Working with Claimbacks

This chapter provides an overview of claimback functionality in PeopleSoft Order Management and discusses how to:

• Set up PeopleSoft Order Management claimbacks.

• Create claimback contracts.

• Analyze claimback impact on profitability.

• Process claims for claimback contracts.

• Review claim information.

Understanding PeopleSoft Claimbacks

PeopleSoft Order Management claimback functionality facilitates collaboration between manufacturers, distributors, and customers.

A claimback refers to money paid to the distributor by the manufacturer (supplier) for the sale of specific products or product groups to specific customers.

In the wholesale distribution environment the distributor has unique relationships with suppliers and contractors. In our example, the distributor is the PeopleSoft system user. They buy from manufacturers and sell to many different entities often times a contractor. A claimback is an agreement between the distributor and manufacturer based on sales (orders that are entered and shipped) to a contractor (or customer of the distributor).

The diagram represents the relationship of manufacturers and distributors with their customers within the wholesale distribution environment.

Wholesale distribution environment

The distributor, the PeopleSoft system user, might have a contract to buy doors from a specific manufacturer (supplier) for 100 USD per door. However, the manufacturer might also have an agreement to sell the same door to a specific contractor for 90 USD, but the contractor must go through the distributor in order to purchase the door. The distributor needs to pay the manufacturer 100 USD per door and needs to sell it to the contractor for 90 USD. The 10 USD difference is a claimback that will need to be handled using this Order Management claimback functionality. This 10 USD difference will apply to each door shipped to the specific contractor and will be a reimbursement paid to the distributor by the manufacturer. The claimback will ensure that the distributor maintains their target sales margin for the door.

Note. In this example, we have assumed a 0% sales margin. The claimback amount could be greater if the distributor needs to maintain a larger sales margin.

Claimback Process Overview

The diagram shows the high-level process for creating a claimback contract and processing the claimback claim within PeopleSoft Order Management.

Claimback Process Flow

Here is an example of the typical business process for claimbacks:

1. Claimback functionality is enabled for PeopleSoft Order Management.

2. The Claimback manager creates a claimback contract for a specific product and customer.

   Note. Claimback contracts can also be made for product groups and customer groups.

   • The Claimback manager can review the Claimback History page at any time to review the complete audit trail of the changes made to a given claimback contract.

   • The Claimback manager can also review the Claimback Activity page which displays order, shipment, and claim information related to the claimback contract.

3. During the order entry process, the Customer Service Representative enters an order line which matches a claimback contract and, in our example, the claimback contract for product 123 is applied when the CSR selects the Calculate Price button from the Order Entry Form.

4. Claims are generated for orders that are applied to the claimback contract and shipped.

5. Claims are processed and adjusted using the Claims Management Workbench.

   • Claims can be deferred to the next period.

   • Claims can also be settled by cash, credit notes, check, EFT, draft, direct debit or adjustment voucher.

6. As requested, accrued revenue transactions will be generated for unsettled claims and users with appropriate security can then:

   • Review the accrued revenue transactions that were generated before posting them to the General Ledger.

   • Review the impact of a claimback contract on sales costs, margin, and profitability.

Note. The processing of the claimback claims uses the same functionality as the vendor rebate process, covered in detail in the Purchasing book.

See Managing Vendor Rebate Claims.

Prerequisites

Before you can process claimbacks in Order Management, you must:

1. Enable claimback processing in Order Management, on the Order Management Installation Options page.

2. Set up default information for claimbacks on the Order Management Business Unit Definition, Claimback Settings page.

3. Determine claimback default values, processing options, and user security using the Claimback SetID options page.

4. Set up Order Management business unit groups to assist in the creation of claimback contracts.

5. Create special customer groups for claimback contract purposes.

6. Create special product groups for claimback contract purposes.

7. Set up feature security for maintaining the claimback Status, Recalculate Claims, and Next Claims Generation Date fields on the claimback contract.

See Also

Setting Up PeopleSoft Order Management Claimbacks

Establishing Customer Group Tables

Setting Up PeopleSoft Order Management Claimbacks

To setup claimbacks, use the Claimback SetID Options and OMBU Groups for Claimbacks components.

