Free Goods Handling (2 Ways)

LinkedIn | Akash S K
Email :- akash.250896@gmail.com
Mob. No: - 7975776231
Free Goods Handling (2 Ways)

In this topic you will learn about, what is Free Goods Handling and you will understand
how to create Sample Material, Goods receipt wrt purchase order through movement type
101 by activating Free of charge check box, another way Goods receipt without purchase
order through movement type 511.
In SAP we can handle Free Goods Handling by using 2 Scenario:-
✓ Create PO with Activating free of Charge use Movement type 101.
✓ Create GR without PO use Movement type 511 i.e. (Receipt of Delivery
Without Charge)
What is Free Goods Handling

The process in which the Vendor provide certain material or quantity as free of charge
based on order quantity or it may be sample product, promotional product.
Scenario 1 Scenario 2
GR wrt PO GR without PO
1.Create
1.Create Material
Material Master
Master MM01
No accounting 2.Create No
entries ,so no Vendor 2. Create
accounting
Invoice Master XK01 Vendor
entries ,no
master
Invoice
3.Goods
3.Create PO Receipt
4.Goods MIGO with
ME21N with
Receipt MIGO
with Mvt 101
activating free Mvt 511
of charge
Mob. No: - 7975776231
In depth explanation of Free Goods Handling:

Why Free Goods Handling Process is useful to all industries: Before going to
explanation, First will discuss with example.
Free Goods in SAP is giving certain material/quantity as free of charge based on

Order quantity. If the Free Goods quantity is a part of Order quantity, it is said to be
Inclusive Free Goods.
It’s also known as FOC (Free of Cost / Free of Charge).
When we order a bulk lot for any company but before ordering bulk lot company
takes the Sample for Trial Testing & Quality purpose. At that time vendor gives a
material without charging any cost. This case known as FOC (Free of Cost / Free of
Charge).
In SAP we can handle Free Goods Handling by using 2

Scenario:-
1] Create PO with Activating free of Charge use Movement type 101.
2] Create GR without PO use Movement type 511 i.e. (Receipt of Delivery

Without Charge)
Important points to remember:
• Free goods handle stocks from vendors are owned and are not valuated.
• Basic behind this in purchase order if suppose any price is manually updated by user or
else price source automatically fetched by Info record as soon as we activate Free of
charge price gets removed and there is no condition tab in item overview.
• There is no accounting entries, Hence no invoice made
Mob. No: - 7975776231
Prerequisites for Free Goods Handling

1. GR Wrt PO :- In this process we have to create PO in which we have to make sure that in
Item overview, Free of charge option should be activate and in Item tab in Invoice section
Inv. Receipt and GR- Bsd IV should be deactivated. So system will update quantity, no
accounting doc.
STEPS: -
➢ Create or Maintain Material Master: MM01/02

➢ Create or Maintain Vendor Master: XK01/02
➢ Create Purchase Order: ME21N
➢ In Item Overview Tab:
Activate Free Of Charge option
In Item Tab:
In Invoice section:
Deactivate Inv. Receipt and GR- Bsd IV
➢ Create Goods Receipt: MIGO with movement Type: 101
➢ Stock Overview : MMBE
2. GR Without PO:- Suppose in this Case PO is not created then GR can be created
without PO with Type 511.
STEPS: -
➢ Create or Maintain Material Master: MM01/02
➢ Create or Maintain Vendor Master: XK01/02
➢ Go to MB1C movement Type:- 511
Enter Plant and Storage location
Enter Vendor, Material, Quantity and text.
OR
➢ Go to MIGO
➢ Select Goods Receipt and Other Instead of PO in dropdown
➢ Enter Movement Type 511
Enter Material, Vendor, Plant, Sloc, Text
➢ Stock overview :- MMBE
Mob. No: - 7975776231
Case 1: Posting Free Goods Handling at Goods Receipt for

Purchase Order
Step: - 1
➔ Create Main Material by using T-Code: - MM01
Material 1001333 created

Mob. No: - 7975776231
Step: - 2
Create a Standard Purchase Order by using T-Code: - ME21N

➔ Enter all the details for PO i.e Material, Vendor, Org. Data, Quantity etc.
➔ Only Pre-requisite is tick mark the Free under Item overview as below.
As soon as we activate Free of charge net price gets removed and therem is no
condition tab in item overview
Mob. No: - 7975776231
➔ Check & Save PO
➔ PO created under the number 4500000931
Step: - 3
Stock overview in MMBE
Step: - 4
➔ Do the Goods Receipt wrt Purchase order by using T-Code: - MIGO

with movement type 101
Mob. No: - 7975776231
➔ Material document 5000001674 posted

➔ In this Goods Receipt Only Quantity of Material Update as we
selected FOC.
➔ As well as no any accounting document generated.
Mob. No: - 7975776231
➔ We can check the Stock by using T-Code: - MMBE

Mob. No: - 7975776231
CASE: - 2
Posting GR use Movement type 511 i.e. (Receipt of
Delivery Without Charge)
Step: - 1
➔ Do Goods Receipt by using T-Code: - MIGO
➔ Select Goods Receipt & Others as above.

➔ Enter the Material, Quantity, Plant, Storage Location & Vendor, Text
Mob. No: - 7975776231
➔ Select the movement type 511: - GI Delivery Without Charge.

➔ Enter the Text. Without entering text system will not allow to post
document.
➔ Check & Post the document

➔ Material document 4900000517 posted.
➔ As we choose movement 511 which is GI Without charge system will not
generate any accounting document
➔ Only Quantity of material gets updated.
Mob. No: - 7975776231

Mob. No: - 7975776231
Case 3:-
Suppose if vendor need to supply sample material of quantity 10 along with Bulk
quantity 1000. Then in such case in purchase order first line item 10 is normal
whereas we need to activate free of charge for second line item 20. Therefore
accounting entries gets generated for line item 10 and there is no accounting
entries for line item 20.
For line item 2 there is price and Condition tab in item overview.
Mob. No: - 7975776231
PO created under the number 4500000931
Material document 4900000518 posted.

Mob. No: - 7975776231
In display FI Document accounting entries will be available only for line

item 10 and there is no accounting entry exist for line item 20

Free Goods Handling (2 Ways)

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LinkedIn | Akash S K

Free Goods Handling (2 Ways)

What is Free Goods Handling

In depth explanation of Free Goods Handling:

Free Goods in SAP is giving certain material/quantity as free of charge based on

In SAP we can handle Free Goods Handling by using 2

2] Create GR without PO use Movement type 511 i.e. (Receipt of Delivery

Important points to remember:

Prerequisites for Free Goods Handling

➢ Create or Maintain Material Master: MM01/02

Case 1: Posting Free Goods Handling at Goods Receipt for

Material 1001333 created

Create a Standard Purchase Order by using T-Code: - ME21N

➔ Check & Save PO

➔ PO created under the number 4500000931

Stock overview in MMBE

➔ Do the Goods Receipt wrt Purchase order by using T-Code: - MIGO

➔ Material document 5000001674 posted

➔ We can check the Stock by using T-Code: - MMBE

➔ Select Goods Receipt & Others as above.

➔ Select the movement type 511: - GI Delivery Without Charge.

➔ Check & Post the document

➔ We can check the Stock by using T-Code: - MMBE

PO created under the number 4500000931

Material document 4900000518 posted.

In display FI Document accounting entries will be available only for line

➔ We can check the Stock by using T-Code: - MMBE

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