Sales process [Time: 43:11 min.]

Objectives

• List the topic steps of the Sales process
• Describe the effect of each step on inventory and accounting

Business Example

Image that: Your company has set customer satisfaction as its top priority and wants to streamline processes in sales to ensure that customer demands can be as quickly as possible.

Sales Process

Sales Order > Delivery > A/R Invoice > Incoming Payment

The sale-A/R process moves from selling the goods (and services) to delivering those goods to invoicing the customer for their purchases, to the last step in accounting of receiving the Incoming Payment.

Each step in the sales process involves a document, such as Sales Order, Delivery, or A/R Invoice.

SAP Business One efficiently moves all relevant information from one document in the next in the document flow.

According to the business needs, you can choose which documents to include as your process steps.

The only mandatory document in sales in the A/R Invoice. [mandatory = must created]

This topic helps you recognize what is the same in each document so that you quickly focus on just the information you need.

Sales documents carry much of the same information throughout the sales process.

Note that ou also have the option to use a Sales Quotation to start the sales process. The Sales Quotation is not covered in this e-learning.

Sales Process

The Sales Order is a commitment from customer or lead to buy - at agreed - to quantity and price -  a product or service from you.

The Delivery include that the shipment of goods has occurred.

The A/R/ Invoice is the only document that must created in the sales process. It is the request for payment and records the revenue in the Profit and Loss statement.

The Incoming Payment receives the payment from the customer and clears the [411] Customer Account.

Internal reconciliation takes place automatically.

Key Data: Business Partners

Business Partners used in sales process:
- Leads (Use on pre-sales documents or Sales Order; Not on Deliveries or Invoices)
- Customers (Use on any sales document; Covert leads to customers when they buy)
Defaults are set the company level for Business Partner details such as:
- Currency
- Payment terms
- Credit Limit
- Price List

Every document in the sales process must have a business partner assigned.

You can begin the process with the Business Partner Master type: lead. A lead describes people and organizations in the sales pipeline - your potential customers. Lead Master Data record are used as the foundation for sales and marketing. After you make the first sale to a lead, you change the Business Partner type to customer, turning the lead into customer.

A Sales Order can have either a Lead or a Customer assigned. Once you move to a Delivery, you must have a customer.

Customer Master Data describes people and organizations to whom your company sells products and services. Customer Master Data records are used the foundation for documents related to processing and fulfilling orders for customers and for the wizard for dunning customers.

We just mentioned leads and customers, but there is also another type of Master Data, the vendor master, which is not used in the sales process. Rather it is used in purchasing. The reason I mention it here is that there is a great deal of similarity between the data for all three types of Master Data records. Therefore SAP Business One uses windows with a common structure for all three Master Data types.

Before you begin entering Business Partners, you set defaults for Business Partners in the company settings. These defaults are then copied into each newly created Business Partner. For example, the currency defaults to the company's local currency and Payment Terms are set the company's default Payment Terms.

Payment terms are very important and contain more than just due date calculation and discount for early payment. Credit limits and price lists are also set in the Payment Terms definitions. Of course, all these defaults can be changed in the Master Data record, and even in sales documents.

Leads and Customers

Leads
● Use on pre-sales documents or sales orders
● Not on Deliveries or Invoices

When you identify a potential customer, you can create a Lead Master Data record using the Business Partner Master Data window. This enables you to document and track the presales activities with this lead.

You can create the following documents for Lead Master Data record: Sales Quotation, Sales Order, Sales Opportunity, and Activity.
Leads cannot be used on Deliveries or Invoices.

Once you assign a lead to sales documents, the lead cannot be deleted, even if the deal does not go through.

When the lead takes the next step and buys a product or service, the lead become a customer.
In this case, all you have to do is to change the type of the Business Partner Master record from lead to customer.
All the information you have added to the Lead Master Data record is saved, as well as the documents you created for this lead. For example, if you created a Sales Order for a Lead, once the lead become a customer and buys the items in the Sales Order, you can use the Sales Order as the basis for creating a Delivery document and later on an invoice.