This section provides discusses how to:

• Configure claimback options and defaults.

• Configure claimback user security.

• Defining Order Management Business Unit groups for claimbacks.

See Establishing Feature Function Security.

Pages Used to Set Up PeopleSoft Order Management Claimback Options

Configuring Claimback Setup Options and Defaults

Access the Options & Defaults page.

This page is used to enter the claimback contract header-level defaults.

Claimback SetID Information

Claimback Contacts

Prefixes

Tolerances

Tolerances (both over and under based on either flat amount or percentage) will be defined on the Claimback Contract Header and passed to the Claims Management Workbench to be used during the settlement process.

Note. The Accounts Receivable Payment Predictor functionality also allows the user to set up matching tolerances that will automatically write off any remaining claim balance. The claim tolerances defined on the Claimback Contract Header are handled differently through the Claim Settlement process, which will create an adjustment to an open item to handle the “write off” of the remaining claim amount. In order to avoid creating duplicate write-offs to an open item and potentially creating a situation where a credit balance exists for the customer (vendor), users should not use a Payment Predictor method that uses a tolerance.

Configuring Claimback User Security

Access the Unrestricted Managers page.

The user needs to be defined as an Unrestricted Manager or be defined as the Claimback Manager on the Options & Defaults page to have access to maintain the Claimback Contract. The user needs to be defined as an Unrestricted Manager, be defined as the Claimback Manager on the Options & Defaults page or be defined as the Settlement Manager on the Claimback Contract to have access to view and maintain Claimback Claims for the contract.

Note. The access for maintaining the claimback contract Status, Recalculate Claims, and Next Claims Generation Date fields are controlled by the standard Feature Security functionality and can be set up for a role, user, Order Management Business Unit or for the installation.

Defining Order Management Business Unit Groups for Claimbacks

Access the Order Management Business Unit Groups page.

Creating Claimback Contracts

This section discusses how to:

• Create claimback contract header and line information.

• Enter claimback VAT information.

• Review claimback activity.

• Review claimback history.

Pages Used to Create Claimback Contracts

Creating Claimback Contracts Header Information

Access the Claimback Header page.

