Akila Wedasinghe
What are you looking for?
SAP Service Procurement Guide
Complete process overview, key concepts, and implementation guidelines
What is Service Procurement in SAP?
Service Procurement in SAP is the process of buying services from external vendors. Unlike material procurement, services are directly consumed rather than stored in inventory. Examples include:
Maintenance Services
Machine repairs, facility maintenance, equipment servicing
Professional Services
Consulting, training, IT support, legal services
Operational Services
Cleaning, security, catering, transport
Construction Services
Building services, painting, renovations
Key Difference from Material Procurement: Services are consumed directly rather than being stored as inventory. They are generally assigned directly to cost objects (cost centers, projects, etc.).
Service Procurement Methods in SAP
There are multiple ways to procure services in SAP systems:
1 Text Item Purchase
The simplest approach where services are described as text in a purchase order, without creating a service master.
- Create a regular purchase order with item category D (Service)
- Describe the service as text
- Standard PO process followed by invoice posting
Best for: One-time services or when detailed tracking by service code is not required.
2 Material for Service
Creating a material master record with material type that represents a service.
- Create a material master (similar to materials)
- Use account assignment to directly assign costs
- Follow the standard PO process with goods receipt and invoice
Best for: When you want to leverage your existing material processes for services.
3 External Service Procurement Most Common
Comprehensive approach using service master records and service entry sheets.
- Create service masters (AC03) for standard services
- Create PO with services and limits
- Document service performance via Service Entry Sheets (ML81N)
- Accept service entry sheet (automated goods receipt)
- Process invoice against service entry sheet
Best for: Complex services where detailed tracking, documentation and approval of actual service performance is required.
4 Lean Service Procurement S/4HANA Only
New approach in S/4HANA combining aspects of the other methods.
- Create PO with or without material (material type SERV)
- Create service entry sheet
- Approval process
- Invoice posting
Note: This process is only supported through SAP Fiori and not available in classic SAP GUI.
Service Procurement with Service Master
Service procurement with a Service Master provides better tracking and reporting capabilities. The service master contains standard information about commonly procured services.
Maintain Service Master
Create, change, or display service master records
Service Master Creation Process
- Create service master with transaction AC03
- Enter service description (e.g., "Painting Service")
- Assign service category (e.g., SCV for purchasing)
- Define base unit of measure (e.g., Hour, Square Foot)
- Assign service group and valuation class
- Save service master to receive an activity number
Best Practice: Create service masters for frequently used standard services to enable better reporting and analysis.
Process Flow with Service Master
Create Service Master
AC03Define standard services with details like unit of measure, valuation class, and service group.
Create Purchase Requisition (Optional)
ME51NCreate PR with item category D and reference the service master. Assign to cost center or other cost object.
Create Purchase Order
ME21NCreate PO with item category D. Specify services and limits. Account assignment to cost center or project.
Create Service Entry Sheet
ML81NDocument actual services performed. Can create multiple sheets against one PO as services are delivered.
Accept Service Entry Sheet
ML81NApprove the service sheet. This creates accounting entries (similar to goods receipt).
Invoice Verification
MIROProcess vendor invoice with reference to service entry sheet.
Payment
F-53/F-58Process payment to vendor.
Key Configuration Points
Configure service categories and account reference settings:
- SPRO → Materials Management → External Service Management → Service Master
- Define service categories (e.g., SCV for purchasing services)
- Link service categories to account reference classes
- Assign number ranges for service masters
Configure number ranges and screen layouts for service entry sheets:
- SPRO → Materials Management → External Service Management → Service Entry Sheet
- Define number ranges for service entry sheets
- Configure field selection and screen layouts
Configure accounting settings for service procurement:
- SPRO → Materials Management → Valuation and Account Assignment
- Define valuation classes for services
- Configure account determination (transaction OBYC)
- Assign G/L accounts to valuation classes
When a service entry sheet is accepted, the system debits the expense account and credits the GR/IR clearing account.