Because SAP Business One automates so much of the Sales-A/R process, it is essential that you select or enter the correct customer and item data when you initiate a Sales Order. For example, things as simple as a customer's ship-to and bill-to addresses, if entered inaccurately or incompletely, can have a huge impact on your company's bottom line when goods ordered shows up where they are not supposed to or invoices are sent to the wrong office.

Additionally, in some localization such as the Unites States, the tax code and rate is determined based on the ship-to assignment. So make sure you select the appropriate ship to address from the drop down list, rather than updating the address manually.

Demo - Customer Data

Then I will create a lead and convert it to a customer master.

Before I create a new Business Partner Master record, I review my defaults for my Business Partners in the sales process.

You can set default for Business Partners in the menu path:
Administration > System Initialization > General Settings > BP tab.

There are several settings here. I will just point out a few useful settings. One useful setting is to turn on credit limit checking for Business Partners in documents. Here you can see we have activated credit limit checks for the A/R Invoice. Once the check is active, a warning message will appear when the customer's account balance plus the amount of the document exceed the customer's credit line.

Next you will see a section where you can set values that will default into a newly created Business Partner Master.

You can set default Payment Terms and Payment Methods for customer masters and vendor masters.

The details behind the Payment Terms, Payment Methods and dunning terms are defined in the menu area for set up for Business Partners.

Administration > Setup > Business Partners.

Besides setting up the details for payment and dunning, there are several other transactions to set up defaults for your customers. You can also adjust the address format used in the Business Partner Master.

You can set up groups and create properties used to organize your customers for reporting and pricing. We have decided that we would like to have a group to give special pricing for our customers who are schools. I will create a customer group for that purpose. I choose Customer Groups. I enter Schools. Choose Update. Then choose OK to close the window.

Now we will look at setting up a Business Partner.

Business Partners > Business Partner Master Data. Change Add mode.

Choose the Addresses tab page. To enter the bill-to address, choose Define New (under Bill to).

To enter the ship-to address, choose Define New (under ship to). Choose Add to save the data record. Choose Add to save the data record.

Later Company contacts me to order some printers, so I will convert the lead to a customer.

Let's assume that Hillsdale School has just called us inquiring about purchasing computer equipments. I will set the school up as a lead.

Business Partners > Business Partner Master Data.
Change to search mode and search for lead. Enter the code value in the Code field and choose Find.

Choose the Address tab page. To enter the bill-to address, choose Define New (under Bill to).
To enter the ship-to address, choose Define New (under Ship to). Choose Add to save the data record.

Later Hillsdale School contacts me to order some printers, so I will convert the lead to a customer.

I change the Business Partner Type to Customer and adjust the lead's code to conform to our naming conventions for customers.
Note that this change could also have been made at a later point in the process after I create the Sales Order document.
I save the changes by choosing Update. The OK.

Key Data: Items

- Items represent products to be sold
- Items can be for either goods or services
- Item information is stored in the Item Master Record

Besides the Business Partner, another key piece of data entered in the Sales Order is item data.

Items represent products to be sold: either goods or service. Like Customer Master Data, item information is stored in Master Data records.

Services you sell can also be setup as Item Master Data records. If the services defined as items they can be entered into Sales Order along with physical items.
Alternatively, you can use the Item/Service type field to switch to a service type document. where descriptions of service can be entered along with prices.

Using Price Lists

Price List basics:
- 10 default Price Lists are provides
- Items are linked to every prince list
- Assign a Price List to each customer
- The assigned Price List defaults into a sales document automatically

Price List > Customer Master Record > Sales Document

When you enter an item into a sales document, a price is automatically found. How does this work?

Company provides 10 default Price Lists. Items are linked to every Price List. You then set up prices for each Price List.
Of course, you do not have to use all ten Price Lists, but they are provided to you so that you can offer different prices to different group of customers.
You assign a price list to each customer via default Payment Terms.

