rebates configuration

7/28/2019 Rebates Configuration

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REBATES

Rebates functionality in SAP uses the concept of conditiontechnique as is used in Pricing (but with rebate specific

features), which is explained below:

Lets see how rebates work in SAP first.

Glen wants to give customer a 3% discount on

everything he or she buys (condition type ZB03).

In addition, Glen provides another 1% discount if the

customer reaches a certain amount of gross sales forthe year which (turnover discount), for a specific groupof products (ZB01).

After all these rebates are set up, the rebate conditions willapply on applicable invoices as accruals instead of off-invoice discounts. The rebate agreement tracks the appliedamounts, which can be reviewed at anytime in the rebateagreement. Once pay out of any rebate amount to thecustomer is decided, there will be a rebate settlementrepresented by a credit memo request. This reversesaccrued amounts and pays the actual amount to the

customer either in form of a check or a credit memo.

Rebate process in SAP is separated into three components:

1) Configuring Rebates

2) Setting up the Rebate Agreements

3) Managing Rebate Agreements and Payments

1) Configuring Rebates

Prerequisites


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1. The Payer partner needs to have the Rebate fieldchecked in the Customer master on the Sales Area>BillingDocument tab.

2. The billing type must be marked as relevant for rebates(IMG Sales and Distribution>Billing>Rebateprocessing>Activate Rebate Processing>Select billingdocuments for rebate processing).

3. The sales organization must be marked as relevant forrebates (IMG Sales and Distribution>Billing>Rebateprocessing>Activate Rebate Processing>Activate rebateprocessing for sales organizations).

The system will issue respective messages when you aretrying to process any rebate-related transactions with any ofthese settings missing.

Condition Technique for Rebates

To create rebate-related access sequences

IMG path Sales and DistributionBillingRebate

processing

Condition technique for rebateprocessing>Maintain access sequences.


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Access Sequence for Rebates


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Condition Tables in a Rebate Access Sequence


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Rebate-related condition types are identified by conditionclass C (Expense Reimbursement). When you create a newrebate condition type (IMG path Sales andDistribution>Billing>Rebate processing>Condition techniquefor rebate processing>Define condition types) and youchange the class to C

If the Rebate proc. field is blank, accruals will be posted on

each applicable invoice. Entering an A will prevent theautomatic generation of accruals on invoices. The latterwould make sense if you dont base your rebate payment onactual sales, but on the specific performance of thecustomer (such as a display in a store or an advertisement inthe paper). These rebates would be paid out as a lump sumand would require the creation of a manual accrual. Forexample, you want to give the customer a $5000 rebate ifhe displays your product at the entrance of his store. You

then would create a one-time manual accrual of $5000. Onceyou have proof of compliance by the customer, you cancreate a lump sum payment in that amount, which wouldreverse the accrual and pay the amount to the customer.

With the Provision con. Field, you determine if you want toreverse your accruals at time of partial payment (we willcover payments later in that paper). Leaving this field blankwill reverse the accrual; a value of A will not reverse it.


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Rebate Condition Type Definition

Now that we defined our rebate conditions, we can add themto our regular pricing procedure (IMG path Sales andDistribution>Billing-Rebate processing>Condition techniquefor rebate processing>Maintain Pricing Procedures. Alternatecondition type AltCTy and Alternate condition base valueAltCBV will not let you do any manipulations on how the

rebate is calculated. Also, you will not be able to do anymanual changes to rebate conditions. The requirement 24in column Reqt prevents the rebate condition fromdisplaying on any document type but the invoice. Simplytake this requirement off if you want to have visibility ofrebates at order entry time as well.


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A very important setting for the rebate conditions in thepricing procedure is the account keys. At Invoice creation,accruals are being created that post to accounting, to giveyou visibility on how much you owe your customers. The

posting of this accrual is done by accounts assigned to theaccount key in column Accrls (Accruals); usually a salesdeduction and an accrual account. The settlement document(in form of a credit memo) uses the accounts assigned to theaccount key in column ActKy (Account key), which reversethe accrued amounts and credits the customer.

