SAP SD Rebate Process
Introduction to Rebate Process
SAP Sales and Distribution (SD) is one of the most widely used modules that is part of the SAP SD Certification program. This certification helps professions build their career towards data and work management in companies. Today, many companies around the world have adopted SAP to improve their work processes across many departments.
A rebate is a financial payment that acts as an incentive to increase the sales growth of an organization. It is a payment from a seller to a buyer after the buyer has bought goods at an agreed location, quantity, or value from the seller. The discount is based on the customer’s sales volume over a specific time.
Rebates are essential for various industrial operations, including building supplies, electronics, retail and wholesale distribution. Vendors can also offer them to specified locations, products, and some transaction types.
Types of Rebates
In a standard system, there are four types of rebates available. They are:
Rebated based on a material
Rebate based on a customer
Rebate based on a customer hierarchy
Rebate based on a group of materials.
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Rebate agreement in SAP SD
A rebate agreement defines the details of the rebate. For example, in the agreement the following are specified:
The receiver of the rebate payment
The criteria of the rebate (customer, customer, and material, etc.)
Rebate process in SD - Components
The rebate process in SAP has three parts:
Setting up rebates
Managing rebate agreements and payments.
Prerequisites to process rebate agreements in SAP SD
The prerequisites for rebate processing in SAP SD are:
Payer Customer Master
For the customer to receive a debate, you must select the Rebate field on the billing screen of the customer master field.
Billing Document Type
The billing type (invoice, credit memo, etc.) must be relevant for rebate processing.
The sales organization must be relevant for rebate processing.
Types of rebate agreements in SAP SD
The following are the types of rebate agreements in SAP SD:
Group rebate: It allows the creation of condition records for a combination of customer/material or a customer/rebate group.
Material rebate: It allows condition records for a customer/material and uses a quantity-dependent calculation.
Customer rebate: It allows condition records only based on the customer and uses a calculation percentage.
Hierarchy rebate: It allows condition records for a customer hierarchy node/material or only by hierarchy.
Independent of Sales Volume: It allows a lump-sum payment to a customer.
SAP SD Flow
Sales and Distribution (SD)
The sales and distribution logistics module handles the entire process from order to delivery. SD includes many phases:
Inquiry: When the vendor receives a quotation from the customer, they check whether they can deliver the goods with the customer conditions or not.
Quotation: Next, the vendor sends the quotation to the particular customer.
Sales Order: Once the purchase order is received from the customer, the vendor raises the sales order. He also needs to know the following partner functions:
- Sold-to-party: Who raised the purchase order?
- Ship-to-party: Where do the goods need to be delivered?
- Bill-to-party: To whom should they give the bill?
- Payer: Who is going to make the payment?
Goods Delivery: Next, the vendor delivers the goods.
Billing: The billing document needs to be sent while delivering the goods.
Finance: Finally, once the goods are delivered with billing, the vendor finance person interacts with the customer finance person for financial settlements.
Accrued rebates accounting
Rebates are not paid until the validity period of the rebate agreement ends. So, the system keeps track of all billing documents (invoices, credit, and debit memos) that are relevant for rebate processing in SAP SD. The system automatically posts accruals. Creating accruals helps accounting have an overview of the cumulated value of the rebate.
Based on the receipt information, the rebate accrual process generates accrual records such as:
The received quantity
The voucher information, such as the unit price and
The rebate agreement information.
Rebate management is the process of documenting the supplier agreements, tracking purchases and sales against the agreements, and managing accruals and rebate claims.
Differences between vendor and customer rebates in SAP SD
Merchants and distributors use vendor rebates.
Manufacturers and merchants use customer rebates.
Vendor rebates are rebate agreements where the rebate payments are received from a supplier.
Customer rebates are rebate agreements where the rebate payments are paid to a buyer or a customer.
Benefits of SAP rebate management system
Some of the benefits of using rebate management systems are:
They are more efficient and straightforward.
There are fewer disputes, and we can quickly identify the causes through accurate audit trails.
There are improved cash flows due to timely and accurate rebate claims.
There are improved margins due to valid rebate and pricing calculations.
Automated processes increase the productivity of finance and commercial teams in other vital areas.
There is a better supplier collaboration that leads to increased profits.
Rebate Configuration in SAP SD
The rebate configuration process in SAP SD consists of ten steps:
- Define agreement type
- Condition type groups
- Condition technique for rebate processing
- Account determination for rebates
- Activate rebate processing
- Create a rebate agreement
- Create a sales order
- Create delivery
- Create billing document
- Go to the created rebate agreement.
