
Sep 04, 2009 | Compensation Management, Pricing, SAP Chargebacks, SAP Contract
Pricing, Vistex | Leave A Comment

Conclusion
I hope youve enjoyed this brief introduction to wholesaler contract pricing and chargeback
processing using SAP Compensation Management instead of Vistex.
Ive barely scratched the surface about topics like chargeback reconciliation, pricing, and
rebates. And there are other areas like credit-and-re-bill processing and the chargeback web
portal that I didnt cover at all.
If youd like to know more, I encourage you to check out the key features post to get an idea
about what other functionality is available (at a high level). Then let me know what youd like
to see in future posts.
And of course: if you would like consulting or training help, please contact me.
Read the rest of this series:
1. Contracts and Chargebacks with SAP Compensation Management
2. SAP Compensation Management Key Features
3. Business Process
4. SAP Process
5. Screenshots
6. Conclusion