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October 21,2011
Requirement
The company sells its products through sales agents who are rewarded a commission based on the sales volume. The commission rates are not based just on the total volume but depends on the rates at which the products are sold. E.g. Commission rate = 1%, if the unit price is Rs. 1000 1200 Commission rate = 2%, if the unit price is Rs. 1201 1400 Commission rate = 3%, if the unit price is > Rs. 1400 (This is an incentive to the sales agent to negotiate a better price.) The commission is to be paid at the end of every quarter.
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Solution Exploration
Solution 1: Update a z-table with the commission amount after saving the invoice. Create a z-program to create a debit memo at the end of a quarter based on the table data. Solution 2: Use an accrual condition to calculate the commission & post to a GL account. Create a report to show the accrued commission & a z-program to create the debit memo at the end of a quarter based on the accrual posting.
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Difficulties: Standard Rebate processing works with a payer; not with sales agent. Rate of rebate is based on the total sales volume; is independent of the unit price of the individual transaction.
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Sales Order 1
Delivery, PGI 1
Sales Order 2
Delivery, PGI 2
Credit Memo
(Auto-generated)
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Rebate payable : Rs. 210 (Rs. 7000 * 3%) + Rebate accrual reversal
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Note: Partial settlement of rebate has an option to pay the rebate to the extent of only upto accrued values; however this is not available for final settlement. In standard system final settlement amount is calculated with rebate rate based on the scale ; it is independent of the accrued amount. In this solution, a pricing routine attached to the condition type sets the final settlement value = the value accrued so far.
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Rebate Accounting
Accrual posting is used when the agreement period is comparatively long. In invoice pricing procedure assign an accrual accounting key (ERU in standard) to the rebate condition type. At the time of invoicing
Dr Rebate Expense Account (a P&L account) (assign in the left column in VKOA) Cr Rebate Accrual Account (a BS account) (assign in the right column in VKOA)
Therefore customer receivable is not affected.
At the time of settlement (partial / full): Following two entries with the actual rebate amount to be paid:
Dr Rebate Expense Account (a P&L account) (assign in the left column in VKOA) Cr Customer Receivable
Note: In this solution, amount to be paid is always equal to the accrued amount.
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