Standard Operating Procedure (SOP)

[02.03.05.06.01 – Manage Sales Rebate Agreement]

1 Table of Contents
2 Version History.........................................................................................................................2
3 Precondition...............................................................................................................................2
4 Purpose......................................................................................................................................2
5 Coverage....................................................................................................................................2
6 Frequency..................................................................................................................................2
7 Roles and Responsibilities.........................................................................................................3
7.1 Policies, Rules & Regulations............................................................................................3
7.2 Contact person and training................................................................................................3
8 Manage Customer Rebate Agreements.....................................................................................3
8.1 Prerequicite before a contract can be created.....................................................................4
9 Create New Rebate Agreement.................................................................................................4
10 Process for Release of condition contract – to be described.....................................................7
11 Release the condition contract...................................................................................................7
12 Additional informations.............................................................................................................7
12.1 How to use scales – to be updated......................................................................................7
12.1 How to change conditions...................................................................................................7
12.2 How to use Partial settlement – to be described.................................................................8
12.3 How to copy a contract.......................................................................................................8
12.4 How to update Accruals /Run delta accrual........................................................................8
12.5 How to do partial and final settlement................................................................................9
12.6 How to cancel a contract...................................................................................................10
13 Glossary...................................................................................................................................10
14 Attachments/Appendices.........................................................................................................11

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2 Version History
List of all changes made in this SOP beginning from first approved version. Minor changes should
be marked by changing second digit - 1.1, significant changes by changing first digit - 2.0.
Explanation of change must be short but detailed enough to track the change.

Version Date Author Date Approver Change/Short description

1.0 Mike Baron Mads Lykke Creation of SOP
1.1 Ingrid Petersen - SOP reworked with info/details.

3 Precondition
Read the Sub-process diagram in the Danfoss Group Management System to get the overview of
the sequencing of this Sub-process. Also, read the Main process diagram in order to see the
start/end events and the connection between the Sub-processes.

4 Purpose
This Standard Operating Procedure will guide you through the Sales Rebate Agreeement creation
and maintenance in SAP S4/HANA.

A rebate is a special discount which is paid retroactively to a customer. This discount is based on
the customer’s sales volume over a specified time period. You define the details of the rebate in a
rebate agreement. In the agreement you specify, for example
 who receives the rebate payment
 on what criteria the rebate is based (customer, customer and material, and so on).
 how long the rebate agreement is valid
 Within the rebate agreement you create separate condition records for each product the
customer buys. These records specify the rebate amount or percentage for each product.
You can also specify a pricing scale - further details see chapter 11
 Because rebates are always paid retroactively, the system keeps track of all billing
documents (invoices, credit and debit memos) that are relevant for rebate processing.
 The building of accruals are done based on the billing document date.
 The system automatically post accruals so that the accumulated value of a rebate is
recorded for accounting purposes. You can run a delta accrual in cases where the accruals
are to be updated (change of %, contract not created at beginning of period …)
 A rebate agreement is finally settled when you issue a credit memo to the customer for the
accumulated rebate total.
 After the contract end day has passed the system will stop the building of accruals to the
contract. (Change request in build - note by Ingrid 03.03.2020)
 On the sales order it is possible to add the orderreason: "Sales without Rebate”, this gives
the possibility within different reports to sort out the sales orders/billing docs not relevant
for rebate. Note this is just a selection option, the system itself does not do any action here.

5 Coverage
This Standard Operating Procedure covers the global process for One ERP. Local exceptions
might exist - please see separate Process Exception Document (PED).

6 Frequency
This procedure should be used as required.

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7 Roles and Responsibilities

Role Responsibility
Pricing Administrator Create and maintain Rebate Agreements for customers

7.1 Policies, Rules & Regulations

 Before the Rebate is created in SAP, an agreement is to be made between the Sales
Management and Customer. The contract must include the Contract period, the business
volume related to a sold to party or a customer hierarchy, as well as the
Producthierrachy/Material price group/material with the related rebate %.

 Sales Managers must work closely together with Customer Service, hence
 Sales Manager makes sure that all customer contracts are in Sales Force.
 Sales Manager informs the CSC of the % accrual before contract starts (usually
before January)
 If the contract is still not finalized (difficult negotiation), the Sales Manager
informs the CSC of the most likely % accrual.

 Contracts must be created and released the month before they become valid (e.g. contracts
from 1/1 must be ready and released in December and 1. April must be ready and released
in April and so on)
 This will ensure that contracts starts accruing from ”day 1”
 Eg: if the contract is released mid-Jan, the accrual is only based on the sales from
mid-Jan only and will only be corrected if running a delta accrual
 If contracts are created late, then a delta accrual must be run – always

 Contracts must include 2 conditions (ZRA1/ZRS1), if ZRS1is missing any delta accrual
run will be incorrect.