Recalculate Claims	Check this field if any fields are changed on the claimback contract that have an impact on the actual claim or claim amount such as purchase price, claimback amount, percentage, or price date. You can select this option if you have access through the Feature Security to edit the Recalculate Claims field. See Establishing Feature Function Security. When you select this option, the Generate Claims batch process will update the claim amounts for any existing claims that have not yet reached the settlement process for the claimback contract and then set the value of this field back to N (unchecked).
Next Claims Generation Date	Calculated by the system when a new claimback contract is added. The date is based on the Start Date and the Schedule ID defined for the claimback contract. You can override the calculated date if you have access through the Feature Security to edit the Next Claims Generation Date field. Claims will only be generated for the claimback contract if the Next Claims Generation Date is less than or equal to the current date.
Customer ID	Required based on the Customer Type and refers to the sold-to customer on the sales order.
Customer Group	Required based on the Customer Type and identifies a specific customer group with a Group Type equal to CLMB (claimback) to which this claimback contract applies.
Product ID	Required based on the Product Type.
Product Group	Required based on the Product Type and identifies a specific product group with a Group Type equal to CLMB (claimback) to which this claimback contract applies.
UOM	Required if the Product Type is Product ID or a maximum quantity is entered on the claimback contract. Defaults to the product selling unit of measure. If the Product Type is Product Group, then the UOM is always assumed to be the selling UOM entered on the sales order. The UOM entered on the claimback contract determines the unit of measure for which the claimback amount or percentage is entered, as well as the unit of measure for the maximum quantity field. When applying the claimback contract to the sales order line or schedule, a UOM conversion will need to be applied if the order UOM is different than the claimback contract UOM. This is necessary for both the Maximum Quantity calculations as well as for the margin calculations.
Stop Applying at Maximum Quantity	Indicates whether or not the contract should still be applied to a sales order line or schedule when the maximum quantity on the claimback contract has been reached. If the option is not selected, then a warning message is displayed during order entry. If the option is selected, an error message is displayed during order entry and the contract is not applied to the sales order because the maximum quantity has been reached.
Maximum Quantity	Optional. Limits the quantity that can be ordered against the claimback contract. If a value is entered in the Maximum Quantity field on the claimback contract, then the order quantity will be validated before a claimback contract can be applied to a sales order line or schedule to ensure that the maximum quantity has not already been reached.
Include Shipments	If the sales order line or schedule is marked as Direct Ship to Vendor, the system will only apply claimback contracts with the Include Shipments option set to Both or Direct to the sales order line or schedule. If the sales order line or schedule is not marked as Direct Ship to Vendor, the system will only apply claimback contracts with the Include Shipments option set to Both or Standard to the sales order line or schedule.
Claimback Amount	A per unit value for the claim amount calculated for the claimback contract.
Claimback Percentage	A percentage of the product purchase cost that applies to the claim amount calculated for the claimback contract. Note. If a claimback amount and a claimback percentage are both provided on a given claimback contract, the claimback percentage will be applied to the claim amount first, then the claimback amount will be applied.
Claimback Margin Impact	Determines if the claimback contract will have any impact on the margin calculation which is based on either the unit cost or alternate unit cost defined on the sales order.
Settlement Method	The method used for reimbursement of the claimback amount or percentage specified in the contract. If the settlement method is anything other than Voucher, where vendor payment is processed through accounts receivable instead of accounts payable, there must be an established vendor and bill-to customer relationship. If the vendor and bill-to customer relationship does not exist then a warning message will be sent informing you that additional setup is required. Additionally, if the settlement method is Draft or Direct Debit, then a warning message will be displayed if the settlement method on the customer (which is associated with the vendor) is different. Note. The vendor and bill-to customer relationship can be automatically created from the Vendor, Identifying Information page if you select the Create Bill To Customer option. This option will create a bill-to customer with the same ID used to create the vendor ID and will associate it to the vendor. Using the same page, you can also enter an existing bill-to customer in the customer ID field in the Additional ID Numbers section.
AP Payment Terms (accounts payable payment terms)	Required. Used for calculating payment due days for claims that are processed through Accounts Payable.
AR Payment Terms (accounts receivable payment terms)	Required. Used for calculating payment due days for claims that are processed through Accounts Receivable.
Group Name	The Order Management Business Unit Group ID for this claimback contract. When the Order Management Business Unit Group ID is entered on the Claimback Header page, and then you press the Load BU Settlement Options button, the system will populate the claimback contract line table with one record for each Order Management Business Unit assigned to the Order Management Business Unit Group ID. The system will also populate all default values for each of the business units, as long as they have been established for the Order Management Business Unit.

Contract Line Entry

In the Settlement Options group box, specify the claimback line information.

Note. The Settlement Options group box contains several fields. The Accounts Payable Business Unit, Accounts Receivable Business Unit and General Ledger Business Unit fields are defaulted from the Order Management Business Unit and are not stored on the claimback line table.

Entering Claimback VAT Information

Access the VAT page.

The VAT — Review link will only appear on the Claimback Header page when VAT tax is applicable to the claimback contract. VAT is considered to be applicable if the General Ledger Business Unit associated with the first Order Management Business Unit entered on the claimback contract is tied to a VAT entity. The VAT entity's registration ID and Country for the Accounts Payable Business Unit location code are retrieved by the system. In addition, the vendor's VAT registration, country, and location are defaulted to the VAT page, but the user can override any of the defaulted VAT information as necessary.

Note. Because the VAT applicability is determined by the first Order Management Business Unit defined for the claimback contract, all business units you define for the contract should have the same VAT applicability. Likewise, all products defined for a Product Group associated with the contract should have the same VAT treatment because only one set of VAT defaults will be defined for the claimback contract.

See Also

Order Processing in a VAT Environment

Reviewing Claimback Activity

Access the Claimback Activity page.

