Free-of-Charge Delivery: Goods Issue Without Revenue
Samples are shipped to a customer at no charge. A free-of-charge order (FD) with a free item category (KLN) creates a delivery and a normal 601 goods issue, so stock and value still leave the company — but the item is not billing relevant, so no invoice and no revenue are ever created.
Educational content. SAP behaviour varies by configuration and release. Spotted something off? Report it.
Digital twin
01Customer asks for samples
Demo Retail wants 5 EA to evaluate before placing a bigger order.
Business scenario
Demo Retail Pvt. Ltd. asks for 5 EA of FG-2000 as free samples before committing to a larger order. Sales raises a free-of-charge order; the warehouse ships the samples exactly as it would a paid order, and nothing is invoiced.
All companies, numbers and documents are fictional demo data.
Step-by-step flow
- 01
Customer asks for samples open in twin
Demo Retail wants 5 EA to evaluate before placing a bigger order.
Free goods are a real cost, so most companies control who may create free-of-charge orders and require an order reason for reporting.
- 02
Free-of-charge order is created open in twin
Order 10000789 (type FD) is created with a net value of ₹0 and item category KLN.
The item category is doing two jobs: it suppresses pricing and it makes the item not relevant for billing. Both together are what 'free of charge' means in SAP.
- 03
Delivery is created as normal open in twin
Outbound delivery 80000999 is created. Shipping handles it exactly like a paid order.
Logistics does not care whether the goods were paid for. Only the billing side is different.
- 04
Picking and loading open in twin
5 EA are picked from SLoc 0001 and loaded for Demo Retail.
Identical to a paid delivery — the difference appears only after goods issue, when there is nothing to bill.
- 05
Post goods issue (601) open in twin
FG-2000: 100 → 95 EA. The value leaves inventory even though nobody is charged.
This is the key insight. Free of charge changes the billing side, never the goods movement. The company still bears the cost of the goods.
- 06
Samples go to the customer open in twin
The samples travel to Demo Retail. Nothing further will be posted.
From here a paid order would go to billing. This one has nowhere left to go.
- 07
Nothing to bill open in twin
The delivery never appears in the billing due list: item category KLN is not relevant for billing.
Billing relevance is a property of the item category. KLN carries none, so VF01 and the billing due list (VF04) ignore this delivery entirely.
- 08
Free-of-charge delivery complete open in twin
FOC order → delivery → 601 goods issue → end. Stock down 5 EA, expense ₹6,000, revenue ₹0.
Comparing this with standard order to cash isolates exactly what billing contributes: the receivable and the revenue, nothing else.
SAP documents
Stock impact
| Step | Plant / SLoc | Stock type | MvT | Change |
|---|---|---|---|---|
| Post goods issue (601) | 1000 / 0001 | Unrestricted use | 601 | −5 EA |
Accounting impact
Goods issue for a free-of-charge delivery
Configuration dependentPost goods issue (601)
- Dr Samples / promotional expense (or cost of goods sold) (GBB/VAX)₹6,000
- Cr Inventory — finished goods (BSX)₹6,000
The quantity and value leave inventory exactly as in a paid sale. Where the offsetting debit lands is a configuration decision: many companies route free-of-charge issues to a separate advertising, samples or promotional expense account rather than ordinary cost of goods sold, using a different account modification in account determination. Your system's accounts depend on that configuration.
Typical conceptual flow. Actual G/L accounts and posting behaviour depend on material valuation, automatic account determination and system configuration.
Movement type
- 601GI for delivery — identical to a paid saleReversal: 602
- 551GI for scrapping — the alternative when goods are written off rather than given away
Ships goods to a customer without charging for them — samples, promotional items, goodwill replacements — while still recording the cost and the stock reduction properly.
Transactions & Fiori apps
- VA01 — Create Free-of-Charge Order (type FD)
- VL01N — Create Outbound Delivery
- VL02N — Post Goods Issue
- VA03 — Display Order — check item category and billing status
- VF04 — Billing Due List — the delivery should not appear here
- Create Sales OrdersAvailability depends on release and scope
- Create Outbound Deliveries
Differences by SAP version
Standard free-of-charge order types FD (delivery) and SO/CR variants for subsequent free deliveries.
Unchanged. Free-of-charge and subsequent free-of-charge deliveries remain standard order types.
Available through Fiori apps; the item-category-driven behaviour is identical.
Configuration
Order type FD and authorisation
Configuration dependentFree-of-charge orders give goods away, so most companies restrict who may create them and add an approval or order-reason requirement.
Item category KLN
Configuration dependentCarries no pricing and no billing relevance. Both properties together are what makes the item free of charge; changing either breaks the process.
Account determination for free issues
Configuration dependentA separate account modification can route the debit to a samples or advertising expense account instead of cost of goods sold. Common, but not automatic.
