Preface – This post is part of the SAP SD series.

Introduction

After the sales have happened and after the logistics processes, which is physically delivering the goods, have happened and the truck has left the warehouse, you can start to invoice the customer.

If you take a case of Amazon, you go select the product, you pay and then get the order number. This is typically the case with any B2C physical deliverables. You can take Wal-Mart retail sales. Anybody walks into Wal-Mart, buys a product, you give the product, the sales clerk scans it, generates a bill, you pay, you walk out.

Now, this is B2B we are talking about, the sale between Wal-Mart and HP. Wal-Mart sends an order. HP takes the order, delivers the order, and then after the delivery, it bills Walmart. In the meanwhile, the delivery would have happened or it might be in between.

That’s a difference in how billing happens between B2B and B2C scenarios.

What is invoice or billing?

Billing is as simple as how Walmart generates a bill for you. There are these products that you have asked for, some desktops, some laptops, what not quantities. However much has been delivered, we’re going to bill them. Let’s say we have only delivered 95 laptops and 15 desktops. So we are going to bill for 95 laptops and 15 desktops. And what do you do after billing, you generate a bill or an invoice which says customer Wal-Mart these are our products, these are the prices which will include taxes, freight discounts, etc. Then finally sent a copy to Wal-Mart saying, this is what we have delivered and this is what you need to pay us.

So billing is an itemized selection of what has been shipped based on the customer’s order and how much the customer needs to pay. This is where the dollar value comes in.

Now, in the next article, we’re going to create an invoice or billing for the delivery that we have just PGI.