It is also imperative that any sub-total line a rebate conditionrefers to needs to be stored in one of the seven availablesub-total fields (KZWI1-KZWI6 and BONBA in column

SubTo). If you are using multiple pricing procedures, youwant to keep the sub-total designations common (i.e., 1 forgross price, 2 for net price).

Rebate Conditions in a Pricing Procedure

Configuring the Rebate Agreement


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To maintain rebate agreement types, use IMG path Salesand Distribution>Billing>Rebate processing>Rebateagreements>Define Agreement types. Select New Entriesto create a new agreement type.

Default valuesThe first section (Default values) serves to define thedefaults that apply for every rebate agreement of that type.

You can define the default start and end date of theagreement. The default start date is important in regards towhether or not you want to allow retroactive rebates. Forexample, if you set the start date of a rebate agreement totodays date, all invoices from that moment on are eligiblefor the rebate and will apply on the invoice itself. However, if

your default is the beginning of the current year, the systemwill calculate rebates for all invoices in the past, from thatdate on, even if they did not apply on the invoice. Theserebates are called retroactive.

The other default in this section allows you to set a paymentmethod, which is freely definable to suit your individualsituation. Every rebate settlement will create a credit memorequest in SAP; however, if you set your default to C for

check, it will carry this flag forward to FI, to later let you cuta check. Of course, all of these defaults can be overwrittenduring creation of the actual rebate agreement.

Control dataThe Condition type group is linked to the rebateagreement type in a different configuration transaction,which we will get into a little bit later. This condition typegroup defines which rebate condition types are allowed forthe rebate agreement type.

The Verification levels field is also a default that definesthe level of detail you see when you review the appliedinvoices within a rebate agreement. You can change thisdefault while reviewing the verification level in the rebateagreement.


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The Different val. period option lets you define whether ornot the rebate condition records you create out of the rebateagreement can have validity dates outside of the ones of theagreement. I suggest you leave this field unchecked.

If you want to allow manual accruals (we will get into whatthese are for), you need to indicate this and define therespective order type. B4 is the standard SAP order typefor manual rebate accruals.

You are able to create the same rebate agreementautomatically in regular intervals with the same data (butdifferent validity dates). To turn on this feature, utilize theArrangement calendar field to do that. You can add astandard SAP calendar, or your own defined one, to schedulethe automatic creation of rebate agreements. In a separate

step, schedule job RV15C005, which can also be accessedvia transaction VB(D (yes, thats the left parenthesis in thetransaction code), to automatically extend your agreements.Manual payment

The Manual payment section of the rebate agreementdefines how much can be paid out during a partialsettlement. You would use partial settlements if, forexample, the rebate agreement is defined for a full year, butthe payouts are supposed to happen on a monthly,

quarterly, or any custom defined schedule.You can choose whether you want to allow partialsettlements only in the amount of what you accrued so far.

This is a good idea if you dont want to pay out more thanwhat the customer is entitled to. However, you can alsoallow any payment amount, if you choose so. As with manualaccruals, you need to define the partial settlement ordertype, which is B3 in the standard SAP system. If you dontwant to wait to reverse your accruals until the finalsettlement, you can do so for the partial settlement bychecking the Reverse accruals box.

Just as with agreements, you can also schedule regularpayments by entering the appropriate calendar in theSettlement periods field. Use program RV15C001(accessible through transaction VB(7) to schedule your


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payment runs. This will create automatic paymentsaccording to the defined schedule.

The reversal of the accruals is independent from thepayment amount of the final settlement. For example, if you

accrued $10,000 over a given period, but the customer didnot reach their sales goal, you might want to pay only halfthat amount or nothing at all. No matter what the paymentamount is going to be, the total remaining accrued amountfor the agreement is reversed.Settlement

The Settlement section defines the final settlement ordertype (B1 in standard SAP) and the minimum status thatneeds to be set in the agreement before it can finally besettled. This will become more clear when we cover the

actual settlement of a rebate agreement later in this paper.