Free goods (item category TANN) as an alternative
TypicalFree goods attached to a paid item — buy 10 get 1 free — use a different mechanism: a free goods master record and a sub-item on the paid order, not a separate FD order.
Statistical values and CO-PA
Configuration dependentWhether a statistical value is carried for reporting the notional revenue given away is a configuration choice on the condition type.
Prerequisites
- Free-of-charge order type (FD) configured and authorisation controlled
- Item category KLN determined for the item, with no pricing and no billing relevance
- Order reasons maintained so free goods can be reported on
- Account determination decided for free-of-charge issues (separate expense account or ordinary cost of goods sold)
- Stock available at the delivering plant, exactly as for a paid order
Master data
- Customer / business partner
- Sold-to and ship-to data drives the delivery, as in any sale.
- Material master
- Sales views allow the sale; valuation supplies the cost posted at goods issue.
- Order reasons
- The basis for reporting how much is given away and why.
Organizational structure
- Company code 1000
- Sales organization 1000, distribution channel 10, division 00
- Delivering plant 1000, storage location 0001, shipping point 1000
Tables
| Table | Description |
|---|---|
| VBAK / VBAP | Order header / item — item category KLN on the item |
| LIKP / LIPS | Delivery header / item |
| MATDOC | The 601 goods movement (MKPF / MSEG in ECC) |
| VBFA | Document flow — ends at the delivery, with no billing document |
Integration
- MMStock is reduced from MM-managed inventory by an ordinary goods issue.
- FIOnly one accounting document exists, from the goods issue. There is no customer receivable.
- COThe cost lands as an expense with no matching revenue, so free goods show up directly in margin and contribution reporting.
Common errors
“The customer was invoiced for goods meant to be free”
Likely causes: Item category determined as TAN instead of KLN; A manual price entered on the item; Wrong order type used
Where to look: Order item category · Pricing conditions on the item · Item category determination configuration
“Free-of-charge delivery appears in the billing due list”
Likely causes: Item category has billing relevance set; Copy control exists from the delivery to a billing type
Where to look: Item category billing relevance · Copy control for the delivery type
“Cost of free samples is mixed into normal cost of goods sold”
Likely causes: No separate account modification configured for free issues
Where to look: Account determination (GBB) and the account modification used · Material document accounting view
“Anyone can create free-of-charge orders”
Likely causes: No authorisation restriction on the FD order type; No approval or order-reason requirement
Where to look: Authorisation objects for sales document types · Order type configuration
Troubleshooting
Something went wrong? Work through these checks in order. They are diagnostic questions, not configuration instructions — confirm changes with your system owner.
CHECK 1
Customer got charged
- Is the item category KLN?
- Did pricing find a condition that should be suppressed?
- Was order type FD used?
CHECK 2
Unexpected invoice
- Is the item category billing relevant?
- Is there copy control from the delivery type to a billing type?
CHECK 3
Accounting looks wrong
- Which account modification is used for the 601 in this case?
- Is a samples/promotional account configured?
- Check the material document's accounting view
CHECK 4
Control concerns
- Who is authorised for order type FD?
- Is an order reason mandatory?
- Is there an approval workflow?
Interview questions
In a free-of-charge delivery, does stock still leave the company, and is anything posted to accounting?
Yes to both. The goods issue is a normal movement type 601: unrestricted stock goes down and the inventory value is posted out. Accounting receives one document crediting inventory; the debit typically goes to a samples or promotional expense account rather than ordinary cost of goods sold, depending on account determination. What is missing is the billing document — so there is no receivable and no revenue.
What exactly makes an item free of charge in SAP?
The item category, typically KLN, determined from a free-of-charge order type such as FD. It suppresses pricing so the net value is zero, and it carries no billing relevance so the delivery never becomes an invoice. Both properties matter: without the first the customer gets a price, without the second they get an invoice.
How is a free-of-charge delivery different from free goods?
A free-of-charge delivery is a standalone order (type FD) where everything is free. Free goods are an extra quantity attached to a paid order — buy ten get one free — implemented with a free goods master record that generates a sub-item (item category TANN) under the paid item. One is a separate giveaway; the other is a discount in kind on a real sale.
Why do companies route free-of-charge goods issues to a different G/L account?
Because the cost is not a cost of sales — there is no matching revenue. Reporting it as advertising, samples or promotional expense keeps the gross margin on real sales meaningful and makes the amount being given away visible to management. It is done with a separate account modification in automatic account determination.
Quiz
References
- SAP SE — SAP Help Portal: Free-of-Charge Deliveries (source)
- SAP SE — SAP Help Portal: Item Categories in Sales Documents (source)
- SAP SE — SAP Help Portal: Account Determination for Goods Movements (source)
Explanations are original. They summarize standard behaviour; always validate against your system's release and configuration.
Version history
| Version | Change |
|---|---|
| 1.0.0 | Initial version. |