Implementing vendor rebates based on sale

If the vendor rebate is based on sales, the rebate is calculated by the Sales Entry Invoice Processing Report. This type of rebate is usually connected to a contract.

For example, an electrical distributor is bidding on a contract to provide light fixtures to their customer, Omega Air. The distributor contacts their supplier and explains that the product must be sold below cost to win the contract. The supplier agrees to provide the product at cost, but issues rebates to the distributor only when the product is sold to Omega Air.

This is the basic checklist to use vendor rebates based on sale:

1. Create vendor on sale rebate records in PD Pricing Setup.
2. Enter a customer order with parameters that match the rebate record you defined in PD Pricing Setup.
3. The rebate is calculated by the Sales Entry Invoice Processing Report. This is the basic journal entry for vendor rebates based on sales, which is created when you invoice the customer’s order:

   	DR	CR
   AR Control	425.00
   OE Gross Sales		425.00
   OE Cost of Goods Sold	300.00
   IC Control		300.00
   Rebates Due	25.00
   Rebates Cost Adjustment		25.00

4. Generate the SM Rebate Report to compile all outstanding rebates.
5. Send the rebate claim to the vendor per your procedures. The vendor issues the rebate based on your agreement. You can receiver cash, a credit you can deduct from your current balance, or a special purchase allowance.
6. When your vendor responds, reconcile your rebate claims in PD Rebate Reconciliation Entry.
7. If you receive the rebate from the vendor as cash, enter the receipt in Customer Cash Receipts Entry.