Simplify Your Rebate Process with Extended Rebate Agreements

  • by Ashok Faujdar
  • July 11, 2011
Learn how to set up extended rebate agreements and use them in various business scenarios such as offering rebates to multiple recipients in a single agreement or reaching a settlement of rebate agreements for specific materials or particular periods.
Key Concept
When a company pays rebates to multiple hierarchy customers, then, in standard rebate processing, you must create and settle separate rebate agreements for each sold-to customer. By using the extended rebate agreement processing functionality, you can create single rebate agreements at a higher level of hierarchy and still accrue and settle for each sold-to hierarchy node periodically. Extended rebate agreements can be created for product hierarchy or material group, and settled for individual material by defining variable keys at the material level. In the consumer products industry, extended rebates can be used for accruals and settlement for indirect customers.

Using the standard rebate process to create and maintain rebate agreements can be cumbersome when rebate agreements are maintained between the manufacturer and customer head office, but paid to the individual store linked to the head office. However, by using extended rebate processing functionality, you can maintain a single rebate agreement for all these hierarchy rebate recipients and create separate credit memos for each store for the accrued rebate amount.

In extended rebate processing, you define a variable key that the system uses to store individual accrual amounts using standard information structures (commonly called info structures) S136 and S469. A rebate agreement can be settled at the end of each month and the accrued amount for each rebate recipient for the period can be settled partially and periodically. Extended rebate settlement differs from the regular rebate settlement. In the extended rebate settlement, credit memos are created directly, while in the regular rebate settlement process, only credit memo requests are created.

In regular rebate agreements, a settlement material must be provided. Upon settlement, the credit memos are created for the customer using this settlement material. For example, say you use multiple scales for rebates based on volume, and during the final settlement, the accrued rate differs from the rate that needs to be paid as per the higher total volume. In profitability analysis (CO-PA) reporting, the difference of this amount is reported against the settlement material. Using extended rebate agreements, the settlement credit memo is created for the individual material on which the accrual was made, thus providing more precise and enhanced reporting in CO-PA.

Let’s use creating an extended rebate agreement for a hierarchy customer as an example. In Figure 1, two stores (customer numbers 99013 and 99014) link to the higher level hierarchy nodes of regional office (customer 99012) and head office (customer 99011). The agreement for the rebates is between the manufacturer and head office, but the rebate recipients and the ordering parties are the individual stores. The rebate amount needs to be accrued separately for each individual store, and at the end of each month the accrued amount needs to be paid to each store.

Ashok Faujdar

Ashok Faujdar has an MBA and more than 11 years of experience in the IT industry. For the last eight years, he has worked on SAP systems, led several implementations in sales and distribution, and co-authored a book on SAP Sales and Distribution.

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