How to Set up Rebate Agreement in SAP
When you negotiate your trade terms with customers, you can rather agree upon performance-based incentives instead of discounts upfront. This ensures that you can pay the high-performing business partners instead of having a universal rule across. Certain business may also want to set this up, so as to be transparent about the incentives instead of upfront discounts to big customers. This can save channel conflicts and also lighten up the load on commercial team.
In order to measure the performance of the customer within the prescribed validity dates, SAP has introduced SAP rebate processing functionality which is explained in this article. It is meant to be simple for someone who is just starting with this feature.
Step by Step Explanation of SAP Rebate Agreement:
The following steps explain SAP rebate process flow:
There are certain pre-requisites for the functionality to work:
a. Sales Organization must be marked active for rebate processing
b. The payer must be marked relevant for rebates within Billing tab of Sales Area view
c. Billing Document must be marked active for Rebate Processing
2. Setting up the SAP Rebate Agreement Configuration
When you set up the rebate agreement, you must provide the following aspects primarily:
a. Payer for which it is set up.
b. The validity period of the agreement.
c. Condition based on which the pay-out would be done.
A settlement material is required so that the credit memo can be generated.
3. Accruals within Invoice
With the above setup, every time an invoice is created, it takes into account the accruals required to pay for the rebate. This remains a liability in the company’s book until and unless it is paid out. This is actually Rebate Accrual Accounting.
4. Updating an Agreement
Updating the sales volume for a SAP rebate agreement is an intense process. Using transaction VBOF, you can update the volume and attach the qualifying invoice and accruals for an agreement. This could also be a scheduled job within SAP.
Using the SAP rebate settlement feature of SAP Rebate agreement, you can do a pay-out. The result of the settlement is a credit memo request. When you remove a billing block, you can convert it into a credit memo.
Following are the main benefits of using rebate agreement solution within SAP ECC. Due to the below-mentioned benefits, almost all the customers who have implemented SAP are using this functionality to a large extent.
1. Performance-based Incentive
It gives the business partners the upfront understanding of incentives which will apply when the business volume reaches a certain level.
2. Simplified and Transparent Commercial Terms
SAP rebate agreement sets up a transparent mechanism instead of having larger discounts for big customers and vice versa.
3. Automatic Reporting on Performance
The feature gives an organization a method to retrospectively analyze the customer performance at end of a period and set up incentives for the coming period.