Service Procurement without Service Master
Service procurement without Service Master is useful for one-time or unique services where maintaining master data is not practical.
Important: When procuring services without a service master, you need additional configuration to enable automatic account determination.
Key Steps
- Create a purchase order with item category D (Service)
- Enter service description as text
- Specify material group/service group
- Define unit of measure manually
- Assign to cost center or other cost object
For Automatic G/L Account Determination: Assign valuation classes to material groups in configuration.
Required Configuration
To enable automatic G/L account determination without service master:
Configure Material Group to Valuation Class Assignment
Materials Management → Purchasing → Material Master → Entries with Items without Material Master
Process Differences
| Process Step | With Service Master | Without Service Master |
|---|---|---|
| Service Description | Retrieved from service master | Entered manually as text |
| Unit of Measure | Retrieved from service master | Entered manually |
| G/L Account Determination | Via valuation class in service master | Via valuation class assigned to material group |
| Service Entry Sheet | Same process | Same process |
| Reporting | Better reporting by service code | Limited reporting capabilities |
Best Practice: Use procurement without service master for one-time or unique services only. For frequently used services, create service masters for better tracking and reporting.
Service Entry Sheet Details
The Service Entry Sheet (SES) is a key document in service procurement and functions similar to a Goods Receipt in material procurement.
Purpose of Service Entry Sheet
- Document actual services performed
- Record quantities of service delivered
- Basis for invoice verification
- Trigger accounting postings
Features
- Partial service entry sheets supported
- Multiple sheets against one PO
- "Final Entry" indicator for closing services
- Integration with workflow for approval
Service Entry Sheet Process
- Create Service Entry Sheet (ML81N): Reference PO, specify quantities of service performed
- Accept Service Entry Sheet: This creates accounting entries
- Debit: Expense account (from configuration)
- Credit: GR/IR clearing account
- Invoice Verification (MIRO): Reference service entry sheet
You can create multiple service entry sheets against one PO as services are delivered in parts:
- Create first SES with partial quantity (e.g., 600 sq ft out of 2,000 sq ft)
- Accept and save this partial service entry sheet
- Later, create another SES for the same PO with additional quantities
- Continue until all services are delivered or use "Set Final Entry" to close further entries
The "Set Final Entry" option closes a service for further entries:
- When selected, no further service entry sheets can be created for that line item
- Useful when service is complete even if full PO quantity is not consumed
- Similar to "Delivery Completed" indicator in material procurement
- Can be reversed by using "Reset Final Entry" if needed
If needed, you can revoke acceptance of a service entry sheet:
- Display the service entry sheet (ML81N)
- Click on "Edit" and select "Revoke Acceptance"
- Specify a reason for revocation
- System will reverse accounting entries
- You can then make changes and accept again
Key Transaction Codes
Maintain Service Master
Create, change, or display service master records
Create Purchase Requisition
Create service PR with item category D
Create Purchase Order
Create service PO with item category D
Service Entry Sheet
Create, change, display service entry sheets
Enter Incoming Invoice
Process vendor invoices for services
Account Determination
Configure automatic account determination
Best Practices for Service Procurement
When to Use Service Masters
- For frequently used standard services
- When detailed reporting by service type is needed
- For complex services with multiple sub-services
- When service conditions and pricing need to be standardized
Account Determination
- Configure automatic G/L account determination
- Assign appropriate valuation classes
- For services without master, link material groups to valuation classes
- Avoid manual G/L account entry to prevent errors
Service Entry Sheet Management
- Create SES as services are delivered (e.g., weekly, monthly)
- Use partial service entry sheets for ongoing services
- Apply "Set Final Entry" when service is complete
- Consider implementing workflow for SES approval
Planning and Limits
- Use planned and unplanned services appropriately
- Set limits for unplanned services
- Define tolerance limits for over-delivery
- Align invoice tolerance settings with service tolerance settings
Pro Tip: For recurring services (e.g., security, cleaning), consider using framework agreements (contracts) to lock in prices for longer periods and simplify the ordering process.