Query: As you are aware, in Third Party Sales process billing is done with reference to order but why the billing type F2 is used instead of F1?
Normally, when billing is done with reference to order ideally the billing type should be F1.
bhage,
My take on this is -
F1 is order related billing, the process in which there is no delivery process for example providing a service (no delivery required for this) item category TAD
On the other hand, in the process where there is delivery process, F2 billing type is used. 3rd party has a delivery process, it is done by vendor but it is there. That is why F2 is used in standard SAP.
As you know, the setup for 3rd party are controlled by item category TAS and schedule line category CS configurations.
An interesting R&D could be to compare F1 and F2 in VOFA and see if you find any differences.
TW