The Claimback Activity page displays order, shipment and claim information related to the claimback contract and provides links to the appropriate pages (Order Entry, Stock Request inquiry, and Claim Details) based on the information displayed for each line. This page also displays the total quantity ordered against the claimback contract, the total claim amount that has been generated for the claimback contract, and a count of the number of claims that have been submitted to the vendor for the claimback contract.

Reviewing Claimback History

Access the Claimback History page.

The Claimback History page provides a complete audit trail of the actions taken against a given claimback contract, including the Operator ID responsible for creating or modifying the contract, the date and time the contract was created or modified and the audit action (Add or Change) taken against the claimback contract.

Analyzing Claimback Impact on Profitability

This section discusses how to review the impact of a claimback contract on product profitability.

Pages Used to Analyze Claimback Impact on Profitability

Processing Claims for Claimback Contracts

This section provides an overview of how claims are processed for claimback contracts and discusses how to:

• Generate claims.

• Use the Claims Management Workbench.

Note. The Claimbacks feature uses the same functionality to process claims as the Vendor Rebates feature.

See Also

Maintaining Claims

Applying Claimback Contracts to Sales Orders

There are two ways in which claimback contracts can be validated and applied to sales order lines or schedules:

• Automatic application during online or batch order entry. During online entry, the CSR must click the Calculate Price button to add the claimback contract to the order.

• Manual application in sales order entry.

Automatic Application of Claimback Contract in Sales Order Entry

Claimback contracts can be automatically applied during the order entry process when the Calculate Price button is selected.

If the Process Claimbacks option is set to Y on the Order Management Installation Options page, the claimback fields will be available for entry on the sales order line and schedule and the system will attempt to retrieve a claimback contract ID both online and in batch mode. During online order entry, the claimback will not be applied until the Calculate Price button is selected.

If a claimback contract is found that matches the:

• Order Management Business Unit

• Sold-To Customer or Customer Group

• Product or Product Group

• Scheduled ship date

Note. The sales order must have a scheduled ship date that falls between the contract start and end dates in order for the claimback to default onto the order.

And if the Automatically Apply field on the Claimback SetID Options page is not set to None then the system will automatically populate the Claimback Contract ID field on the sales order line and the sales order schedule with the matching claimback contract ID when the Calculate Price button is selected.

Manual Application of Claimback Contract in Sales Order Entry

You can override the application of a Claimback Contract ID on the sales order line or schedule. This is particularly important in several situations, including:

• When more than one Claimback Contract qualifies.

• When the Automatically Apply option is set to None.

• When you need to maintain the Claimback Contract ID on the schedule to control changes to the Product Group defined for the contract.

Note. The Claimback Contract ID field on the Sales Order Schedule can be modified even if the schedule has been partially shipped. If the schedule is shipped complete or a claim for the claimback contract has reached the settlement process, then the Claimback Contract ID field can no longer be modified.

Applying Claimbacks — Common Usage Scenarios

Several fields and sales order entry scenarios impact the claimback contract matching process including:

Calculating the Claim Amount for a Claimback Contract

The claim amount for a given claimback contract is calculated using the formula:

( (Starting Purchase Cost x Claimback Percentage) + Claimback Amount) + (Current Purchase Cost — Starting Purchase Cost))

There are several factors that have an impact on the value of the starting cost.

• Cost Defined on Contract: If the contract has this field checked, then the Starting Purchase Cost is equal to the Purchase Cost defined on the Claimback Contract.

• Cost Fixed from Contract Date: If the contact has this field checked, then the Starting Purchase Cost is retrieved for the product and is based on the Cost Fixed Date defined on the Claimback Contract.

• Neither: If neither the Cost Defined on Contract nor the Cost Fixed from Contract Date fields are selected on the contract, then the Starting Purchase Cost is always equal to the Current Purchase Cost. Current Purchase Cost is always the purchase cost based on the claim generation date.

Note. The purchase cost is determined by the vendor list price minus any discounts. The vendor list price is retrieved from either a procurement contract (if defined on the claimback contract) or from the price defined on the Vendor's Unit of Measure & Pricing Info page. The discounts are retrieved from either a procurement contract (if defined on the claimback contract) or from vendor price adjustments that are defined in the system. The logic to determine the starting or current purchase cost for the claimback calculation is similar to the logic used in Purchasing to determine the purchase order price.

