SAP SD Reimbursement Process Configuration | Step-by-Step Guide Part 1

Part 1: Introduction to SAP SD Reimbursement Process & Initial Configuration

In business operations, errors and adjustments are inevitable. Whether it's an overcharged invoice, damaged goods or a customer return, companies must handle reimbursements in a structured and auditable way. SAP Sales and Distribution provides a standardized process for issuing reimbursements through credit memo requests and credit memos, ensuring transparency, compliance and integration with Financial Accounting.

What Is the Reimbursement Process in SAP SD?

The SAP SD reimbursement process allows businesses to compensate customers for overbilling, returned products or other credit situations by generating credit memos. This process ensures that:

• Customer balances are updated correctly in Accounts Receivable (FI-AR).
• Reimbursements are traceable to original transactions like invoices or deliveries.
• Internal controls are maintained through approvals and audit trails.

Reimbursement typically follows these steps:

1. Creation of a Credit Memo Request
2. Approval and validation
3. Generation of a Credit Memo (billing document)
4. Automatic posting to Financial Accounting

When Is Reimbursement Used?

• Price discrepancy (e.g., invoice issued for ₹12,000 instead of ₹10,000)
• Customer returns damaged goods
• Warranty-based refunds
• Free-of-charge replacement promised but billed

Configuration Part 1: Setup of Credit Memo Request in SAP

To initiate reimbursements, you must configure a Sales Document Type and Item Category for credit memo processing.

Step 1: Define Sales Document Type – Credit Memo Request (G2)

SPRO Path:
IMG → Sales and Distribution → Sales → Sales Documents → Sales Document Header → Define Sales Document Types




Field	Value
Sales Document Type	M3
Description	Credit Memo Request
Sales Doc Category	K (Credit Memo Request)
Output Application	V1
Billing Type	G2
Pricing	Yes
Delivery Type	(Blank – Not required)
Screen Seq. Group	GA

Click on Save

This ensures the credit memo request must refer to an existing invoice, maintaining traceability.

Step 2: Define Item Category – G2N (Credit Memo Item)

SPRO Path:
IMG → Sales and Distribution → Sales → Sales Documents → Sales Document Item → Define Item Categories

Field	Value
Item Category	M3N
Description	Request
Billing Relevance	B (Order-related billing – based on order qty)
Pricing	Yes

Click on Save.

Then assign M3N in

Sales and Distribution → Sales → Sales Documents → Sales Document Item → Assign Item Categories.

Click on Save.




Pro Tip:

Always use reference to a billing document (M) for credit memos to keep audit trails strong and prevent misuse.

Part 1 Summary – SAP SD Reimbursement Process

In Part 1 of the SAP SD Reimbursement Process series, introduced the concept of reimbursements in SAP SD — typically handled through credit memo requests and credit memos. Explained common use cases such as price discrepancies, returns and customer refunds.

The configuration covered includes:

• Creating a Sales Document Type (M3 – Credit Memo Request)
• Defining the Item Category (M3N) with Billing Relevance = B for order-related billing

This setup enables businesses to process customer reimbursements in a standardized, auditable way.

What’s Next?

Reimbursement Process Configuration Part 2

Stay tuned for Part 2: SAP SD Reimbursement Process

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