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 so that the customer can earn a better rebate by ordering more. 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 system can, if you wish, automatically post accruals so that the accumulated value of a rebate is recorded for accounting purposes.

A rebate agreement is finally settled when you issue a credit memo to the customer for the accumulated rebate total.

You can set up rebates at any level just like pricing. The following rebates have been set up in the standard version of the SAP R/3 system:

• Rebate based on a material
• Rebate based on a customer
• Rebate based on a customer hierarchy
• Rebate based on a group of materials

You can process rebate agreements when the following prerequisite conditions are met:

• The sales organization in which you are processing sales orders must be relevant for rebate processing. Your system administrator sets this indicator in Customizing for Sales.
• The payer must be relevant for rebate processing. In many cases, the payer is the same as the customer. You indicate whether a customer can receive rebates by marking the Rebates field in the Billing view of the customer master record.
• The billing type (invoice, credit memo, and so on) you are using must be relevant for rebate processing. Your system administrator sets this indicator when defining billing types in Customizing for Sales.

Rebates differ from other kinds of discounts in that they are based on sales volume over time and are paid retroactively. However, the system processes rebates in much the same way as other kinds of pricing elements. Rebate data is saved in condition records. Controlling for rebate processing is carried out via condition types, pricing procedures and access sequences. This control data is defined in Customizing for Sales and Distribution.