• Automates Rebate Calculations and Payments
• Minimizes Manual Intervention
• Improves Efficiency of Rebate Programs

This module is designed to automate the task of processing rebates to selected customers. Using easy-to-use, on-line parameter setup screens, the Customer Rebates module interfaces to the Order Entry, Accounts Receivable, Accounts Payable and General Ledger modules.

The parameter setup screens provide a means to update simple-to-use mathematical parameters which are predefined by Sales Management. As management becomes more experienced in using the system, additional rebate calculations can be introduced for increased control and accuracy.

Customer Rebate Interfaces

The DMACS Order Entry module is required in order to process customer rebates. The Accounts Receivable module is not required to process customer rebates; however, Accounts Receivable is required if rebates are to be automatically processed for payment based upon the receipt of customer payments.

The Accounts Receivable module is not required to process customer rebates; however, Accounts Receivable is required if rebates are to be automatically processed for payment based upon the receipt of customer payments.

The Accounts Payable module is required if customer rebates are to be automatically paid by the system as they come due. An Accounts Payable check is the means by which the customer rebates due are paid to the customers, unless a customer is paid manually.

The General Ledger module is not required to process customer rebates. However, if the General Ledger module is implemented, rebate entries will generate journal entries for rebates payable and rebate expense transactions. Order Entry will automatically generate summary journal entries when a shipment is invoiced.

Rebate Parameters

Each customer must first be defined as to whether they are eligible to receive rebates. A default rebate percentage can be optionally identified on the Customer Rebate Master, although this can be overridden at the order and item level.

By default all items qualify for rebates; however, selected items can be identified that do not qualify for rebates.

The default rebate percentage for a customer can be overridden for a particular order. The rebate percentage can be further overridden at the order line item level, unless either the rebate percentage for the order is zero percent (0%) or the item does not qualify for a rebate.

Rebate Calculation Methods

There are three methods available for calculating the customer rebate for a shipment. The rebate can be based on the Shipment Value of the rebate line items, the Combined Profit Margins of the rebate line items or on the Individual Profit Margin of each rebate line item.

Shipment Value

When the rebate is based on the Shipment Value, it is calculated by accumulating the rebate amount of each rebate line item on the shipment.

The rebate amount is calculated as the discounted unit price of each line item (less the unit freight for the line item when freight is prepaid and not billed to the customer) times the quantity shipped times the line item rebate percentage, for all rebate items shipped.

Combined Profit Margins

If the rebate is based on the Combined Profit Margins of all rebate line items shipped, it is calculated by first adjusting the cost of the rebate line items shipped by the freight-in cost percentage, if applicable. Similarly, the revenue for the shipment is reduced by the freight charge for the shipment when the freight is prepaid and not billed to the customer.

The Profit Margin for the shipment is then computed and compared to the minimum Profit Margin for a shipment to determine whether it qualifies for a rebate. If the Profit Margin for the shipment is greater than or equal to the minimum Profit Margin, the rebate amount is the profit for the shipment times the rebate percentage for the order percentage, if applicable. Since this method uses the rebate percentage for the order to calculate the rebate, the rebate percentages for the line items are not applicable and neither system nor manual line item overrides are available.

Individual Profit Margin

If the rebate is based on the Individual Profit Margin of each rebate line item shipped, it is calculated by first increasing the cost of the line item by the freight-in cost percentage, if applicable. Similarly, the revenue for the line item is reduced by the freight for the line item when the freight is prepaid and not billed to the customer.

The Profit Margin for each rebate line item shipped is then computed and compared to the minimum Profit Margin to determine whether the line item qualifies for a rebate. If the line item Profit Margin is greater than or equal to the minimum Profit Margin, the rebate amount is the profit for the line item times the line item rebate percentage, summed for all rebate line items shipped.

Payment Methods

Customer rebate payment processing can be initiated by the Invoice Generation program for the Shipment Value of the invoice, or by the Cash Receipt Processing program after the cash receipts have been posted to the customer accounts by Accounts Receivable. These payment methods are not mutually exclusive; there-fore, a predefined percentage of the customer rebates can be specified for each method.

Lost Rebates

An optional ‘grace period’ can be defined for a customer whose rebates are based on the receipt of payment for the invoice. The grace period is defined in days to be added to the due date of the customer invoice in order to determine the grace period cutoff date.

The customer will lose the rebate if the customer invoice is not paid by the cutoff date. The grace period can be adjusted or eliminated by customer.

General Ledger journal entries are generated to reverse the original journal entries for the amount of the lost rebate.