Defining Trade Agreements
A trade agreement determines and consists of the common calculation rules and conditions for generating accruals, processing advances, and settlements, for one or more recipients. A trade agreement is updated with the sales of the invoiced customer order lines covered by the agreement.
Trade agreements are entered in 'Trade Agreement. Open' (OIS430) in which a trade agreement type defined in 'Trade Agreement Type. Open' (OIS440) should be entered upon the creation of the trade agreement. Trade agreement number is generated upon creation.
Completion of the following fields on the trade agreement is mandatory:
- Valid from/valid to date - This specifies the dates comprising the validity of the trade agreement.
- Status - This indicates the status of the trade agreement. A trade agreement is valid when
status is set to 40-' Active’. No calculation for generating or paying values is done on the
trade agreement when status is set to 70-'Hold’. Note: Deletion of a trade agreement is not permitted when status is greater than 30 or if status is set to 99. Deletion is also not permitted if trade agreement is connected to a selection matrix.
The following restrictions apply to active trade agreements:
- When a trade agreement is set to status 40, it can only be changed to status 70.
- When a trade agreement is set to status 70, it can only be changed to status 40.
- Trade agreement class - This is the classification grouping for the trade agreement.
- Currency and exchange rate type - Trade agreements can handle different currencies. Regardless of the local currency, all sales are converted to the agreement’s currency. Advances and settlements are also based on the agreement’s currency. The exchange rate type must be specified to convert sales currency to the trade agreement’s currency.
- Generating unit - This indicates the unit of the generating value in the trade agreement. This value is used to retrieve the trade agreement rate in is stated in the currency of the trade agreement.
- Paying unit - This indicates the unit of the paying amount in the trade agreement. This is stated in the currency of the trade agreement.
- Settlements for the agreement can be put on hold by selecting parameter 'Hold settlement' on (OIS430/E). This can be inherited to the recipient in 'Trade Agreement Recipients. Open' (OIS431) and the payout in 'Trade Agreement Payout. Open' (OIS445).
- Invoices are verified if they are paid in full before a credit note settlement is created by selecting the parameter 'Chk paid inv' in (OIS430). The value for this parameter can be set per division in 'Settings - Trade Agreements' (CRS740), which is defaulted and can be manually modified on (OIS430/E) and in (OIS445).
- Select the 'Copy Conditions' check box on the 'Settings' panel (OIS430/P) if the recipient and scale rates defined in (OIS430) for the 'Copy from' agreement is to the new agreement.
Define facility
A facility can only be defined upon creation of a trade agreement. If a facility is not defined, then the agreement will be valid for all facilities within the division.
Define advance method
Advance method indicates how advances for the trade agreement are calculated from the accumulated trade agreement. This amount is then credited to a recipient. If an advance percentage or amount is specified for an agreement, then only that amount is paid out in advance.
It is mandatory to indicate the settlement frequency which is the number of periods between each settlement when an advanced method is specified for the trade agreement. The settlement frequency defined in the trade agreement is then inherited to the connected recipient.
- Alt 0='No advance'.
- Alt 1='Advance according to a fixed percent entered as internal reservation per recipient in (OIS431)'.
- Alt 2='Advance according to a dynamic percentage or amount as retrieved according to the scale rate table' in 'Trade Agreement Scale Rates. Open' (OIS432).
- Alt 3='Advance according to a fixed amount, as entered in the trade agreement payment schedule per recipient table in 'Trade Agr Pmt Sched per Recipient. Open' (OIS449).
Define generating and paying values
Generating and paying amounts are accumulated for the qualified invoiced order lines by either through the invoice process or by batch 'Trade Agreement Calculation. Open' (OIS450). The order lines that can affect the trade agreement are defined as generating and/or paying on 'Item. Open' (MMS001/H).
It is mandatory to specify the generating and paying unit of the trade agreement. The generating and paying unit is disabled for trade agreements with status greater than 30.
Scale U/M is the unit of measure (U/M) for limit values in the scale if the value is quantity. Note that entering a value in this field is not permitted when generating unit is not 8 or 10 and paying unit is not 11 or 13.
- 0 - The order line does not affect the agreement.
- 1 - Generating - The order line affects the trade agreement generating value.
- 2 - Generating and Paying - The order line affects both the trade agreement’s generating value and paying value.
Generating unit
Generating unit indicates the unit of the generating value in the trade agreement. This value is used to retrieve the trade agreement rate to be calculated on the paying amount for dynamic advanced method. This is stated in the currency of the trade agreement.
The trade agreement percentage or amount to be calculated on the paying amount is entered in an ascending scale of generating values where each limit corresponds to a percentage or amount. The percentage or amount in the scale used for calculation on the paying amount depends on the generating value reached.
Scale unit of measure is mandatory when generating unit is set to 8-'Net weight with catch weight - with entering catch weight U/M' and 10-'Quantity in agreed U/M'.
- 1-'Net amount after external discounts'
- 2-'Gross amount excluding discounts'
- 4-'Sales price according to item file'
- 5-'Contribution margin (net amount - cost value)'
- 6-'Cost value'
- 7-'Net weight'
- 8-'Net weight with catch weight - with entering of catch weight unit of measure'
- 9-'Gross weight'
- 10-'Quantity in agreed U/M'.
Paying unit
Paying unit indicates the unit of the paying value in the trade agreement. This value is the basis for calculating the trade agreement accruals with the percentage or amount indicated in either the recipient (OIS431) or the scale (OIS432). This is stated in the currency of the trade agreement.
Scale unit of measure is mandatory when paying unit is set to 11-'Net weight with catch weight - with entering catch weight U/M' and 13-'Quantity in agreed U/M'.
- 1-'Net amount included discount'
- 2-'Gross amount excluded discount'
- 3-'Sales price according to item file'
- 4-'Contribution margin (net amount - cost value)'
- 5-'Cost value'
- 10-'Net weight'
- 11-'Net weight with catch weight - with entering of catch weight unit of measure'
- 12-'Gross weight'
- 13-'Quantity in agreed U/M'
- 21-'Fixed amount'.
Define scale code for reservation amounts
Scale code is defined for the trade agreement to indicate how the agreement rates are retrieved to calculate the reservation amounts when using a scale rate in (OIS432). Scale code defined on (OIS430/F) is also used for dynamic percent advance method.
- 0-'Best possible trade agreement rate'
By selecting this alternative, the same trade agreement rate is used for the entire initial generating value. The mandatory defined normal rate in (OIS432) is used to calculate the reservation amount.
- 1-'Graduated trade agreement rate'
By selecting this alternative, the trade agreement rate used to calculate the reservation amount for the entire initial generating value is according to the last limit passed.
- 2-'Graduated rate - split trans'
By selecting this alternative, the generating value is split into separate lines in 'Trade Agreement Transaction File. Open' (OIS435) for each limit breached and assigned the corresponding rate.