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Process supplier rebates and incentives

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Applies to: Dynamics 365 Finance, Dynamics 365 Supply Chain Management

This article describes how you can use Dynamics 365 products to support the process for managing supplier or vendor rebates or other incentives in your supply chain.

Note

In the first versions of the business process catalog, this article represented a business process area, but it is now a business process under Manage accounts payable. We're in process of updating the article based on the November 2024 version.

Processing vendor rebates and incentives is a crucial aspect of financial management within an organization, playing a pivotal role in optimizing revenue and strengthening vendor relationships. In the realm of Dynamics 365, particularly Finance and Supply Chain Management, this process is seamlessly integrated, offering a comprehensive solution for managing rebate-related transactions. The cohesive ecosystem of Dynamics 365 ensures that businesses can efficiently configure and execute vendor rebate processes, fostering a streamlined and transparent approach.

The vendor rebate process encompasses several key business processes within Dynamics 365, each contributing to the overall efficiency of managing incentives. This involves configuring a structured vendor rebate approval process, defining diverse rebate programs tailored to specific business needs, and establishing criteria for rebate eligibility. With the capability to generate vendor rebates seamlessly, Dynamics 365 empowers organizations to process and review rebate transactions effortlessly.

The system further enables users to analyze rebate performance comprehensively, providing valuable insights into the effectiveness of incentive programs. Through this integrated suite of functionalities, Dynamics 365 ensures that organizations can navigate the complexities of vendor rebate management with precision and effectiveness. The calculation of vendor rebates is determined retrospectively, taking into account both the purchase amount and volume. Furthermore, these rebates are then applied to the respective purchases.

The functionality for rebate management is flexible and can be added at any time even after you're live on Dynamics 365. When you're implementing the functionality for vendor rebates and incentives, it's OK to leave this functionality to a later phase or sprint in an agile approach. The setup and configuration of your products and base pricing along with the general procurement process should be in place before starting the process for rebates and incentives.

Stakeholders

Many people across the organization should contribute to the decision-making process and design of the process supplier rebates and incentives business process area. The following list provides examples of such stakeholders:

  • Finance team stakeholders include accounts payable specialists, financial analysts, controllers, and chief financial officers (CFOs). These finance team stakeholders play a crucial role in designing and configuring the vendor rebate approval process, defining rebate programs, and analyzing rebate performance. Their expertise ensures the financial accuracy and viability of the incentive programs.

  • Sales and procurement stakeholders include sales representatives, procurement managers, and category managers. Sales and procurement stakeholders are essential in configuring rebate eligibility and generating vendor rebates. Their input is vital for aligning incentive programs with sales targets and procurement strategies.

  • Supply chain management stakeholders include supply chain managers, inventory planners, and logistics coordinators. Stakeholders from the supply chain management team contribute to the configuration of vendor rebate approval processes, ensuring alignment with supply chain operations, and optimizing the logistics of rebate-related transactions.

  • Executive leadership stakeholders include chief executive officers (CEOs), chief operating officers (COOs), and CFOs. Executive leaders should be engaged in high-level decision-making and approval processes, providing strategic direction and oversight to ensure that vendor rebate and incentive programs align with organizational goals and objectives.

Process supplier rebates and incentives process flow

The following diagram illustrates the process supplier rebates and incentives business process.

Diagram of the process supplier rebates and incentives business process flow, showing the connections between the different stages.

Process supplier rebates and incentives benefits

Many key benefits can be used to monitor and measure the success of implementing technology to support the process supplier rebates and incentives processes. The following sections outline the key benefits that an organization might monitor and measure for processing vendor rebates and incentives.

Streamlined rebate approval process

Dynamics 365 Supply Chain Management facilitates a seamless vendor rebate approval process, reducing the time and effort required for authorizing incentives. The system allows for the configuration of automated workflows, ensuring swift approvals and minimizing delays. This streamlined process not only enhances operational efficiency but also contributes to a more agile business environment.

Key performance indicators (KPIs) to measure this benefit include average approval time and the percentage reduction in manual intervention, providing management with valuable insights into process optimization.

Enhanced financial visibility and control

With Dynamics 365 Finance, organizations gain unparalleled financial visibility and control over their rebate programs. The system enables real-time tracking and monitoring of rebate transactions, empowering financial teams to make informed decisions.

KPIs such as rebate accuracy, financial forecasting accuracy, and reduction in financial discrepancies serve as metrics to gauge the impact. This enhanced financial oversight contributes to better fiscal management and risk mitigation.

Improved collaboration across departments

The integrated platform of Dynamics 365 fosters improved collaboration among various departments involved in vendor rebate processes. Sales, procurement, finance, and supply chain teams can seamlessly share information and insights, promoting cross-functional synergy.

KPIs such as the reduction in communication gaps and the percentage increase in interdepartmental collaboration measure the success of this benefit. Enhanced collaboration ensures that all stakeholders work cohesively toward common goals, optimizing the overall efficiency of rebate management.

Accelerated rebate processing

Dynamics 365 Finance expedites the generation and processing of vendor rebates, contributing to a more responsive and agile business model. The system automates rebate calculations, reducing manual effort and the risk of errors.

KPIs such as rebate processing time and the percentage reduction in manual errors quantify the acceleration of the rebate processing cycle. This benefit allows organizations to capitalize on time-sensitive opportunities, improve vendor relationships, and maintain a competitive edge in the market.

Next steps

If you would like to implement Dynamics 365 solutions to assist with your processing supplier rebates and incentives business process, you can use the following resources and steps to learn more. (Links are added, when the articles are ready.)

  1. Define procurement and sourcing strategies

  2. Define procurement catalogs

  3. Manage vendor relationships

  4. Procure materials and services

  5. Process vendor invoices

  6. Issue and settle vendor payments

  7. Process supplier rebates and incentives (the article you're currently reading)

You can use the following resources to learn more about the process supplier rebates and incentives business process in Dynamics 365.

Find definitions of terminology used in content for run production operations in the Glossary of terms in Dynamics 365 business processes article, including the following terms:

Contributors

This article is maintained by Microsoft. It was originally written by the following contributors.

Principal author:

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