Sales Contract Versus Sales Order

[Former Member]

In a Project based billing scenario, when would you start the process with a sales contract and when would you use a sales order?

Basically, what is the difference between setting up a sales contract (va41) and using it for Project billing versus setting up a sales order (va01) for the same.

[Former Member]

Hi,

Milestone billing is typically used for billing projects, such as plant engineering and construction projects. Such projects often include a series of milestones that mark the completion of different stages of the work

First you create contract and maintain billing plan as milestone billing

in billing plan maintain milestone(stages)

Example : Construction of building

Initial - 10 %

construction start - 10%

after completion of 70 percent work - 50%

full completion - 30 %

Now first milestone occurs then you can create sales order with reference to contract(an order created from contract is called as release order) and bill customer.

Please go through below link so you will get more insight on this.

http://help.sap.com/saphelp_46c/helpdata/en/dd/5606b5545a11d1a7020000e829fd11/frameset.htm

kapil

[Former Member]

Thanks Kapil, that is very helpful.

I understand the business case for having these two as seperate, as you may have a agreed "contract" with a customer but you wont't bill him unless you do some "work" (as in milestones are reaached) which is when you would create a Sales Order, but are you aware of any reason ( technically) that these two should be seperate?

I mean we can have a billing plan on a Sales order as well, and then bill every line as we reach milestones?

[Former Member]

Hi,

You are right we can maintain billing plan for order also.

But these two have for separate business process.

We create order for order confirmation(i.e customer confirm order)

Where as contract is different i.e contract is nothing but agreement between two parties

contract have specific to time,value-price agreements, to whom, for which product or services

Kapil