User Manual: Free of Cost - Purchase
Order Approval Process
This user manual provides a comprehensive guide to understanding and utilizing the Free of
Cost (FOC) Purchase Order (PO) approval process within SAP. This document aims to simplify
the process, making it more accessible and understandable for all users. It covers material
purchase orders, services purchase orders, and assets approval processes.
1. Introduction to Free of Cost Purchase Orders
A Free of Cost Purchase Order is used when goods or services are received without any
monetary transaction. This often occurs for samples, warranty replacements, or promotional
items. While no payment is involved, it is crucial to track these items for inventory management,
compliance, and internal record-keeping. The approval process ensures that all FOC
transactions are legitimate and properly authorized.
2. Material Purchase Order (FOC)
For FOC material purchase orders, the process involves creating a PO with a zero value and
ensuring it goes through the appropriate approval workflow.
2.1 Creating a Material PO in SAP
The first step is to create the PO in SAP. Ensure that the item category is set appropriately for
free goods.
2.2 Entering Material Details
When entering the material details, the net price should be set to zero.
2.3 PO Approval Workflow for Materials
Once the PO is created, it enters the approval workflow. The system will automatically
determine the approvers based on predefined rules.
3. Services Purchase Order (FOC)
FOC services purchase orders are used for services provided without charge, such as trial
services or pro bono work. The process is similar to material POs, but with specific
considerations for service items.
3.1 Creating a Services PO in SAP
When creating a services PO, you will typically use a different item category or account
assignment.
3.2 Entering Service Details
Similar to materials, the net price for the service should be zero.
3.3 PO Approval Workflow for Services
The approval workflow for services POs follows a similar logic to material POs, with approvers
defined based on the nature of the service and organizational hierarchy.
4. Assets Approval Process in PO (FOC)
When an asset is acquired free of cost (e.g., donated equipment), it still needs to be recorded
and approved through a PO process to ensure proper asset management and depreciation
tracking.
4.1 Creating an Assets PO in SAP
For FOC assets, the account assignment will typically be to an asset.
4.2 Linking to Asset Master Data
The PO will link to the asset master data, even if the value is zero.
4.3 PO Approval Workflow for Assets
The approval for FOC assets often involves finance and asset management teams, ensuring
that the asset is properly recognized and tracked within the company's books.
5. General Approval Process Considerations
Regardless of whether it's a material, service, or asset PO, the general principles of the
approval process remain consistent.
5.1 Approver Roles and Responsibilities
Each approver in the workflow has specific responsibilities to review and approve the PO based
on their authority and the nature of the request.
5.2 Tracking PO Status
Users can track the status of their POs within SAP to see where they are in the approval
process.