The standard correction order type B2 is needed if thestatistical and actual accrual amounts are getting out ofsync. This is mostly the case for retroactive rebates.


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Definition of a Rebate Agreement

Condition Type Groups

I mentioned the assigned condition type group in thedefinition of the rebate agreement. With IMG menu pathSales and Distribution>Billing>Rebate processing>Rebateagreements>Condition type groups>Define condition typegroups, you can freely define your rebate condition typegroup (see Figure 6). Make sure that you leave the Cat.


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(Category) field blank. This defines the Condition Type Groupas relevant for rebates. Sales deals share this configurationtransaction and would be identified with a category of A.

Definition of Condition Type Groups

Assigning Condition Types to Condition Type GroupsIn this configuration step (IMG Sales andDistribution>Billing>Rebate processing>Rebateagreements>Condition type groups>Assign Condition

Types/Tables To Condition Type Groups), you define whichcondition tables, of which rebate condition types, you allowfor a specific Condition Type Group, and in which order theyappear in the rebate agreement (see Figure 7). Since the

standard SAP rebate functionality does not allow exclusionsin the access sequence, the order of condition tables can befreely defined here. You can assign multiple condition typesthat can have different access sequences.


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Assigning Rebate Conditions to Condition Type Groups

Assignment of Condition Type Groups to RebateAgreement TypesFinally, we are able to link the Condition Type Group to theRebate Agreement Type through the IMG menu path Salesand Distributions>Billing>Rebate Processing>RebateAgreements>Condition Type Groups>Assign Condition TypeGroups to Rebate Agreement Types


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Assignment of Condition Type Groups to Rebate Agreement Types

2) Setting up Rebate Agreements

The rebate agreement is the central point for processingrebates. Here are the main tasks that can be done out of

this transaction:

Define the payment method and validity of the rebate

agreement.

Define the condition records with rates and scales for

which rebates should apply. NOTE: You cannot createrebate condition records with the regular pricingtransaction VK11 or VK31. (This is due to the conditionclass of C as indicated in the section above aboutcondition types.)

Review all applied invoices to a specific rebate

agreement.


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See which payments were already made and how much

you accrued.

Generate partial and final settlements, as well as manual

accruals. NOTE: If you attempt to create any rebate creditmemo manually with VA01, you will get an error. Thereason for this is the same as the one for the conditiontypes. In order to track all payments within the rebateagreement, they have to originate from that rebateagreement.

To create a rebate agreement execute transaction VBO1


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On the next screen (Figure 10), enter the description of therebate, the rebate recipient, the currency in which the

rebate payments are going to be made, the paymentmethod, and the validity period of the agreement. Here aresome comments to the individual fields:

The rebate recipient has to be a payer partner. You alsoneed to make sure that the payer partner type that you areusing (RG in standard SAP) is linked to the account groupyou are using for the sold-to (0001 in standard SAP). As wecan see later, the rebate recipient becomes the sold-to in therebate settlement credit memos.

The payment method defaults from the rebate agreementtype configuration setting and can be overwritten here. Thesame applies to the validity period. Originally the valid fromdate is defaulted to todays date (as set in the agreementtype). Since our sales department was (as usual) late to giveus the agreement information, we need to back-date thestart date to the first of the year. We assume that the rebateagreement is valid for the whole calendar year, but if you

want to do it by fiscal year, just adjust the dates to yourliking. Once all this data is entered, click on the Conditionsbutton to create rebate condition records.


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Rebate Agreement Overview Screen


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You can see that the validity period for the condition recorddefaults from the validity period of the rebate agreement. Aswe defined in the agreement type, an attempt to change thevalidity period (to one outside the agreement validity period)would result in an error. However, you can change the

validity period to one within the range of the agreementperiod. For example, if you set up the agreement for thewhole year and you pay out on a monthly basis with differentamounts, it makes sense to create multiple condition recordswith monthly validity dates.If you enter a rate in Figure 12 and hit Enter, the sameamount applies in the Accruals column. It is important toremember, that the rate represents what you are going topay to the customer, and the accrual is what you accrueover time on invoices. This becomes very clear when you are

using scales. Although you are able to maintain differentrates 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 youdont know if a customer will reach the next scale level overthe time of the agreement. You might want to maintain an


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average accrual rate (for example, if you have scale rates of1, 2, and 3%, your accrual rate might be the median of 2%).However, based on your accounting guidelines, you alsomight 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 rateentry. However, if you are trying to create partialsettlements and configured the agreement to not allowhigher payments than what you accrued, you will have tocreate manual accruals in order to do so.

