SAP ERP (Enterprise Resource Planning) system consists of a number of modules.

Each of the modules covers a certain business area of a company that uses SAP.
These modules include Finance Accounting, Controlling, Production Planning,
Materials Management, Business Intelligence, Human Resources, etc.
SAP SD (Sales and Distribution) is one of the worth noting modules of SAP ERP. It
encloses all the information regarding customer and services. In an organization, it
deals with shipping, selling and transportation of goods and services.
SAP SD is specially designed to facilitate the following business processes in an
enterprise:

 Customer Master and Material Master data

 Sales Orders
 Deliveries
 Pricing
 Billing
 Credit Management

SAP ERP Sales and Distribution is a component of the logistics module and it
assists the customers in issues related to the quotations, sales order and billing. It is
in collaboration with the MM and PP modules. It enables organizations to update
their sales price, and observe open orders and other forecast.
SAP SD Modules
Sales & Distribution (SD) is one of the prominent modules of SAP R/3 services. This
module comprises of several constituents called sub-modules. These include:
SAP-SD-MD (Master Data): SAP SD user has a master data that tracks each and
every transaction within the data. The SD master data comprises of both customer
and material data, record of price conditions, and credit management. This module
includes processes of order and cash.
SAP-SD-BF (Basic Functions): SAP SD configuration results in an effective
process across all basic functions involved in sales and distribution area. Here,
examples of the basic functions can be pricing, output, etc. The amount of pricing
used for a particular sale and the output result from the same and so on.
SAP-SD-SLS (Sales): As the term suggests, SAP SD sales handle the minute
details of every sale that is taking place. From recording the product to customer
details, pricing, feedback and the sales process, everything is tracked through this
module.
SAP-SD-SHP (Shipping): Sales are closely related to shipping and delivery. A
Product needs to be rightly shipped and delivered to the customer. There are
different methods of shipping and this module tracks each product used for each
delivery. The entire process from being shipped to delivered or return back is
recorded through this module.
SAP-SD-TBA (Transportation): This component works hand in hand with the
shipping. The mode of transportation for each product differs and this module keeps
track of all the transportation data.
 SAP-SD-FTT (Foreign Trade): This component helps a department to handle the
data related to foreign trade including both imported and exported products. This
module works best for enterprises involved with trade across nations.
SAP-SD-BIL (Billing): Billing is the key part in any transaction. Consumers prevail
the choice of either paying through online media or else through cash on delivery.
This particular module keeps track of all the billing data in an appropriate manner.
SAP-SD-CAS (Sales Support): From selling a product to maintaining it for a
process, customers constantly interact with the sales team. The data exchanged
between the sales team and customers while delivering support for a product is
recorded and reported through this module.
These are some of the multiple components involved in SAP SD user for effective
process work within sales and distribution area.
Below are some of the key areas covered by the above modules:

 Pre-sales actions, comprising of Inquiry and Quotation creation.

 Sales Order processing, viz. Sales Order (SO) creation.
 Shipping, including Outbound Delivery document creation.
 Billing, which takes into count both Billing document and invoice creation.

The characteristics of SD include:

 Implements business processes used in selling, and billing of goods and services.
 Integrates data flow to the remaining modules of SAP.
 Multilingual/Multicurrency: Several languages can be used. Conversion between
currencies is automatic and connecting to SAP’s real-time currency rate database in
Germany enables operational use.
 Adaptable functionality. R/3 customizes the product through the IMG function.
 Pricing Flexibility. In SD, you can create complex pricing schemes that are
dependent on customers, goods sold, special promotions, etc. Rebate processing
options are also very sophisticated and comprehensive.
 Simple Order Entry. The user enters basic order details all on one window. From this
window, there is simple access to all the levels of the order, namely header, item,
and schedule line information.
 Comprehensive Reporting. The Sales Information System (SIS) allows data to be
stored, consolidated, and reported upon by the user in a variety of formats.
 Effective Batch Processing of Orders, shipments, and other sales documents based
on order types, customer, or material.
 WHAT IS ORDER TO CASH?

In business, order-to-cash (O2C) encompasses the processes used to get

paid from a customer order. One would think this is a simple and
straightforward process, but anyone who has been involved in sales at a
large company knows that the operation is not so simple. Below you can
find an overview of the order to cash cycle and ideas on how to cut down
the process time.

