relationship for rebate basis/accrual rate/rebate rate

[Former Member]

Hello Gurus,

please demonstrate the relationship for rebate basis/accrual rate/rebate rate ?

thanks very much!

[Former Member]

A rebate agreement takes the form of a special discount paid retroactively to the customer. This discount is based on the sales volume for the customer over a specific time period. The rebate is only relevant if the customer purchases the required sales volume. Because rebates are always paid retroactively, the system keeps track of all billing documents that are relevant for rebate processing.

A discount is an incentive given immediately to the customer. There are no conditions for discounts.

In your case, rebates are

from $1000 - 2%

from $500 - 4% ( I presume amount as $5000 since you are giving higher rate)

This is known as rebate scales. You are telling your customer that if sales volume is above $1000 during the said period, you are going to give him 2% rebate. If the sales volume is more than $ 5000, you are paying rebate of 4%.

Now my doubt is if you want to use rebate scales as above, why you want to give accrual rate as 3%. Since your rebate scale starts with 2 %, your accrual rate is 2%.[If you want accrual rate as 3%, system starts calculating at 3% instead of 2% you specified in your rebate scale]

Once your accounting document is created, systems automatically updates sales volume and accruals.

for example sales volume for the customer reached $1000.

You billed a document for $500 to the customer with whom you have rebate agreement, system calculates rebate for $500 at accrual rate of 2%. In this transaction customer accrues a rebate amount of $10 for this transaction.

For next billing document for example say for value $2000, system calculates rebate amount as $40.

Now the customer has $10 + $ 40 = $50 as accruals.

Once the sales volume crosses $4000, accrual rate is calculated at 4%.

This rebate amounts are calculated until the period specified in rebate agreement is over.

Hope this helps you.

[former_member184555]

Hi

Hope your doubt is cleared.

Thanks,

Ravi

[former_member184555]

Hi

I'm giving here the details gathered from the document specified above...

If you enter a rate in while creating the records and hit Enter, the same amount applies in the “Accruals” column. It is important to remember, that the rate represents what you are going to pay to the customer, and the accrual is what you accrue over time on invoices. This becomes very clear when you are using scales. Although you are able to maintain different rates based on different scale levels of sales achievements, you can only maintain one accrual rate.

The accrual rate applies on each invoice, at which time you don’t know if a customer will reach the next scale level over the time of the agreement. You might want to maintain an average accrual rate (for example, if you have scale rates of 1, 2, and 3%, your accrual rate might be the median of 2%). However, based on your accounting guidelines, you also might either over- or under-accrue.

You also have the choice not to accrue at all (for example, for a lump sum payment) and can take out the accrual rate entry. However, if you are trying to create partial settlements and configured the agreement to not allow higher payments than what you accrued, you will have to create manual accruals in order to do so.

Thanks,

Ravi

[former_member184555]

Hi

Please use the below link to access a pdf document on Rebate processing configuration. Your doubt will be cleared if you go thro that document(page 14)

http://www.erpgenie.com/publications/saptips/052005.pdf

Thanks,

Ravi

[former_member184555]

Hi

Accrual Rate : Percentage rate or amount per transaction to be accrued in Financial Accounting in anticipation of rebates that have to be paid.

Rebate Rate : It is the rate at which the rebates are calculated and the values are posted as accruals.

As per my understanding the Accrual Rate and the Rebate Rate are same.

Thanks,

Ravi

[Former Member]

thanks, but notice my example above. in caculating debate, we use accrual rate, so what does 2% or 4% use for ?

thanks very much!

[Former Member]

when I set rebate condition as folowing:

from $1000 -->2%

from $500 -->4%

why accrual rate is 3%. I can get discount by %2 or %4, why should I need %3 accrual rate ?

thanks very much!