Rebate Pricing Record Rates

Select the condition record and click on the Details button.


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At the bottom of the Control Data section of the detailsscreen (see Figure 13), you can see that the condition recordwas created retroactively. This means that not only willinvoice line items apply from this day forward, but also the

ones that were created from the valid from-date of thecondition record, until todays date.

Since a rebate settlement in SAP is reflected as a creditmemo request, a material number is needed to generate thecredit. The material for this credit memo is stored in fieldMatl. f. settl. (Material for settlement). Since the keycombination we choose is by customer, we need to define amaterial of our choosing. For most of my clients, this alwayscauses an issue with reporting, since the materials that are

actually being accrued on cannot be easily tied to thematerial of the settlement. You will always have to choose amaterial if the material number is not part of your conditiontable. In the latter case, the material number defaults as thesettlement material.

If you like to create more condition records, use the greenback-arrow to go to the Valid Condition Types and KeyCombinations screen (see Figure 11). However, if you are

done with all your rebate pricing maintenance, you can nowsave the rebate agreement. At this point, I would like to givesome insight on the number of condition records you createper rebate agreement. Although we allowed three differentcondition types to be maintained within agreement typeZSRB, it does not mean that we have to maintain it in oneand the same agreement. It makes sense to distinguishmultiple rebate agreements based on the type of rebate youwant to give. For our example we will create three separaterebate agreements: One for all the items a customerpurchases throughout the duration of the rebate, a secondcan be created for the performance based (scale). and athird agreement for the material promotion.


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This way, if you want to see the status of one of your rebateprograms, you can look at it without having to dissect otherrebate conditions. It also improves performance since thesystem does not have to read every invoice line item everytime.Another common mistake I often see is that instead ofcreating new rebate agreements (for example, yearlyrenewals), clients just extend the validity end date of theagreement. The problem with that scenario is that when youwant to look online to see which invoice line items applied tothe rebate, the system has to look back at two or more years

worth of data. Get your mocha latte while the program isrunning. When you come back, you will realize that youtimed out of the transaction. Instead of increasing thevalidity period, it takes the same amount of time to create anew rebate agreement with reference by clicking the button(see Figure 9). You can also use the automated rebateagreement renewal transaction VB(D.


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Rebate Condition Record Detail

Figure 14 shows you our condition record for condition typeBO01 for which we wanted to set a sales goal. The customerneeds to buy $100,000 worth of Health Foods (representedby Volume rebate group 01 of the material master) inorder to get an additional 1% rebate. We will always accrue

1% on all applicable invoices since we dont know at thattime if the customer will reach that goal. Once we create thefinal settlement, all applicable sales will be accumulated andcompared with the scale value. If the threshold is not met,nothing will be paid out, but all accrued values will bereversed.NOTE: The scale levels are always only applicable to thecondition record they were created for. You cant complywith a request like: If you buy $100,000 worth of item A, Band C , if A, B and C are not in some kind of grouping.


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Scale View of Rebate Condition Record

After we have created our rebate agreement, we can check an invoice thathas rebate conditions applied. The service rendered date (not the pricingdate!) of the invoice line item is used to determine the validity of a rebate

condition record. All rebate conditions are line item conditions, so go to theConditions tab of one of your invoice line items.


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You see in Figure 15 that two rebate conditions applied. BO02 for ourmaterial promotion with a $1.00/EA allowance and the 3% of condition typeBO03 for everything the customer buys. It is possible that the same rebatecondition type applies several times, unlike regular pricing conditions. You

could for example have a Headquarter rebate that pays 3% of all sales of apayer (BO03). In addition you have a rebate agreement that pays anadditional 1% for a specific sold-to customer (for example, a new store

promotion). This is also set up as a BO03 condition record. You would seeboth BO03 records, one with 3% and one with 1%.