7.2 Contact person and training

The ‘Process Owner’ of this sub-process can be found in the ‘Danfoss Group Management
System’ under the ‘Definition’ tab on the ‘Main Process’: Manage Sales Rebate Agreements

Training material for the sub-process can be found in the ‘Danfoss Group Management System’
under the ‘Definition’ tab on this ‘Sub-process’; Create Sales Rebate Agreement

8 Manage Customer Rebate Agreements

SAP Transaction Purpose
WCOCO Create and Maintain Condition Contract
WCOCO_Create Create Condition Contract
WCOCO_Change Change Condition Contract

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Condition Contract ype Description

ZRE1 Sales Rebate

8.1 Prerequicite before a contract can be created

Customer Master must be ticked with “Relevant for Settlement Management” under the
Orders tab in the Sales and Distribution section of the Business Partner.
• Under the billing tab the field Rebate and Pricing must be ticked as well.

9 Create New Rebate Agreement

Transaction: WCOCO or WCOCO_Create.
The creation has to be done within 3 areas, before it can be saved:
Create main contract data: step#1 to 5
Create Header information: step# 6
Create Conditions/Rates for contract: step#7

Step #1 Click to create a new Condition Contract.

Step #2 Select Condition Contract Type ZRE1 Sales Rebate - from the drop-down list. Hit
[ENTER] or click .

Step #3 In the From field, insert the date the Condition Contract should take effect.
Step #4 In the To field, insert the date the Condition Contract should expire.
Step #5 Enter the customer number into the Customer field. NOTE: This will be the
customer to whom the Rebate will be credited.

Step #6 Go through each of the Header tabs and add the relevant information.

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Sales: Add Sales org., Distr. Channel and Division

Header text: The text added, will be printed on the settlement document (=creditnote). Choose
External text, choose language and then click the to add a description. It is
important to select the language of the sales org. The print program is only able to
find the text if it is setup with the local lanquage key. Internal text can be used as
well, but will not appear on the settlement document to the customer.

Business volume selection criteria:

This section holds the sold to party numbers or cust. hierarchies on wich the
accruals/pay out will be registered. Click to add a new line and select CUST
Customer or CUHI Cust. hierachy. (The other fields in the drop down list are not to be used)

Fill in the required data.

Incl. Excl: Always use inclusive, unless you have a full customer hierarchy and
then you want to exclude some of the sold to party numbers.
Group: Leave “blank”
Valid from/to: Same as for contract period unless otherweise agreed.
Sales Org.: Add the sales org. number (System does not automatically fill in)
Customer: Add sold to party number
Cust.hierachy: Add customer hierarchy number
Note! You can also add more than one line by clicking on the - but since you
can only insert one customer number, it does not make sence to use it. But in case
you select 1 line then it has to be filled in like below.

Settlement data: Add ZRE1 into the Amounts Fields Group

Settlement calender: Click to enter a date and date type. As a minimum always insert:
 Settlement Date = Date for end of Contract period

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 Settlement Date Type = Final settlement

 Reference date= Leave “blank”

If you want to have partial settlement, please create those with a date and choose “1 Partial
settlement”. Further details on how to set up see chapter 11
You are now done with all the Header data of the Rebate contract.

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-

Create Conditions/Rates for contract: step#7

For every contract, both the condition ZRA1 and ZRS1must be created!

Condition ZRA1: Rebate Accruals (used in the billing document to make the accruals)
Condition ZRS1: Rebate (Used for the settlement – when issuing the credit note)

Select the relevant tables in the drop down menu dependend if you apply for a customer or a
customer hierarachy. click to load the line, and fill in the data.

For Customer: For customer Hierarchy:

V648 Cond.Cont./Sales org./Customer/Material (A648) V918 Cond.Cont./Sales org./Material
V907 Cond.Cont./Sales org./Customer PH1 V912 Cond.Cont./Sales org./PH1
V908 Cond.Cont./Sales org./Customer PH2 V914 Cond.Cont./Sales org./PH2
V909 Cond.Cont./Sales org./Customer PH3 V915 Cond.Cont./Sales org./PH3
V910 Cond.Cont./Sales org./Customer PH4 V916 Cond.Cont./Sales org./PH4
V918 Cond.Cont./Sales org./Material price group

Enter condition type (ZRA1/ZRS1), sales organization, customer number, material or PH number,
valid from date, valid to date, and the condition rate. If you want to work with scale please see
chapter 11.

When done it should look like below example.

Important to note is that there are no exclusion rules. If you add a % on both a PH3 (Pclass) and a
PH1 (Producline) both will get a bonus, according to example below.

