SAP Free-of-Charge Sales: Why Revenue Is Zero but COGS Still Posts

Free-of-charge sales look simple because the customer pays nothing. The accounting is not zero: inventory leaves the company and its cost must be recognized.

The business scenario

The company may provide samples, promotional items, replacements or goodwill goods. The customer receives a product, but the commercial decision is that no selling price is charged.

Sales and delivery flow

The order uses an appropriate free-of-charge process. Pricing may display a statistical value, but the net customer charge is zero. The outbound delivery and post goods issue still record the physical movement.

Accounting at goods issue

A simplified entry is:

• Debit promotional, sample or other expense
• Credit inventory

Depending on configuration, the debit may use a COGS account or a dedicated expense derived from the movement and account-assignment logic.

What happens at billing

Some designs create no billing document; others create a zero-value or pro-forma document for legal, tax or reporting purposes. Do not assume zero price means no tax obligation—local rules can require tax based on normal value.

Controls to test

Confirm order reason, item category, schedule line, movement type, pricing requirement, account determination and tax treatment. Prevent a normal sale from being changed to free-of-charge without appropriate authorization.

Reconcile commercial and financial reporting

Track quantity and notional value so the business can measure the cost of promotions or replacements. Revenue can be zero while margin is negative because inventory cost is real.

This is the core lesson: price controls the customer charge; goods issue controls the inventory and expense posting.