See PeopleSoft Enterprise Source to Settle Common Information 9.0 PeopleBook.

Example — Cost Fixed from Contract Date (Amount)

When a claimback contract has the Cost Fixed From Contract Date option checked, the cost is derived from the product cost for the date specified on the contract and is compared to the product cost at the time of claim generation. The claimback amount can be determined once both product costs are derived.

• Create a claimback contract and select the Cost Fixed from Contract Date option and enter a Cost Fixed Date of January 1, 2005.

• In the Claimback Amount field, define the claimback amount as 10 USD.

• The date stored in the Cost Fixed Date field, for our example January 1, 2005, is used to determine the starting cost for the product. As of January 1, 2005, the product starting cost is 75 USD. February 1, the cost for the product goes up to 100 USD. Assume the total quantity shipped in January is 20 units and the total quantity shipped in February is 10 units.

When calculating the per unit and total claimback amount:

• Claimback claim amount (per unit shipped) for January 2005:

  (75 USD x 0) + 10 USD) + (75 USD -75 USD) = (0 + 10 USD) + 0 = 10 USD/unit shipped.

• Total claimback claim amount for January 2005:

  Total Claimback Amount = 10 USD * 20 units = 200 USD

• Claimback claim amount (per unit shipped) for February 2005:

  (75 x 0) + 10 USD) + (100 USD -75 USD) = (0 + 10 USD) + 25 USD = 35 USD/unit shipped.

• Total claimback claim amount for February 2005:

  Total Claimback Amount = 35 USD * 10 units = 350 USD

Example — Cost Defined on Contract (Percent)

When a claimback contract has the Cost Defined on Contract option checked, the claimback amount, per unit and total, is determined using the cost stored on the claimback contract.

• Create a claimback contract on January 1, 2005. This claimback contract has the Cost Defined on Contract option checked. The cost, defined in the Purchase Cost field is set to 125 USD. The calculated product purchase cost for the month of January is 130 USD, and the calculated product cost for the month of February is 135 USD.

• In the Claimback Percent field, define the claimback percent as 15.00.

• Assume the total quantity shipped in January is 12 units and the total quantity shipped in February is 8 units.

When calculating the per unit and total claimback amount:

• Claimback claim amount (per unit shipped) for January 2005:

  (125 USD x 15 Percent) + 0) + (130 USD -125 USD) =18.75 USD + 5 USD = 23.75 USD/unit shipped.

• Total claimback claim amount for January 2005:

  Total Claimback Amount = 23.75 USD * 12 units = 285 USD

• Claimback claim amount (per unit shipped) for February 2005:

  (125 USD x 15 Percent) + 0) + (135 USD - 125 USD) =18.75 USD + 10 USD = 28.75 USD/unit shipped.

• Total claimback claim amount for February 2005:

  Total Claimback Amount = 28.75 USD * 8 units = 230 USD

Note. The Purchase Cost defined on the claimback contract determines the Starting Purchase Cost in this calculation and the Current Purchase Cost is calculated based on the claim generation date.

Example — Neither Cost Fixed from Contract Date or Cost Defined on Contract (Amount and Percent)

When a claimback contract does not have the Cost Defined on Contract option checked, and it doesn't have the Cost Fixed from Contract Date option checked the system uses the Current Purchase Cost, as of the claim generation date, to determine the product cost and derive the claimback amount per unit and total.

• Create a claimback contract on January 1, 2005. This claimback contract does not have the Cost Defined on Contract option checked, nor does it have the Cost Fixed from Date option checked.

• In the Claimback Percent field, define the claimback percent as 9.00.

• In the Claimback Amount field , define the claimback amount as 7 USD.

• The purchase cost, as of January 1 is 20 USD. February 1, the purchase cost goes up to 30 USD.

• Assume the total quantity shipped in January is 25 units and the total quantity shipped in February is 18 units.

  Note. If both an amount and a percentage is entered on the claimback contract, then the percentage discount is applied before applying the flat amount to the total claimback amount.

