## Setting Up Rebates

This chapter provides an overview of the setup for rebates and discusses how to:

- Enter basic rebate agreement information.

- Define conditions for obtaining a rebate.

- Define purchase limits for rebate amounts.

### Understanding Setup for Rebates

For the system to track rebates, you must provide information about the agreements that you have with your suppliers. This information includes:

- Basic information about each agreement, such as the supplier providing the rebate and the effective dates of the rebate.

- The items that you must purchase or the account numbers that you must purchase against to obtain the rebate.

- The quantity or amount that you must purchase for the rebate.

- The amount of the rebate or the percentage of purchases that determines the rebate amount.

If several of your suppliers have the same parent company, you might want to track rebate information at the parent level instead of at the supplier level. You can set up procurement instructions for each supplier to specify the level at which to track rebate information.

When you enter orders, the system applies purchase quantities and amounts toward rebates. You must specify the order types from which the system applies purchases to rebates. For example, you can have the system apply quantities and amounts from purchase orders, blanket orders, or both.

Important! Ensure that you specify the correct order types from which the system applies purchases to rebates. For example, if you use blanket orders to purchase items, you must specify the blanket order type. If blanket orders are prerequisites to purchase orders, you specify only the purchase order type. Otherwise, the system applies the same quantity and amount from both the blanket order and the purchase order.

### Entering Basic Rebate Agreement Information

This section provides an overview of basic rebate agreement information, lists a prerequisite, and discusses how to enter basic rebate agreement information.

#### Understanding Basic Rebate Agreement Information

When a supplier offers you a rebate for purchasing certain goods and services, you set up a rebate agreement. You can have an unlimited number of rebate agreements for each supplier. For each agreement, you specify basic information, such as:

- The agreement number.

- The supplier who is offering the rebate.

- The effective dates of the agreement.

- The status of the agreement, such as active or pending.

- The person to whom the system directs messages when a rebate is due.

You can also specify whether the rebate is based on purchase quantities or amounts and whether the rebate is an amount or a percentage of the purchase amount.

If you specify that a rebate agreement is based on purchase quantities, you must enter a unit of measure for the rebate agreement.

You can have the system assign a number to each of your rebate agreements or you can enter your own number. If the system assigns a number, the system increases the last rebate agreement number for the supplier by one. If it is the first rebate agreement for the supplier, the system assigns the number 1.

You can also specify a currency for a rebate agreement; if you do so, you must enter the thresholds, or purchase limits, for the agreement in that currency. When you enter purchase orders for rebate items in another currency, the system converts the purchase order currency to the rebate currency.

You can enter a memo about a rebate agreement. When a memo exists, the system displays a paper clip icon next to the rebate agreement in the detail area on the Work With Purchase Agreements form.

If the terms of the agreement are not yet final, you can set up a pending rebate agreement for a supplier. You can also specify that all rebate agreements for a certain supplier are pending. If you use procurement instructions to specify that all rebate agreements for a supplier are pending (inactive), the system changes the status to active when you enter a new active rebate agreement for the supplier.

The system stores rebate agreement information in the F4340 table.

#### Prerequisite

Set up the order types from which the system applies purchases to rebates in the Rebate Order Type (43/RB) user-defined code (UDC) table.

#### Form Used to Enter Basic Rebate Agreement Information

Form Name | FormID | Navigation | Usage
Purchase Rebate Agreement Revisions | W4340B | Price Management (G43A17), Purchase Rebate Agreement Click Add on the Work With Purchase Agreements form. | Enter basic rebate agreement information. Revise a purchase rebate agreement.

#### Entering Basic Rebate Agreement Information

Access the Purchase Rebate Agreement Revisions form.

Agreement Seq Number (agreement sequence number) | Enter the sequence number that distinguishes rebate agreements for a specific supplier. You can enter an agreement number, or the system assigns a number by increasing the last agreement number for the supplier by one.
Rebate Status | Enter a value from the Rebate Status (43/RS) UDC table that defines the status of the rebate agreement. The status can be pending or active. The value A (active) is hard-coded to indicate that the rebate information will be updated.
Threshold Type | Enter a value from the Threshold Type (43/TT) UDC table that indicates whether the threshold is in number of units or amount. Depending on the type that you indicate, the system uses the name Threshold Units or Threshold Amount.
Rebate Type | Enter a value from the Rebate Type (43/RT) UDC table that indicates whether the rebate is a percentage of the quantity purchased or a fixed currency amount.
Administrator | Enter the address book number of a manager or planner. A processing option for some forms enables you to enter a default value for this field based on values for category codes 1 (Phase), 2, and 3. You set up the default values on the Default Managers and Supervisors form. After you set up the default values and set the processing option, the system automatically displays the default information on any work orders that you create if the category code criterion is met. You can either accept or override the default value.
Stop Messages | Enter a value from the Stop Messages (43/SM) UDC table to specify whether the system sends messages to the person identified in the Administrator field.

### Defining Conditions for Obtaining a Rebate

This section provides an overview of rebate conditions, lists a prerequisite, and lists the forms used to define conditions for obtaining a rebate.

#### Understanding Rebate Conditions

After you enter basic information about a rebate agreement, you must specify inclusion rules that indicate what must be purchased to obtain the rebate. The system applies purchases toward a rebate agreement based on:

- Item number.

- Account number against which you are purchasing.

