Rebate Calculation

This document describes the different calculation methods available in the supplier rebate on sales agreements functionality.

The calculation of a rebate amount is determined by the agreement's rebate calculation method and its rebate calculation base.

Define rebate calculation method

The rebate calculation method defines how the supplier rebate amount is calculated. You can define a rebate calculation method on the agreement header in 'Supplier Rebate on Sales. Open Agreement' (OIS860), which by default will be selected as the rebate calculation method for the agreement lines defined in 'Supplier Rebate on Sales. Open Agr Lines' (OIS861).

This table lists the rebate calculation methods and describes their use:


Method	Description
0-'Select a calculation method'	No rebate calculation method is defined. This value is allowed for the agreement header, since it implies that no specific rebate calculation method is selected by default on the agreement lines. When selected, it is mandatory to specify a calculation method when entering agreement lines.
1-'Percentage'	The rebate amount is calculated as (rebate base x rebate percentage rate) converted to the agreement currency, then rounded off. For this method, a rebate percentage rate and a rebate base must be specified on the agreement line.
2-'Amount'	The rebate amount is specified as a fixed amount per rebate unit of measure. For this method, a rebate amount and its unit of measure must be specified on the agreement line. Note: Items that are valid for the agreement line must have the rebate amount unit of measure defined as basic or alternate price unit of measure in 'Item. Connect Alternate U/M' (MMS015).
3-'Net'	The rebate amount is calculated as a percentage of the difference between two selected from and to rebate bases. For this method, a rebate percentage rate and a from and to rebate base must be specified on the agreement line. The rebate base values and their currencies are retrieved for the two selected rebate bases. The currency is converted to the currency specified on the agreement. The unit of measure for the rebate base is, if needed, converted to the item's basic unit of measure. The rebate is calculated as ((from rebate base in the agreement currency − to rebate base in the agreement currency) x rebate percentage). The result is rounded off to the number of decimals specified for the currency on the agreement. If the calculated rebate amount is negative, the rebate amount is automatically set to zero. An example to clarify the net calculation method: Supplier rebate on sales agreement currency = EUR, from rebate base = 199.5 USD, to rebate base = 150.5 USD, rebate percentage rate = 50%. From rebate base in the rebate agreement currency: 199.5 USD = 145.635 EUR, To rebate base in the rebate agreement currency: 150.5 USD = 109.865 EUR. Calculated rebate amount in the rebate agreement currency: (145.635 EUR − 109.865 EUR) x 0.5 = 17.885 EUR = 17.89 EUR (rounded off).
4-'Margin guaranteed'	The rebate amount is calculated based on the difference between an actual margin percentage (excluding supplier rebates, internal charges, and VAT) and a predefined guaranteed margin percentage. The actual margin percentage is defined as the difference between the transaction lines net price and a predefined margin cost base, divided by the transaction lines net price. The 'Margin cost base' must be specified on the agreement line. The margin cost base and the net price are converted to the local currency before the actual margin percentage is calculated. The rebate is calculated as ((guaranteed margin percentage − actual margin percentage) x unit net price), then rounded up, converted to the currency on the agreement, and rounded off to the number of decimals specified for that currency. If the difference between the guaranteed margin percentage and actual margin percentage is positive, a rebate should be given. The actual margin percentage is calculated as (((unit net price − margin cost base) / unit net price) x 100). An example to clarify the margin guaranteed calculation method: Supplier rebate on sales agreement currency = EUR, net unit price = 40 USD, margin cost base = 37.55 USD, guaranteed margin percentage = 10.5%, local currency = SEK. Calculated actual margin percentage: ((292 SEK – 274.115 SEK) / 292 SEK) x 100 = 6.125%. Rebate amount local currency: ((10.5% – 6.125%) x 292 SEK) = 12.775 SEK = 12.78 SEK (rounded up to avoid ending up below the guaranteed margin). Rebate amount in the agreement currency: 12.78 SEK = 1.278 EUR = 1.28 EUR (rounded off)
5-'Scaled rebate'	The rebate amount is calculated based on a selected rebate scale. The rebate scale ID can be reused on several agreements. The rebate scale ID must either be defined on the agreement header as a default value to the agreement lines, or directly defined on the agreement line. Rebate scales are defined in 'Supplier Rebate on Sales. Open Scale' (OIS867). See Rebate Scale

Rebate calculation settings

The settings for the rebate calculation determine the input values for the calculation method. The fields available depend on the selected rebate calculation method. For the calculation methods that require a rebate base or margin cost base the available fields will also vary depending on the selected base.

This table gives a description of the fields in (OIS860) and (OIS861) that are available for the different rebate calculation methods and lists the rebate calculation methods they are used in:


Field	Used in rebate calculation method	Description
Rebate percentage	1-'Percentage' 3-'Net'	The rebate percentage rate together with the rebate base is used to calculate the rebate amount at customer invoicing.
Rebate base	1-'Percentage' 3-'Net'	The field indicates the rebate calculation base (or bases), which together with the rebate percentage rate is used to calculate the rebate amount at customer invoicing.
Agreement number	1-'Percentage' 3-'Net' 4-'Margin guaranteed'	The field indicates a purchase agreement used to retrieve the purchase price when the base is set to 3-'Fixed gross purchase price or 4-'Fixed net purchase price'. This is used for calculating the rebate amount at customer invoicing. Note: If the purchase price is defined for a specific warehouse, facility and division, the search criteria warehouse setting field must be specified on (OIS861/E).
Search criteria - warehouse	1-'Percentage' 3-'Net' 4-'Margin guaranteed'	The field is used when the rebate base is a purchase price defined for a specific warehouse, facility or division. The setting determines which warehouse to use in search for a valid purchase price. There are two available alternatives, to specify a specific warehouse or to specify 'SYS'. If 'SYS is specified, the warehouse is retrieved from the order transaction line. The warehouse's main facility and main division are also applied to validate the purchase agreement lines.
Rebate amount Rebate amount - unit of measure	2-'Amount'	The rebate amount is defined in the currency of the agreement and as per rebate unit of measure. The item that is specified for the sales or material transaction line must have the specified unit of measure as its basic unit of measure or as an alternative price unit of measure for the agreement line to be valid.
Price list and Currency	1-'Percentage' 3-'Net'	These fields indicate a unique identity for a price list and its currency. The price list is used to retrieve a price for the rebate calculation when the base is set to 22-'List price'. Note: Customer-unique price lists cannot be used as the base for the rebate calculation.
Costing type	1-'Percentage' 3-'Net' 4-'Margin guaranteed'	The field indicates the costing type used to retrieve an item's standard cost when the base is set to 9-'Std cost with costing type'. The standard cost is retrieved based on the costing type and the subtotal defined in 'Setting – Product Costing' (PCS001).
Guaranteed margin percentage	4-'Margin guaranteed'	The field indicates the guaranteed margin percentage, which together with the actual margin percentage and the unit net price is used to calculate the rebate amount at customer invoicing.
Margin cost base	4-'Margin guaranteed'	The field indicates the margin cost base, which together with the unit net price is used to calculate the actual margin percentage.
Rebate scale	5-'Scaled rebates'	The field indicates a unique identity for a rebate scale that defines the relationship between scale limits and rebate rates. Different price reductions give different rebates depending on what limit the reduction passes. The rebate scale is defined in (OIS867).

This table shows the valid rebate bases that can be selected in (OIS860) and (OIS861):


Rebate base	Description
1-'Current gross purchase price'	The rebate base is set to the current gross purchase price. This is retrieved using this hierarchy: 'Purchase Agreement. Open' (PPS100) 'Supplier. Connect Item' (PPS040) 'Item. Open' (MMS001) If the gross purchase price is defined for a specific warehouse (facility or division), the 'Search criteria – warehouse' setting must be specified.
2-'Current net purchase price'	The rebate base is set to the current net purchase price. This is retrieved using this hierarchy: 'Purchase Agreement. Open' (PPS100) 'Supplier. Connect Item' (PPS040) 'Item. Open' (MMS001) If the net purchase price is defined for a specific warehouse (facility or division), the 'Search criteria – warehouse' setting must be specified.
3-'Fixed gross purchase price'	The rebate base is set to the purchase price from a specific purchase agreement. The possibility to define a specific purchase agreement number enables the user to define discounted purchase agreements, to be used specifically for supplier rebate calculations. The purchase agreement number is specified per agreement line or retrieved by default from the agreement header. If the purchase price is defined for a specific warehouse (facility or division), the 'Search criteria – warehouse' setting must be specified.
4-'Fixed net purchase price'	The rebate base is set to the purchase price from a specific purchase agreement. The possibility to define a specific purchase agreement number enables the user to define discounted purchase agreements, to be used specifically for supplier rebate calculations. The purchase agreement number is specified per agreement line or retrieved by default from the agreement header. If the purchase price is defined for a specific warehouse (facility or division), the 'Search criteria – warehouse' setting must be specified.
5-'Last gross purchase price'	The rebate base is set to the last gross purchase price for the item. The last gross purchase price is retrieved from 'Purchase Statistics. Display' (PPS450). If no statistic record is found, the current gross purchase price is used as the rebate calculation base, retrieved using this hierarchy: 'Purchase Agreement. Open' (PPS100) 'Supplier. Connect Item' (PPS040) 'Item. Open' (MMS001)
6-'Last net purchase price'	The rebate base is set to the last net purchase price for the item. The last net purchase price is retrieved from 'Purchase Statistics. Display' (PPS450). If no statistic record is found, the current net purchase price is used as the rebate calculation base, retrieved using this hierarchy: 'Purchase Agreement. Open' (PPS100) 'Supplier. Connect Item' (PPS040) 'Item. Open' (MMS001)
7-'Inventory cost'	The rebate base is set to the item's inventory cost. The inventory cost is retrieved from the transaction lines' delivering facility at the time of the order date. Items with inventory accounting method 0-'Zero cost' and 5-'Simplif purch' on 'Item. Connect Facility' (MMS003/E) are not supported for this calculation base, since items with those inventory accounting methods do not have inventory values.
8-'Standard cost'	The rebate base is set to the item's standard cost. The standard cost is retrieved from the transaction lines' delivering facility at the time of the order date. The standard cost is calculated based on the values defined in 'Settings - Product Costing' (PCS001).
9-'Standard cost with costing type'	The rebate base is set to the item's standard cost and a given costing type. The standard cost is retrieved from the delivering facility at the time of the customer order date. The standard cost is retrieved based on the costing type specified on the agreement line and the subtotal defined in 'Setting - Product Costing' (PCS001).
20-'Unit gross price'	The rebate base is set to the transaction lines' gross sales price, excluding charges and VAT. This calculation base is not valid for rebate calculation method 4-'Margin guaranteed'.
21-'Unit net price'	The rebate base is set to the transaction lines' net sales price, excluding charges and VAT. This calculation base is not valid for rebate calculation method 4-'Margin guaranteed'.
22-'List price'	The rebate base is set to the item's list price as defined in a price list. Note: Customer-unique price lists cannot be used as the base for the rebate calculation.