A rebate is an agreement between the company and the customer which is valid for a specific time period. The rebate agreement specifies the percentage of rebate offered to the customer during the specified period. The system calculates the rebate accruals for each applicable invoice and posts them to the corresponding G/L accounts and also updates them in the corresponding rebate agreement. At the end of the rebate agreement validity period, the company will reimburse the rebate amount to the customer.
The rebate process in the following 3 steps.
- Configuring rebates.
- Setting-up rebate agreements.
- Managing rebate agreements and payments.
In order to configure the rebate, we shall activate the rebate in the following 3 areas.
- In the definition of the required sales organization, we shall check the field “rebate process active”.
- In the required customer master record (payer) we shall check the field “rebate”.
- In the required billing type, we shall check the field “relevant for the rebate”.
Setting-2: Configuring condition technique for rebates.
Path: SPRO--->sales and distribution--->billingàrebate processing--->condition technique for rebate processing.
- Maintain condition tables for the rebate.
- Create the required condition tables like the customer, material, customer/material, etc.
- Maintain access sequences.
- Create an access sequence and place the required condition tables in it. While creating the access sequence for the field “type”, we shall specify the value ‘1’ (access sequence relevant for rebate).
- Define condition types.
- BO01-group rebate.
- BO02-material rebate.
- BO03-customer rebate.
The functionality of rebate condition type
- The condition class is ‘C’ (expense reimbursement).
- Plus/minus’ field contains “negative”.
- The ‘calculation type’ is “percentage” for BO01 and BO03 whereas it is “quantity” for BO02.
- For the rebate condition types fields like ‘amount/percent’, ‘value’, ‘delete’ etc. are not available as the rebate condition types should not be processed manually. This is controlled by the condition class ‘C’.
- The field “rebate process” specifies how the system calculates the rebate amounts. If we leave this field blank, the system calculates a rebate on each applicable invoice value. If we specify the value ‘1’ the system calculates the rebate independent of the sales volume. It makes sense to specify the value ‘1’ if the company offers a rebate in certain schemes such as the display scheme.
- The field “provision can” specifies whether the rebate accruals are corrected or not while setting the rebate amount to the customer.
Maintain pricing procedures
We shall place the rebate condition type in the main pricing procedure itself.
In the pricing procedure just above to the net value of the item, we shall specify a sub-total “rebate basis” by specifying the value ‘7’ for the field “sub-total” which updates the rebate basis in the table ‘KOMP’ and the field ‘BONBA’.
The rebate basis is nothing but the value based on which the rebate is calculated (net value)
Below to the net value of the item we have to place the rebate condition types. As the rebate amount shall be calculated on a rebate basis while placing the rebate condition types in the procedure for the field “from” we shall specify the “step no” of a rebate basis.
For the rebate condition types, we shall maintain the “requirement” ‘24’ which specifies that the rebate condition types must only be determined into a billing document.
For the rebate condition types, we shall assign “accrual key” as well as “account key”. The accrual key (ERU) enables the system to post the rebate accruals from each applicable invoice to the corresponding G/L accounts.
The settlement document (credit memo) uses the account key (ERB) to post the rebate deductions to the corresponding G/L accounts.
Setting-3: Defining rebate agreement types.
While creating the rebate agreement for the customer, we shall specify the rebate agreement type. For this, we need to define the agreement type with the required functionality. For this, go to;
Path: SPROàsales and distributionàbillingàrebate processingàrebate agreementsàdefine agreement typesàdefine agreement types.
The functionality of agreement type
Proposed valid from/proposed valid to Specifies the default validity periods that the system automatically proposes while creating the rebate agreement. The default valid from date is very much important in regards to whether or not we offer a retroactive rebate. If we leave this field blank, the rebate will be valid from the current date. If we specify the value “first day of the year” the rebate agreement will be valid from the first day of the year even though the agreement is created on the current date which is called a retroactive rebate.
Payment method: Specifies the default method of paying the rebate amount to the customer. For example, it can be a credit memo or check, etc.
Default status: Specifies the default status of the rebate agreement. Generally, it will be “open”.
Condition type group: Specifies the corresponding condition type group of the rebate agreement type.
Verification levels: Specifies whether the system displays all the billing documents in the rebate agreement based on which the rebate is calculated, or it displays the totals depending on the payer, etc.
Different validity period: If we check this field, the validity period of the rebate condition record may differ from the validity period of the rebate agreement.