- Items to which you assigned a particular category code value.

You can enter item numbers or account numbers when you must purchase specific items or services to obtain the rebate. You can enter stock or nonstock items for a rebate agreement.

You can enter a category code value to specify a group of items from which you can make purchases. The system applies purchases to the rebate agreement each time that you purchase an item that is assigned the category code value.

The system applies purchase order transactions to a rebate agreement by comparing the items or services purchased to the inclusion rules that are set up for each rebate agreement. The system begins searching on the agreement with the lowest sequence number.

For the system to apply purchases to a rebate agreement:

- The agreement must have an active status.

- The purchase transaction date must be within the effective dates that you specified for the agreement.

- The supplier rebate code on Purchasing Instructions (P04012) must be set to active.

A single purchasing transaction cannot apply to more than one purchasing agreement.

Each time that you enter an order detail line, you must specify a line type. The inventory interface for the line type, which you specify in Order Line Types (P40205), determines the order in which the system searches through inclusion rules for a rebate agreement to find a match:

- A represents the account number and category code.

- B represents the account number and item number.

- D represents the item number and category code.

- N represents the category code.

- Y represents the item number and category code.

The system stores information about the items, account numbers, and purchasing code values that are applicable to a rebate agreement in the F4342 table.

#### Prerequisite

Specify the purchasing category (P1–P5) that you will use to enter category code values for rebates. You specify this value in the System Constants program (P41001). If you do not specify a purchasing category, the system uses purchasing category code 1 (P1) as the default value.

#### Form Used to Define Conditions for Obtaining a Rebate

Form Name | FormID | Navigation | Usage
Inclusion Rules Maintenance | W4340E | Price Management (G43A17), Rebate Inclusion Rules Select a supplier on the Work With Purchase Agreements form, and then select Inclusion Rules from the Row menu. | Define conditions for obtaining a rebate. Maintain inclusion rules. Specify an object account, which is the portion of a general ledger account that refers to the division of the cost code (for example, labor, materials, and equipment) into subcategories. For example, you can divide the cost code for labor into regular time, premium time, and burden. If you use a flexible chart of accounts and the object account is set to six digits, you should use all six digits. For example, entering 000456 is not the same as entering 456 because, if you enter 456, the system enters three blank spaces to fill a six-digit object.

### Defining Purchase Limits for Rebate Amounts

This section provides an overview of purchase limits and discusses how to:

- Set processing options for Purchase Agreements Maintenance (P4340).

- Define purchase limits for rebate amounts.

#### Understanding Purchase Limits

After you define the conditions for obtaining a rebate, you must enter the quantity of items or the financial amount that you must purchase before you can receive a rebate. For example, you enter either 500 widgets or 500.00 worth of widgets. Each quantity or financial amount is referred to as a threshold. When you enter multiple thresholds, you must enter threshold quantities or amounts in ascending order.

If you set up multiple thresholds, you must enter the total rebate amount that you have received from the supplier in the Amount Purchased field on the Rebate Adjustments Revision form. When you meet the next rebate threshold for the agreement, the system subtracts the received amount from the rebate that you are now due.

Next, you enter information about the type of rebate that you are to receive. The rebate type indicates whether the rebate is a specific predetermined financial amount or a percentage of the total purchase amount. For example, if you purchase 100 widgets, the supplier gives you a 50.00 rebate. However, if you purchase 500 widgets, the supplier gives you a 15 percent rebate on the total purchase amount of the widgets.

You must enter the entire financial amount or percentage that you are to receive for each threshold, regardless of other thresholds for which you might have already received a rebate. For example, you should receive 100.00 for purchasing 100 widgets, and 500.00 for purchasing 500 widgets. When you purchase 500 widgets, you are entitled to a total rebate of 500.00, regardless of the 100.00 that you might already have received.

If you are entitled to a rebate regardless of the quantity or amount that you purchase, you can enter a threshold quantity of zero.

Important! You must base threshold quantities on the unit of measure that you specify for the purchase rebate agreement. When you enter purchase orders for rebate items, the system converts the purchasing unit of measure to the rebate unit of measure if necessary.

The system stores information about the thresholds and rebates that are applicable to a rebate agreement in the F4341 table.

#### Form Used to Define Purchase Limits for Rebate Amounts

Form Name | FormID | Navigation | Usage
Threshold Maintenance | W4340D | Price Management (G43A17), Purchase Rebate Agreement Select a supplier on the Work With Purchase Agreements form, and select Thresholds from the Row menu. | Define purchase limits for rebate amounts.

#### Setting Processing Options for Purchase Agreements Maintenance (P4340)

Processing options enable you to specify the default processing for programs and reports.

Display

This processing option specifies the type of information that the system displays on the Rebate Adjustment form.

1. Rebate Adjustment | Enter 1 to enable entry of quantity and amount on the Rebate Adjustment form. If this field is left blank, the window is display-only.

#### Defining Purchase Limits for Rebate Amounts

Access the Threshold Maintenance form.

Threshold Quantity | Enter the total quantity of an item that must be reached to qualify for a rebate. You can establish multiple threshold values for a single rebate agreement.
Rebate Percentage | Enter the percentage of actual purchases that the supplier pays when the associated rebate threshold is reached. You must express a percentage as a whole number (for example, enter 10 to express 10 percent). Note that the supplier pays a rebate amount if the rebate type specifies a fixed amount.