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The current business landscape is becoming increasingly complex, driven by factors like globalization and ever-changing market demands. Processing orders is no longer just “one order, one invoice”. A single sales transaction may involve multiple deliveries (in different countries) , and deal with different VAT rates, different currencies, and more.
Fortunately, SAP provides a solution for businesses to ensure this process runs smooth and transparent: Billing Split.
This blogpost will explain:
- What billing split is,
- Why it is essential for modern businesses, and
- How your company can benefit from using it.
What is "Billing Split"?
Billing split means that a single sales order or delivery is divided into multiple invoices based on predefined criteria. In SAP some criteria’s are evident and automatically trigger a billing split when they differ:
- Payment terms
- INCO-terms
- Sold-To Party
- And more…
In addition, custom criteria can be defined using splitting routines. These can be set up with the help of an ABAP-developer. A splitting routine can be customised to whichever splitting criteria your company needs. Examples are:
- Reference fields (e.g. PO numbers)
- Different deliveries
- Varying VAT-rates
SAP evaluates these criteria and ensures that a separate invoice is generated for each unique combination.
Why is Billing Split essential?
Imagine receiving a sales order with different split criteria, for example varying payment terms and/or tax requirements. Issuing a single invoice could lead to administrative confusion, accounting errors, or even worse, cause compliance issues.
Billing split makes this process clear and manageable:
- Clear financial administration: Each invoice corresponds to one distinct transaction.
- Customer satisfaction: Customers receive clear, separate invoices aligned with their administrative processes.
- Compliance and regulations: Easily meet tax requirements in different regions or countries.
Consider an order with multiple deliveries to the same location. By default, SAP will combine these deliveries into a single invoice. If your company prefers to receive separate invoices per delivery, this can be achieved using a customized splitting routine.
Real-life use cases
- An international brewery with a global distribution network
Scenario: The brewery ships to distributors around the world. A distributor in Africa places one order for various products. The brewery ships these from different warehouses in different countries. Due to differing VAT rates and import regulations, billing split is a necessity.
Why billing split?
Due to the order being shipped from different countries, different VAT rates may apply. The currency may also differ if part of the order is shipped from Europe (Euros) and the other part from local African hubs.
Billing split is also important here for compliance, as different customs formalities may be in place.
- A global tech & engineering company makes project-based deliveries
Scenario: The company delivers large installations and machinery in different phases (e.g. machinery, parts, software). Each phase has its own contract- & payment terms.
Why billing split?
This kind of project is long-term, with each phase having project-based deliveries spread over months or even years. Moreover, due to its long-term nature, you may want to collect partial payments, with each phase having different payment terms. Billing split enables phased invoicing aligned with the project.
- A large consumer goods company has multiple diverse product categories with different VAT-rates
Scenario: A supermarket chain orders various items (food, cleaning products, and cosmetics) in a single order. Each product category has different VAT-rates.
Why billing split?
Billing split is beneficial due to the different VAT-rates. A split also ensures accurate taxation and a correct internal cost allocation between the different departments.
Why you should choose SAP
SAP is particularly well-suited for organisations dealing with complex sales processes thanks to:
- Flexible configuration: SAP offers extensive options to define custom split criteria (or split procedures) tailored to the needs of your business processes.
- Automation: Once configured the system automatically detects when a billing split is necessary, no manual intervention needed.
- Integration: Billing split works smoothly with other SAP modules like FI (Finance), MM (Material Management), and CRM, ensuring a consistent and reliable process.
- Transparency and reporting: Easily track and report on split invoices for any order.
Availability in SAP S/4HANA & ECC
The Billing Split functionality is available in both SAP S/4HANA and SAP ECC, enabling automated invoicing for sales orders with differing terms, VAT rates, currencies, or item categories. While the core logic remains consistent across both platforms, S/4HANA delivers improved processing performance, streamlined configuration steps, and tighter integration with other order-to-cash components. This ensures that organisations running on ECC or operating in an S/4HANA environment can use Billing Split to maintain invoicing accuracy, meet compliance requirements, and support complex billing scenarios.
Conclusion
Billing split isn’t just a “nice to have,” but it is an essential tool for companies operating in complex (sales) environments. Especially when they encounter sales orders with varying deliveries, VAT rates, payment terms, or currencies. SAP provides a scalable and reliable solution.
By correctly using billing split, you ensure clarity for your customers, compliance with regulations, and—above all—a smooth administrative process. Which is exactly what you should expect from an ERP system like SAP.
Curious how billing split can deliver maximum value for your organisation? Let’s explore the possibilities together — get in touch with us today, and we’ll help you design and implement a solution that works in practice.
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