Rebates – R1/R2 – Basics

NOTE R3 has introduced a lot of new functionality in the ‘incentivising’ area including the following:

  • Vendor rebates 
  • Royalties 
  • Brokerage 
  • Trade allowances 

I will not be covering this functionality in this post however I will aim to have a post with this information in the near future. 

AX 2012 R1 and R2 has the capability to use customer rebates in this post I hope illustrate  the potential of rebates.

What are rebates? 

Rebates are used extensively in America but it becoming more common in the UK. Rebates by definition mean that you are returning a specific sum of money after the purchasing of specific product.Rebates in the context of this post are between the manufacturer and a purchaser (most likely a reseller).

Why use rebates?

Rebates are used to as an incentive to improve the effectiveness of selling.

In AX we can use rebates to help incentivise our customers to purchase specific items (new lines for example) and/or order larger quantities of a product. This is done by creating rebate agreements which can grouped and paid for by specific time periods.

AX and rebates

The first area of setting up a rebate in AX consists of creating a rebate program, the Rebate program allows the user to predefine the defaults for the accrual and expense accounts, the next thing to note would be the different Rebate program types; these have been defined below:

  • Rebate:   The rebate type is typically processed by sending a check to the customer or by deducting the rebate amount from the customer’s invoice.
  • TMA:       The Trade and Merchandising Allowance rebates accrue until they are passed on to the customer, which is usually processed by a credit note.
  • Freight:   Freight rebates accrue based on region and are not passed to the customer. They are used only for reporting.

Rebates use a concept similar to trade agreements in terms of how they group the rebates.

Rebate lab

Below i’m going to run through the steps required to create a simple Cumulative rebate agreement for a specific item and a specific customer.

  1. First thing we are going to do is create a rebate program, to do this open Sales and marketing > Setup > Rebate program > Rebate program type 
  2. Click New 
  3. Enter an appropriate name and description (e.g. New Rebate)
  4. Select the rebate type ‘Rebate’ 
  5. Select the accounts ‘Default accrual – 130800‘ and ‘Default expense – 403200
    38
  6. Now we need to create a Rebate agreement, Open Sales and marketing > Setup > Rebate program > Rebate agreements
    39
  7. Click New
    Enter the following information:

    Rebate program

    (use the one created above)

    Customer code*

    Table

    Customer selection

    1203

    Item code*

    Table

    Item selection

    10000

    Unit

    Pcs

    Unit type

    Inventory unit

    Minimum quantity

    1

    Minimum amount

    1

    Start date

    Todays date

    Expiry date

    Never

    Find next

    Tick

    Payment type*

     Pay using Accounts Payable

    Field definitions:

    • Customer code/Item code – As per other areas of AX we are offered the options of:Table (direct link to a specific account/item), Group (link to a group of customers/items) and All (All items / Customers).
    • Payment types – This field defines how the rebate will be paid back to the customer.
  8. Next we will need to fill in the mid section of the form, for this example we will accumulating by invoice taking the Gross price.
    Cumulate – Cumulate sales by Week
    Price – Taken from Gross
    Rebate program accrual account Leave default from program type
    Rebate program expense account Leave default from program type
    Approval required Ticked
  9. In the line details we will enter 2 conditions for the item we are using:
    Customer code Customer selection Item code Item selection Currency Unit From qty. To qty Value Amount type Validated
    Table 1203 Table 10000 USD Pcs 1.00 20.00 10.00 Amount per unit No
    Table 1203 Table 10000 USD Pcs 20.00 30.00 20.00 Amount per unit No
  10. Next validate the Rebate agreements, to do this click ‘Validation’ at the top of the screen.
  11. Next create a Sales order for customer 1203 and item 10000 and a quantity of 10 Pcs. Process this order through to invoiced.
  12. Open Sales and marketing > Common > Rebates > Rebates 
  13. A new rebate should now be created on the rebate from. This rebate should be in a status of To be calculated
    62
  14. Click the function Cumulate in the ribbon bar at the top. In the popup window select the customer you would like to accumulate by and click OK 
  15. You should notice the rebate has now changed to a status of ‘Calculated’ (you might need to refresh your screen)
  16. Click the function ‘Approve’
  17. You should notice the rebate has now changed to a status of ‘Approved’ (you might need to refresh your screen)
  18. Click the function ‘Process’ In the popup window select the customer you would like to accumulate by and click OK 
  19. A popup should come up detailing that a voucher has now been created.
  20. Now the Rebate has been approved and processed we can now pay/credit the customer
  21. Open Sales and marketing > Common > Customers > All customers 
  22. In the ribbon bar click Collect > Settle > Settle open transactions 
  23. Mark the invoice you would like to process
    63
  24. Click Functions > Rebate program 
  25. Again mark the transaction and click Functions > Create credit not (this will create a credit note)

Note – This process has been looking at the ‘Cumulative’ process if you you selected per Invoice, if you did this you can skip steps 12-20.

 

 

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