Case study 2C Sales and marketing

Objectives

Generate rebates and process rebate claims for payment.

Exercise #1 Generate and process customer rebates

Objective: Generate rebates and process rebate claims for payment.

Sales manager build better relationships with customers and encourage them to be loyal to the company`s products and services by offering them rebates based on the order volumes or quantities.

Customers can receive balance deductions, trade spending, invoices deductions, or get paid directly.

The sales manager you are working with asked you to show how this works using existing rebates for item T0020 and process a claim.

You will have to do the following:

Generate and process customer rebates.
Generate rebate claims.
Process rebate claims.
Process rebates for payment.

Generate and process customer rebates

In USMF navigate to the Accounts Receivable > Setup > Accounts receivable parameters page, select the Prices tab and expand the Price details tab, and check that the Enable price details option is set to Yes.
Navigate to the Sales and marketing > Customer rebates > Rebate agreements page and select the customer rebate agreement: USMF-000001.
If the Workflow approval status field is not set to Approved, you need to select Validation on the Action pane to approve it.
Review a customer rebate agreement
- The agreement is for an individual customer, in this example customer US-009.
- Rebates are given to the customer when they purchase a specific product. In this case, the product has item number T0020.
- The customer’s sales performance, against which the rebate amounts are estimated, is to be accumulated on a weekly basis.
  - The setting for Price taken from is Gross, which means that line’s sales amount on which basis the claim is estimated is not reduced by the line discount.
  - The Rebate line break type field shows the method for calculating rebates. In this case, the sales target against which the rebates are to be estimated is set to Quantity.
  - The agreement’s lines specify the rebate amount type, the actual rebate value, and the thresholds. In this example, the customer will qualify for a rebate of 20 USD per unit sold, if their weekly purchases of the product fall within 1 to 50 units; and a rebate of 40 USD per unit sold, if they purchase above 50 units.

Generate rebate claims

Navigate to Sales and marketing > Sales orders > All sales orders.
Select New.
In the Customer account field, enter or select US-009.
Select OK.
In the Item number field, enter or select T0020.
Set Quantity to 40.
Select Sales order line.
Select Price details.
Expand the Rebates section. The Rebates tab lists all the rebate agreements that are applicable to the current order line and shows the estimated rebate amount. Note that the displayed amounts are only indications of what future rebate claims may be. The actual rebate amounts may be different depending on: the total sales volume achieved by the customer under a periodic rebate agreement; whether the customer had returned all or partial quantities; and whether the applicable sales order was invoiced.
Close the page.
Select Save.
On the Action Pane, select Invoice.
Select Invoice > Generate > Invoice.
Expand the Parameters section.
In the Quantity field, select All.
Select OK.
Select OK.
Close all pages.

Process rebate claims

The Rebates page acts a workbench in which you can review, approve, and process rebate claims. You’ll now process the claims that were created as a result of invoicing a sales order for customer US-009, who is the subject of the rebate agreement USMF-000001.

The line represents a rebate claim for 800 USD, which is based on the sales of 40 units of product T0020, calculated at 20 USD per unit. This matches the conditions of the first quantity break in the rebate agreement.

The claim is in the To be calculated state. This means that it is associated with an agreement that tracks the customer’s sales performance on periodic basis and it must be re-calculated to account for the total sales volume within the respective period.

Navigate to Sales and marketing > Customer rebates > Rebates.
Select Cumulate.
In the Customer field, enter or select US-009.
In the Start date field, select today’s date.
Select OK.
Select Approve.
Select Process.
In the Customer field, enter or select US-009.
Select OK.

If you get a message that it cannot create a record in Ledger journal table, it is because the demo data is out of sync; perform these steps:

Select Close.
Reset the number sequence:
1. Navigate to General Ledger > Ledger setup > General ledger parameters.
2. Select Number sequences tab.
3. Select the hyperlink for Number sequence code field for Journal batch number.
4. In the General FastTab, change the Next number higher.
5. Set Continuous to No.
6. Select Yes.
Navigate to Sales and marketing > Customer rebates > Rebates.
Resume with step 7 of Process rebate claims.

A message shows that the rebate was processed successfully, and the status of the claims has been changed to Mark. This means that as a result of a Rebate accrual journal being posted:

the claims have now been transferred to the temporary customer balance as deductions;
the Rebate accrual account has been credited to represent the future liability towards the customer; and
the Rebate expense account has been debited, in recognition of the cost incurred in connection with the sales.

Process rebates for payment

The Rebate page lists the rebate claims that you have processed in the customer rebate workbench and that are in status Mark. When you create a credit note, a message appears to inform you that a journal has been posted.

This is the Accounts receivable consumption journal, as specified in the Accounts receivable parameters page. This causes the real liability (credit) amount to be moved to the customer balance. This means that the customer’s account has been credited, and the Rebate accrual account has been debited.

Navigate to Accounts receivable>Customers>All customers.
In the list, find and select US-009.
On the Action Pane, select Collect.
Select Settle > Settle transactions.
Select Functions.
Select Rebate program.
Select Edit. Set checkmarks in the Mark field for the claims that you want to include into credit note.
Select Functions.
Select Create credit note.
Close the page.
Select Cancel. This refreshes the page so that you can see the updates.
On the Action Pane, select Collect.
Select Settle transactions. Note that a transaction for negative amount, representing the total rebate amount, without invoice reference has been added to the customer balance.
Select Cancel.
Close all pages.