Lesson 3 of 5
Quantity and value contracts
9 min
A quotation is a one-off offer. A contract is a longer-term agreement: the customer commits to buy a quantity or a value over a period, usually in exchange for a better price. In SAP S/4HANA Sales, contracts are outline agreements. They do not ship anything themselves. The customer calls off goods with release orders, which are ordinary sales orders created with reference to the contract.
| Quantity contract | Value contract | |
|---|---|---|
| Commitment | A total quantity of specific products | A total monetary value, possibly across many products |
| Standard document type | CQ | Value contract types (for example WK1 and WK2 in many systems; check yours) |
| Typical use | Great Lakes Fleet Services commits to 1,200 CMC-ALT-100 this year | A fleet customer commits to $500,000 of parts of any kind |
| What release orders consume | Quantity | Value |
| Billing | Each release order is billed as normal | Release orders are billed, or the contract itself via a billing plan |
Creating a contract
In SAP GUI, contracts are created with VA41, changed with VA42 and displayed with VA43. In Fiori, Manage Sales Contracts lists and maintains them; SAP has delivered a newer version of this app for quantity and value contracts. A contract carries a validity period in its header (often derived from a contract profile and date rules), the agreed items or value, and the prices. It may also restrict who can release against it, for example only certain ship-to parties or members of a customer hierarchy.
Release orders and the remaining balance
When Maria creates a sales order with reference to the contract, the system checks the contract's rules (validity period, authorized partners) and updates the released quantity or value on the contract. For a quantity contract for 1,200 alternators, a first release of 300 leaves 900 open. For a value contract, the system compares the release order's value with the open target value and reacts as configured when it would be exceeded, typically with a message.
- Jan 2Contract createdQuantity contract 40000021 for 1,200 CMC-ALT-100 at $195, valid Jan 1 to Dec 31
- Feb 10Release order 1Sales order for 300 with reference to the contract; 900 open
- May 5Release order 2400 units; 500 open
- Sep 18Release order 3450 units; 50 open
- Dec 31Contract expires50 units never released; sales decides whether the shortfall clause applies
Monitoring what is left
Sales teams need to know which contracts are under-consumed (a revenue risk and perhaps a penalty to bill) and which are nearly exhausted (a renewal opportunity). The contract itself shows released and open values in its status and document flow, and Manage Sales Contracts and contract list reports let you filter by validity and status. Make "contracts expiring in the next 60 days with more than 20% open" a standing report for the account manager.
Billing under contracts
For a quantity contract, each release order is delivered and billed like any other order, at the contract price. A value contract offers a choice: bill each release order as it ships, or bill the contract itself through a billing plan, for example monthly installments. SAP Learning notes that value contracts that have not been completely released cannot be billed automatically under the standard rules. Whichever model you use, the expected result for a release is the same: the contract price on the order, the contract balance reduced, and an invoice that the customer can match to their agreement.
What would you do?
Great Lakes Fleet Services has a quantity contract for 1,200 alternators at $195. Maria enters a standard order for 300 alternators without referencing the contract, and the order prices at the list price of $210. What has gone wrong, and what is the fix?
- Contracts are outline agreements; release orders (sales orders with reference) call off goods against them.
- Quantity contracts (CQ) commit a quantity; value contracts commit a monetary value.
- VA41/VA42/VA43 in SAP GUI; Manage Sales Contracts in Fiori.
- Release orders check validity and partners and update the released quantity or value.
- Monitor open balances against time left to spot shortfalls and renewals.
Check your understanding · not graded
Lesson check
1. What is a release order?
2. Which document type is the standard quantity contract?
3. A 1,200-unit contract has releases of 300 and 400. What quantity is open?
4. Which situation signals a shortfall risk?