ORDER TO CASH PROCESS FLOW & CYCLE

The order to cash process is made up of several steps. Each step is vital
to business operations. Some computer systems, like an enterprise
resource planning system (ERP), connect each of the order to cash
processes. In most large ERP systems, like Oracle and SAP, the order to
cash process is made up of eight smaller processes.
 Customer presence
 Order entry
 Order fulfilment
 Distribution
 Invoicing
 Customer payments
 Cash Application
 Deductions
 Collection
If a business sets up its sales systems efficiently, much of the order to
cash process flow can take place without human interaction. For digital
products, like accounts payable automation, the entire process can take
place with no human input at all outside of the customer entering order
and payment information.
The eight steps in the order to cash cycle can be lumped into four major
processes: order entry, order f ulfillment, billing, and payment. Depending
on the industry, the order of these processes may change, but the overall
process works similarly for each business.
The order entry process may require manual intervention from a sales
representative or an order entered by a customer directly. A consistent,
high quality order entry system can prevent many problems later in the
process, so it is important that this process is thoughtfully built to ensure
efficiency and accuracy.
Order fulfillment varies most widel y across industries. Construction,
manufacturing, and digital product companies all operate very differently.
Each industry has its own best practices for order fulfillment. Whenever
possible, invoicing and accepting payment before delivery is ideal. This
can dramatically shorten the order to cash process time.
In the ideal world, billing takes place automatically when the order is
entered. However, most business people know that processes c an be far
from ideal. If ordering, invoicing, and payment collection can all be
connected into one system that will help better manage the flow behind
the scenes.
Payment can be made by issuing a check with check writing software,
cash, credit card, debit card, or electronic funds transfer in most cases.
The options each business offers generally depends on the industry and
customer needs. As a rule, it is best to make it as easy as possible for
customers to give you money. Doing so ensures customers can pay
quickly and on time.
It is important to remember that while sales bring business in the door,
effectively responding to each client’s unique needs in a timely manner is
critical. Jamie Liddell of Shared Services and Outsourcing Network
(SSON) explains that if you “choke up here… you’re depriving your
organization of critical energy at the worst possible time.”

ORDER TO CASH BEST PRACTICES

While every business has many options when approaching the order to
cash cycle, some companies have emerged as clear industry leaders . By
looking at what the best companies do, it is possible to identify the best
order to cash practices to follow.

STANDARDIZE ORDER TO CASH PROCEDURES COMPANY WIDE

Whether a company has 10 employees or 10 thousand, consistency and

standardization can help increase productivity and decrease order to cash
process cycle time. Cutting even a day or two off of the order to cash
cycle can help companies put more money in the bank, operate without
financial worry, and help the company earn more through short -term cash
investments.
INTEGRATE ALL ORDER TO CASH SYSTEMS
Many large enterprises, particularly those that have grown through
acquisition, often have dozens of independent computer systems.
Integrating those systems creates efficiency that can shorten the order to
cash cycle by automatically sending data into the next step. Fully
integrating order, fulfillment, billing, and payment processing systems
eliminates the possibility of human error and, depending on the industry
and the company, can cut days or weeks off of the order to cash process.
Finance and accounting professionals may need to push IT departments
on this, but doing so can considerably improve processing times and cut
costs.

EMPOWERED STAFF TO HANDLE O2C EXCEPTIONS

Even the best engineered and integrated processes may have an

occasional exception. Some customers or sales staff do not enter an order
right, a short system downtime causes some orders to fall out of the
process, or one of dozens of other potential problems can arise. It is
important to have well-trained staff standing by and ensure those
employees are empowered to resolve the issue quickly and independently.
CONSTANT MONITORING AND PERIODIC EVALUATIONS OF THE
ORDER TO CASH PROCEDURES

The ERP system behind corporate order to cash systems should be

configured to send an automated alert any time an exception takes place.
Requiring a human to review and intervene creates a situation ripe for
failure. In addition to automated alerts, managers should use a scorecard
or dashboard to review key metrics on a monthly or quarterly basis to
identify and remove bottlenecks from the process. Setting high but
realistic goals encourages the support team to take all possible steps for
efficiency and success.
Every business has opportunities to improve processes and procedures
over time. Sometimes improvements can be iterated by internal teams, but
oftentimes businesses look to outside consultants and vendors to better
manage the order to cash cycle.
Third party tools may look expensive, but well integrated tools can easily
make up the cost. Improved margins and lower operating costs are always
possible. If a process improvement allows reducing headcount by two or
three employees, that can easily be worth $120,000 to $240,000 per year.
Human resources are expensive and computers are almost always more
efficient at order to cash processes.
Think about your experience each time you visit a restaurant. Even if you
can quickly make your order and get your food in a hurry, if the server is
slow to drop off your check or run your credit card, it can be frustrating.
By optimizing the order to cash process flow, businesses ca n remove that
frustration from its customers.
Every time managers and employees interact with any system in the order
to cash cycle, they should be looking for opportunities to improve. Even a
small improvement is worthwhile. It all adds up to better employee
operations, shorter order to cash cycles, and most importantly, superior
customer experiences.
Cross functional mapping