Payment procedure: Specifies whether the rebate shall be paid up to the accrued value or there is no limit for manual payment.
Partial settlement: Here we need to specify the document type ‘R3’ for creating a partial rebate settlement requests when entering the payment in the rebate agreement.
Reverse accruals: If we check this field, in the rebate agreement the field “accruals reversed” will be automatic with the rebate amount paid to the customer. It is always a best practice to check this field.
Final settlement: Here we need to specify the document type ‘B1’ for creating the document rebate credit memo request while making the final settlement to the customer.
Text determination procedure: Specify the corresponding text determination procedure for the rebate agreement with the corresponding text ID.
Save the agreement type.
Setting-4: Condition type of group. The condition type group specifies which rebate condition types are to be used for the rebate agreement. For configuring this, go to;
Path: SPRO--->sales and distribution--->billing--->rebate processing--->rebate agreements--->condition type group.
- Define the condition type of group.
- Go to “new entries” and create a group.
- Assign condition types and tables to condition types group.
- Go to “new entries” and assign the required rebate condition types along with condition tables to the condition type group.
- Assign condition type groups to rebate agreement types.
- Select the required agreement type and assign the required condition type group.
Setting up rebate agreements
Setting-1: Creating a rebate agreement.
Path: logisticsàsales and distributionàmaster dataàagreementsàrebate agreementàVBO1-create.
- Enter the required agreement type.
- Select the icon “organization data” and enter the required sales area.
- In the overview enter the “rebate recipient” and the “currency”.
- The validity period will be automatically proposed by the system from the definition of the agreement type which if required can be changed manually.
- Select the button “conditions” and maintain the condition record for the required rebate condition type.
Note: If it is a customer rebate the condition record shall be maintained for the payer.
Select the record and go to “details” where we shall enter “material for settlement”.
Note: Whatever the material that is entered for settlement, by using that only the system automatically creates the document partial rebate settlement request while making the rebate payment from the rebate agreement.
Note: When we save the rebate agreement the system generates a no. for that agreement. For this, we shall maintain a no. range for the rebate agreement. For this, go to;
Path: SPRO--->sales and distribution--->billingàrebate processing--->rebate agreements--->define no. ranges for sales deals.
Setting-2: After creating the agreements the system calculates the rebate accruals from each applicable invoice and updates those rebate accruals in the rebate agreement, to see this create few invoices.
Managing rebate agreements and payments.
To see the rebate accruals updated in the rebate agreement, select the condition record maintained in the agreement and select the icon “payment data”.
In the rebate agreement, the system displays all the billing documents based on which it has calculated the rebate. To see these documents select the icon “verification levels” in the rebate agreement overview screen.
Creating partial settlements:
- In the agreement, the overview screen selects the button “pay” and enters the required amount to be paid. Save the agreement.
- When we save the agreement the system automatically creates the document ‘partial rebate settlement request’ for the entered amount.
- Go to the overview screen of ‘partial rebate settlement request’ by using the transaction code ‘VA02’ where the system displays the material which is entered as “material for settlement” in the agreement.
- Remove the billing block.
- Go to item data of that item and select the conditions tab page where the rebate condition type is displayed twice. One is to reverse the accruals, and the other is to credit the customer with the specified amount. Save the document.
Note: The sales document type ‘R3’ is the same as ‘CR’ except the corresponding billing type which is ‘B3’ (rebate partial settlement).
The item category is ‘B1N’ which is the same as ‘G2N’ except the field “returns” which must not be checked.
Create the billing document ‘rebate partial settlement’ (credit memo) with reference to ‘partial rebate settlement request’ by using the transaction code ‘VF01’.
Note: The billing type ‘B3’ is the same as ‘G2’. Apart from that for the field “rebate settlement” we shall specify the value ‘C’ (partial settlement for a rebate agreement).
After making the payment to the customer, the field “accruals reversed” in the rebate agreement will be automatically updated with the amount paid to the customer and it also calculates the “maximum payable amount” that is left to pay to the customer. To see this select the condition record in the agreement and select the icon “payment data”.
Like this, we can create partial settlements until the entire rebate amount is paid to the customer.
In conclusion, SAP Sales and Distribution is one of the main components of the SAP ERP system. It manages the shipping, billing, selling, and transportation of products and services in an organization.
The SAP Sales and Distribution module is part of the SAP logistics module. It manages the customer relationships right from raising quotations to sales orders and billings.
For In-depth knowledge on SAP SD click on:
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- SAP SD Module
- SAP SD Implementation
- Sales Document Processing in SAP SD
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