Of course, the Price List can be changed in the customer master. When you enter the customer in a sales document, the assigned Price List defaults to the sales document automatically. The system will then use that Price List to price items in the order.

Of course, more complex pricing can be used such as Special prices, Discount groups, and Pricing hierarchies.

Prices can also be changed in the Sales Order by authorized users. For example, a salesperson might give a 5% discount to a particular item or to whole Sales Order.

Sales Order

The Sales Order is an important document - it tells everyone to get busy filling that order. As such, this document is important for planing production, creating Purchase Orders, and scheduling resources.

One unique feature of SAP Business One is that you can create Purchase Orders directly from Sales Orders, thereby streamlining your supply chain as well as Material Requirements Planing process.

You can change a Sales Order (changing quantities, updating prices or discounts, and so on) after have posted it. This is possible as long as you have made the appropriate setting in Document settings and there are no deliveries or invoice documents which reference the Sales Order.

A Sales Order can be based on one or more Sales Quotations.

A Sales Order affects the available stock level. This means that the stock available to sell is reduced by the quantity in the order.

When you enter Sales Orders, no value-based changes are posted to the general ledger, but the items added to the committed quantity in the inventory module

Let us imagine that our customer orders 5 printers.

Our customer orders 5 printers
We enter customer, items, and quantity in the Sales Order
The system determines the price automatically, based on the customer's assigned Price List.
Sales person offers a discount to the customer, so manual discounter for 1% is entered in the order
Based on the Payment Terms, the customer is also eligible for an early payment discount of 2%.

Open Items List

Open Item List:

• Open Sales quotations
• Open Sales Orders
• Open Deliveries
• Open ...

The Open Items report allows the user to view open Sales and Purchasing documents. Use this report to get an accurate picture regarding the status of documents in the system.

Only documents status Open appear in this report.

Documents that were partially copied to target documents are still open and will also appear in this report.

You can choose which document type you would like to view: for example, pull up all open A/R Invoices or all open Sales Orders.

As you view the list, you can drill down into a document on the list to display the document itself.

Demo - Sales Order

We will create Sales Order.

Hillsdale Schools just called to place an order for five printers. I choose Sales A/R > Sales Order.

A customer [School] has just called to place on order for five printers. I choose Sales A/R > Sales Order.
The sales person gives a 1% discount to the customer for being a new customer. The purchaser from the school receive a 2% discount for paying within 10 days.
In the Accounting tab, I check if the terms are correct. I will review the Payment Terms and adjust if necessary.
To review the details of the Payment Terms, I choose the link arrow. This will take me to the definition from the setup menu.
Payment terms include the calculation for due date of the invoice. Also, I can see that this customer will receive a cash discount.

I can view the details for the cash discount assigned to these Payment Terms by choosing the link arrow. Here we can see that if the customer pays 10 days they will receive 2% discount.

I choose Cancel to return the Payment Terms, then cancel again to return to the Sales Order.

Then I choose Add to save the Sales Order.

Now let us take a look at the Sales Order's effect on inventory and accounting. I open the Sales Order I just created using the Last Data Record icon.

To view the details for the row I double-click on Row 1. The warehouse assigned is 01.

Then I choose the link arrow to next to the Item No. field to view the Item Master Record. To see the quantity in stock, I choose the Inventory Data tab.

When Sales Order is added, the quantity is shown as Committed. I choose Cancel to return the Sales Order.

Another useful report to show the effect of the Sales Order is the open items list.

Sales A/R > Sales Reports > Open Items List. Then I choose Sales Orders in the dropdown list for open documents. Here I can see what is currently on all the Sales Orders. I can see my Sales Order and Item. I choose my Sales Order so I can point out other options available in the Sales Order.

The Sales Order contains essential information not just for selling the item, but information that will be used by the Delivery and later by the Invoice.