Applied Rebate Conditions on an Invoice


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Next, select one of the rebate condition types and click onthe Details button.

You can see that, although not specified explicitly in the rebate condition

type configuration, the rebate condition is automatically an accrual. Therebate agreement number to which the condition record belongs to is alsoshown in the rebates section of this screen (see Figure 16). It is alsoindicated if the condition is retroactive or not.

3) Managing Rebate Agreements and Payments

Verification levelsAfter several invoices are created, we can access the rebateagreement either in change (Transaction VBO2) or displaymode (VBO3). To see which invoice line items applied, select

the Verification level button shown in Figure 10. Items thatshow accruals of 0 are invoice line items that appliedretroactively. Since the rebate agreement did not exist whenthey were created, no accrual could be made. You can drilldown to an individual invoice by clicking the invoice numberonce. If you would like to change the level of detail shown,


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select the button on the Verification Level screen shown inFigure 17. Remember that we set the verification level incustomizing the agreement type to Open, meaning everyline item shows. It might make sense (if you have thousands

of invoice line items and you would like to just see totals bycustomer) to select verification level D. One annoyingthing to note is that the month displayed is always thecalendar month, even if you set up your condition records byyour fiscal month. This can lead to misinterpretation of thedata. This issue was addressed with SAP, but the answer wasthat the system works as designed and that there are noplans for an enhancement.As mentioned above, it can happen that the system timesout if you are trying to review the verification level online

(due to the large number of applicable invoice line items). Inthis case, use transaction VB(8, which lets you run averification report in background


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Creating Partial SettlementsAs mentioned before, you can automate periodic creation ofrebate payments. You need to decide, based on the numberof rebate agreements you have, and their complexity, if thisoption makes sense. For example, it makes sense to

schedule regular payments for rebates where the customergets a certain percentage for everything he buys. However,rebates that check scales or need manual calculations oradjustments should be handled manually. In this paper, I willexplain how to create manual settlements.

In order to create any kind of settlement, you need to be inchange mode (Transaction VBO2) of the rebate agreement.

Clicking the Pay Create Manual Rebate Payment buttonwill open the partial settlement screen as seen in Figure 18.All condition records of this agreement are displayed (in ourexample just one). In the Max amount field you see theaccrued amount as of today, which, by our configurationsetting, is the maximum amount we are able to pay in a


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partial settlement. If we would enter a higher amount, wewould get an error. Enter the amount you want to pay in theAmt. to be paid field. Note that the amount you enteralways defaults as a negative amount. Save your changes.

Partial Settlement Amount Screen

An information message is displayed that a partial rebatesettlement was created.

NOTE: You cannot create a final settlement until all opensettlement requests are posted to accounting. The reasonfor that is the actual payments are updated in the rebateagreement only at accounting time, to determine what is leftto pay.

You can process the settlement request with transactionVA02. You need to release the credit memo billing blockbefore the request can be invoiced. Looking at the line itempricing screen (see Figure 19), you see that only the rebatecondition type appears, although the same pricing procedure


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as the one on the invoice is used. There are two entries. Oneis to actually credit the customer with the specified amount,the other one to reverse the accrual. Since we configuredthe partial settlement in the agreement type to always

reverse the accrual (See Figure 5), the amounts are alwaysthe same in a partial settlement. Save the credit memorequest and invoice it.If you realize you made a mistake before you invoice thecredit memo request, you can delete the credit memorequest with transaction VA02, which will increase theavailable accrual amount in the rebate agreement again. Incase you already invoiced the settlement, you will need tocancel the credit memo. Since you then cannot delete thecredit memo request, you have to reject all the line items.