When calculating the per unit and total claimback amount:

• Claimback claim amount (per unit shipped) for January 2005:

  ((20 USD x .09) + 7 USD) + (20 USD - 20 USD)) = (1.8 USD + 7 USD) + 0 = 8.80 USD/unit shipped.

• Total claimback claim amount for January 2005:

  Total Claimback Amount = 8.80 USD * 25 units = 220 USD

• Claimback claim amount (per unit shipped) for February 2005:

  ((30 USD x .09) + 7 USD) + (30 USD - 30 USD)) = (2.7 USD + 7 USD) + 0 = 9.70 USD/unit shipped.

• Total claimback claim amount for February 2005:

  Total Claimback Amount = 9.70 USD *18 units = 174.60 USD

Pages Used to Perform Claimback Claim Maintenance

Generating Claims

Access the Generate Claim Request page.

The Generate Claims page allows you to submit the Claimback Claims and Accruals batch process. This process will automatically create claims for shipments that have been made against a claimback contract and create new claims for claims that have been deferred to another period.

Using the Claims Management Workbench

The Claimback Manager can update the status of claims that have been created for claimback contracts using the Claims Management Workbench. The claimback status determines what actions the Claimback Manager can perform.

Reviewing Claimback Accruals

This section provides an overview of accruing revenue for claimbacks.

Accruing Revenue for General Ledger

The Generate Claim Request page provides a batch process and request capability for automatically accruing incurred revenue for claimbacks which have not gone through the settlement process. In this case, shipments have been made against the claimback contract, claims may have been generated, but the claims have not yet been passed to Accounts Payable or Accounts Receivable for processing. The Accrued Revenue transactions will be sent to General Ledger so new journal entries can be created by the Journal Generator.

You can submit the Claimback Claims and Accruals process for

• A specific claimback contract (SetID and Contract ID).

• All claimback contracts for a SetID.

• All claimback contracts for a specific Vendor ID.

The process is run based on the status of the claimback contract. Claimback contracts with a status of Approved or Closed will compute accrued revenue amounts for all shipments for which the order schedule is tied to the claimback contract and a claim has:

• Not yet been generated.

• Not yet been passed to Accounts Payable or Accounts Receivable for processing.

• Has been deferred to another period, but a new claim has not yet been created.

The Claimback Claims and Accruals process will look at any shipments that have a claimback contract applied to them and determine if an accrual transaction needs to be generated. If no claim has been generated yet, or an existing claim has not yet been settled or a claim has been deferred to another period, then the claimback amount will be accrued and passed to the General Ledger.

Note. The Claimback Claims and Accruals process will process any claims with a status of Open or Approved, but will ignore any claims with a status of Pending Payment, Partially Paid, Paid, or Cancelled. If a claim has a status of Deferred, then it will only be included in the accrual calculations if no new claim has been generated for the deferred claim or if the new claim has a status of Open or Approved.

• The Accrued Revenue Distribution Code will be retrieved from the claimback contract. The Accrued Revenue Distribution Code defaults to the claimback contract line for the Order Management Business Unit, and is then used to retrieve the Accrued Revenue ChartField information and to populate that information in the Accrued Revenue transaction table for Debit entry.

• The Claimback Distribution Code will be retrieved from the claimback contract. The Claimback Distribution Code defaults to the claimback contract line from the Order Management Business Unit, and is then used to retrieve the Claimback Revenue ChartField information and to populate that information on the Accrued Revenue transaction table for the Credit entry.

• A user can review transactions written to the Accrued Revenue transaction table prior to them being posted to the General Ledger on the Claimback Accruals Inquiry page.

• Accrued Revenue transactions written to the Accrued Revenue Transaction table are retrieved and posted to the General Ledger using the Journal Generator batch process (FS_JGEN). A special journal template has been created for Claimback Accrued Revenue. A journal entry is made to the Accrued Revenue ChartFields at the end of the current period, with a reversing entry to the same account in the start of this period.

• A user can review Accrued Revenue transactions that have been posted to the General Ledger on the GL Accrued Revenue page.

Pages Used to Review Claimback Accruals