Example: Material 082H3037 assigned with product hierarchy 08B7311908481

If you maintain for PH1=08=2%, and for PH3 119=2%, then the total rebate will be 4%.

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Click to SAVE the Condition Contract. If there are errors you have to corrert those before
being able to save. A contract number is now assigned (No. 153). Click to continue.

10 Process for Release of condition contract – to be described

11 Release the condition contract
Open the Condition Contract using transaction WCOCO. Click . Add contract number and click
enter. Hit the to enter the Condition Contract in change mode.
To release the contract click , and the icon will change to a lock . The System status will at
the same time change to Released. Click to SAVE.
The contract is now effective and will start building accruals along with the invoices, debet and
credit notes etc.
If there are documents created before the contract was set up, but still withon the contract period
you will have to update the accruals. This you do by running a delta accrual (see separate chapter
below).

12 Additional informations
12.1 How to use scales – to be updated
For the condition ZRA1(accrual) the rate should be updated over time dependend on the expected
turnover for the year. When creating the contract the % rate should reflect the most likely
scenario.
Example total business volume for the contract period:
Value 0 - 100.000 EUR 2%
Value > 100.001 EUR 3%

For the condition ZRS1 (settlement), you can apply a Value scale. Click on the line and then
select the scale icon . Add scales as listed in example below.

1.1 How to change conditions

You can change conditions during the contract period, as ex.:
Add or change condition lines
Change the rebate %
Change the rebate % to an amount (used normally for the settlement for ZRS1)

Open contract set contract in Change mode

For the conditions you can only change the % and the validityperiod. Any other adjustment
requires that you delete the line and create a new line, with the correct info.

Use the button with – to delete lines and the + to add lines.

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12.2 How to use Partial settlement – to be described

12.3 How to copy a contract

Open the contract you want to copy, click the tab: Condition Contract and select “copy”. The
system will now open a new condition contract with the number $1. You can now update the
relevant fields so it fits to the new customer that it should apply for.
Please ensure to update all fields with the new customer number, period from/to, business
volume and conditions.

Copy as successor, gives the same result as the copy function.

Create Successor, can be used to create a “template”, witch you than use as base to copy to
different customers.

12.4 How to update Accruals /Run delta accrual

The prerequisite for the accruals to start is that the contract is released.

In case you have created the contract after the start date, and there are documents within the
contract period that has not been accrued for, you will have to update your accruals!

In the settlement calender you need to add a date for when you want to run the delta accruals
(typically todays date). Run Settlement for Delta accruals via transaction WB2R_SC, and system
will recalculate the accrued amount. Please follow the step by step guide below for that purpose.

Note! The recalculation will be done by reversing all accrued amounts till today, and then
accruing from start of period for all documents billed.

Step #1 Add a date to the settlement calender:

Open the contract (WCOCO) and go into the change mode of the contract.

Add delta acccruals in Settlement Calendar

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This should now look as below.

SAVE the contract

Release the change by going into CHANGE MODE of the contract and click the release Flag.

Save the contract.

Step#2 Run Settlement for Delta accruals

Run transaction WB2R_SC (= Customer Contract settlement)
Ensure you select the right settlement date and the right settlement date type.
Follow the instructions below in the red marked fields.
Click execute

12.5 How to do partial and final settlement

This is described in a separate SOP, see below

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12.6 How to cancel a contract

Use SAP transaction code: WCOCO, and open the contract in change mode
Reason to Final Settlem. Accruals System What to be done
cancel status
Created by No rebate to be paid Accrual Released 1. Edit -> Lock settlement
mistake out. Amount is 2. Condition contract -> Delete document logically
Ignore any fixed value stille open 3. Check system status and save.
or % maintained for 4. Reverse Accruals with TC: WB2R_RAC.
ZSR1.
Treshold for Rebate of 0,00 Eur to Accrual Released 1. Unlock the contract
rebate not be settled Amount is 2. Delete all current condition lines for ZRS1. Create
met stille open one new condition line for ZRS1 with fixed amount 0,00
EUR.
3. Save the contract.
4. Settle the contract with TC: WB2R_SC
Contract is Rebate is paid out Accrual Locked 1. Condition contract -> Delete document logically
locked but Amount is 2. Reverse Accruals with TC: WB2R_RAC.
has stille open
outstanding
accruals

Please note that after having carried out the steps above, always to check the condition contract, to
ensure the result is as expected !

13 Glossary
Abbreviation Explanation

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Explanation of important phrases and words that can be incorrectly understood.

14 Attachments/Appendices
List of additional documents necessary to proceed this procedure – add link to the documents
updated in the Danfoss Group Management System.

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