Pricing Screen of Partial Settlement Credit Memo

Going back to the rebate agreement itself, you can seewhich settlements were already created for this agreement.Select Rebate Payments>Rebate Documents and select thetype of document you would like to see. Partial and fullsettlements can be accessed separately. Since we onlycreated a partial settlement so far, this is the only option


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that is available. Click the check mark and you will see all (inour case just one) partial settlements that were created forthis rebate agreement. Figure 20 shows the settlementamount (what was credited to the customer) and the

reversed accrual amount. If you would like to see the actualcredit memo, click on the invoice number (to select it) andthe Display button. If you have a credit memo request thatis not invoiced yet, you will see the credit memo requestnumber here. This helps if you try to determine if you haveany open settlement documents for this rebateagreement.

Rebate Documents of a Rebate Agreement

Another view of payment data can be accessed from withinthe rebate condition record. Go into the BO03 conditionrecord for your customer specific rebate and select Goto-Payment data. This view (see Figure 21) shows you the

total accrued dollars, how many accrual dollars werereversed, and how much money was paid to the customeralready. In the lower section of the screen, it is indicatedhow much accrued money is left to pay out. From here youcan also initiate a partial settlement by entering a paymentamount in field Amount to be paid, just like weve done in


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Figure 18. The same check (process) for maximum accruedvalue occurs here.

Payment Data for a Rebate Condition Record

Manual Accruals

As I mentioned before, sometimes manual accruals need to be made in order

to increase the accrued amounts for a given condition record. The mostlikely scenario is when you create a rebate agreement in the middle of theyear, but set it retroactively valid for the whole year. The system will take

previous invoices into consideration, but no accruals for these invoices areaccounted for. If we want to make partial settlements, we would not haveaccrued as much as we would like to pay out. So we need to increase theaccrual amount by creating a manual accrual. In order to know how muchwe need to accrue in addition, click the Sales volume button on theAgreement Overview screen. The resulting screen (see Figure 22) shows theactual eligible rebate amount (in our example $281.25) and the accrued

amount ($102.48). We need to create an accrual for the difference of$178.77.


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This can be accomplished by clicking the button on the AgreementOverview screen. In the resulting screen (see Figure 23), we can enter theaccrual amount. A negative amount will increase the total accrual amount; a

positive amount will decrease it. Save the document and you will receive themessage that a manual accrual has been created. Invoice the credit memo

request to post it to FI. Go back now to the rebate agreement and check thesales volume. You will see that the accrual amount matches the eligiblepayout amount.


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Manual Accrual Payment Screen

Final SettlementsAt the end of the rebate agreement, we finally can executethe final settlement to close the agreement. As defined inthe agreement type, we need to manually set theAgreement status field on the Overview screen to B

(Agreement release for settlement). This is a manual checkthat prevents us from accidentally closing the agreement.Then select the button from the Overview screen. We areusing our first rebate agreement, for which we did not createa manual accrual. Although we only have $500 accrued, thefinal settlement shows what the customer is eligible for,including retroactive amounts (see Figure 26). At this pointin time, you could also pay out more than this amount.Nothing will stop you from doing that, but I wonder whatSarbanes-Oxley would say to that. Make your adjustments

and save.You could also have used the Create final settlementbutton from the rebate agreement overview screen, whichwould have created a credit memo request right away,without giving you the opportunity to manipulate the finalpayment amount.


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After the credit memo request is created, the agreementstatus is set to C, which prevents you from creating anyfurther settlements out of this rebate agreement.

Final Settlement Payment Screen

The final settlement credit memo request uses the last dayof the agreement validity period as the billing date. You can

create it manually or via the same batch job (RV15C001)with which we can create periodic partial settlements.Invoice the credit memo request. Looking at the pricingscreen of the credit memo (see Figure 27), you see that thepayment amount is higher than the accrual amount, sincewe cant reverse more than what we accrued for. In a case inwhich we wouldnt pay out anything (for example if salesgoals were not met), only the accrual amount would bereversed in a final settlement. Once the credit memo isposted in FI, the agreement status changes to D. This

effectively closes the rebate agreement.


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Pricing Screen of Final Settlement Credit Memo

After the final settlement is executed, no changes can be made to the rebateagreement anymore. It can be reviewed in display mode only.