What is preauthorization in SAP SD - Sales and Distribution?

SAP Term: preauthorization

• Component: SD

• Component Name: Sales and Distribution

• Description: A "soft" authorization process performed to ensure that payment card data is correct. The system sends a preauthorization request to the payment service provider who then verifies the cardholder’s name and address, and the card number. In the SAP system, if the material availability date or billing date is outside the authorization horizon, for the time being, only preauthorization is possible. Preauthorization attempts are repeated until successful or until the authorization horizon comes into effect.

Smart SAP Assistant

• Key Concepts: 
  Preauthorization is a process in SAP Sales and Distribution (SD) that allows customers to reserve goods or services before they are actually purchased. This process is used to ensure that the customer has sufficient funds to cover the purchase and that the goods or services are available when the customer is ready to make the purchase. 
  
  How to use it: 
  In SAP SD, preauthorization can be used to reserve goods or services for a customer. The customer must provide their payment information, such as a credit card number, in order to preauthorize the purchase. Once the preauthorization is complete, the customer can then make the purchase when they are ready. 
  
  Tips & Tricks: 
  When using preauthorization in SAP SD, it is important to ensure that the customer’s payment information is secure and that their privacy is respected. Additionally, it is important to keep track of preauthorized purchases so that they can be easily identified and processed when the customer is ready to make the purchase. 
  
  Related Information: 
  Preauthorization is similar to a “hold” on a credit card, where funds are reserved for a purchase but not actually charged until the purchase is made. Preauthorization can also be used in other areas of SAP, such as Materials Management (MM) and Financial Accounting (FI).