Processing Claims for Claimback Contracts

This topic provides overviews of applying claimback contracts to sales orders and calculating the claim amount for the claimback contract.

Note: The claimbacks feature uses the same functionality to process claims as the vendor rebates feature.

Page Name

Definition Name

Usage

Generate Claim Request Page

CB_CLAIM_RQST

Create claimback claims to submit to the supplier and generate accrued revenue transactions for the claimback contract.

Notify Claimback Manager

VRBT_NTFY_RM_RC

Run a batch process that notifies the Claimback Manager when claims are generated by the Claimback Claims and Accruals process.

Claimback Claims Print

VRBT_CLAIMS_PRT_RC

Run a batch process that prints claimback claims by SetID, Claimback Contract ID, or Claim ID. This process prints the formal claims to send to the supplier for payment.

Notify Settlement Manager

VRBT_NTFY_SM_RC

Run a batch process that notifies the Settlement Manager when the claim settlement process is initiated for all claims, a specific claimback contract, or a specific claimback claim for the selected SetID.

Incoming Payment Reconcile

VRBT_CLAIMS_WB

Run a batch process that reconciles incoming claimback payments for all claimback claims or all claimback claims for a specific claimback contract for the selected SetID. You can enter an accounting date (blank by default) on this page.

Claims Management Workbench

VRBT_CLAIMS_WB

Manually submit a specific claimback claim for processing. Once a claim is generated, the Claims Management Workbench pushes the transaction to Accounts Payable or Accounts Receivable for settlement. Additionally, the Claimback Manager uses this page to defer a claim ID to the next payment cycle, create a deduction for an overdue payment from the supplier, reverse a deduction, reconcile payment for a claim, or print a claimback claim.

Claim Details

VRBT_CLAIM_DETAIL

View the details of a specific claimback claim, including details of the shipments that comprise the claim amount for the claimback contract.

Claim Reconciliation

VRBT_CLAIM_RECON

View reconciliation details and maintain the reconciliation status for claimback claims.

Claim Settlement Inquiry

VRBT_CLAIM_SETTLE

View settlement information about specific claimback claims.

Claim Incoming Payment

VRBT_CLAIM_INPAY

Manually enter incoming payment information for claimback claims.

You validate claimback contracts and apply them to sales order lines or schedules in one of two ways:

  • Automatic application during online or batch order entry.

  • Manual application during sales order entry.

Automatic Application of Claimback Contract

To automatically apply claimback contracts during the order entry process, the CSR clicks the Calculate Price button.

When 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 clicked.

Note: For the claimback to be provided by default to the order, the sales order must have a scheduled ship date that falls between the contract start and end dates.

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 clicked.

Manual Application of Claimback Contract

You can override the application of a Claimback Contract ID on the sales order line or schedule. This capability is particularly important when:

  • More than one claimback contract qualifies.

  • The Automatically Apply option is set to None.

  • You need to maintain the Claimback Contract ID on the schedule to control changes to the product group defined for the contract.

Note: You can modify the Claimback Contract ID field on the Sales Order Schedule even if the schedule has been partially shipped. If the schedule is shipped completely or a claim for the claimback contract has reached the settlement process, then you cannot modify the Claimback Contract ID field.

Common Scenarios for Applying Claimbacks

This table describes the fields and sales order entry scenarios that affect the claimback contract matching process:

Scenario

Effect on Matching

Product ID or Product Group field is changed after a Claimback Contract ID is identified for the sales order line or schedule.

Claimback Contract ID field for the line or schedule is cleared, and the automatic claimback contract matching process begins again.

Customer ID or Customer Group field is changed after a Claimback Contract ID is identified for the sales order line or schedule.

Claimback Contract ID field for the line or schedule is cleared, and the automatic claimback contract matching process begins again.

Order quantity on the line or schedule is changed.

Claimback Contract ID field for the line or schedule is cleared, and the automatic claimback contract matching process, including validation against the maximum quantity if defined for a matching contract, begins again.

Claimback contract specifies a maximum quantity.

If a maximum quantity is defined for the claimback contract, then the order quantity is validated to ensure that it can still be applied to the contract.

If the Stop Applying at Maximum Quantity field is not selected on the claimback contract, then a warning message appears in the message grid, indicating that applying this quantity to the claimback contract will result in an excess quantity beyond that specified in the claimback contract.

If the Stop Applying at Maximum Quantity field is selected on the claimback contract and the order quantity exceeds the claimback contract maximum quantity, then the claimback contract ID is not applied to the line or schedule and an error message appears in the message grid.

Claimback specifies a maximum quantity and the order quantity changes, causing it to exceed the maximum quantity specified for the claimback contract.

An error message appears, indicating that applying this quantity to the claimback contract will result in an excess quantity beyond that specified in the claimback contract. As a result, the claimback contract ID will not be applied to the line or schedule.

Multiple valid claimback contracts are located during the matching process.

The system attempts to apply contracts based on the Automatically Apply SetID option.

If the option is set to First to Expire, then the contract with the earliest end date is applied.

If the option is set to Largest Claimback Amount, then all valid claimback contracts are evaluated on the calculated claimback amount, and the contract generating the largest claim amount is applied to the sales order line or schedule. The Largest Claimback Amount is calculated using this formula: claimback amount + (unit cost * claimback percent).

Sales order line or schedule is marked as Direct Ship to Supplier.

If the sales order line or schedule is marked as Direct Ship to Supplier, the system only applies claimback contracts with the Include Shipments option set to Both or Direct to the sales order line or schedule.

Sales order line or schedule is not marked as Direct Ship to Supplier.

If the sales order line or schedule is not marked as Direct Ship to Supplier, the system only applies claimback contracts with the Include Shipments option set to Both or Standard to the sales order line or schedule.

Buying agreement specified in the claimback contract does not match the buying agreement specified in the sales order.

A warning message appears, indicating that the buying agreement on the claimback contract and the sales order line do not match.

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

( (Starting Purchase Cost × Claimback Percentage) + Claimback Amount) + (Current Purchase Cost − Starting Purchase Cost))

Several factors affect the value of the starting cost:

  • Cost Defined on Contract: If this field is selected on the contract, then the Starting Purchase Cost is equal to the Purchase Cost defined in the claimback contract.

  • Cost Fixed from Contract Date: If this field is selected on the contact, then the Starting Purchase Cost is retrieved for the product and is based on the Cost Fixed Date defined in 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 supplier list price minus any discounts. The supplier list price is retrieved from either a procurement contract (if defined on the claimback contract) or from the price defined on the Supplier's Unit of Measure & Pricing Info page. The discounts are retrieved from either a procurement contract (if defined on the claimback contract) or from supplier 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.

Example of Cost Fixed from Contract Date (Amount)

When the Cost Fixed From Contract Date option is selected for a claimback contract, 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 the claim is generated. The claimback amount can be determined once both product costs are derived.

  • Create a claimback contract, 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 (January 1, 2005) stored in the Cost Fixed Date field 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 increases to 100 USD. Assume that 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 × 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 USD × 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 of Cost Defined on Contract (Percent)

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

  • Create a claimback contract on January 1, 2005. This claimback contract has the Cost Defined on Contract option selected. The cost, defined in the Purchase Cost field, is 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 × 15%) + 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 × 15%) + 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 in 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 of Neither Cost Fixed from Contract Date or Cost Defined on Contract (Amount and Percent)

When neither the Cost Defined on Contract option nor the Cost Fixed from Contract Date option is selected for a claimback contract, the system uses the Current Purchase Cost, as of the claim generation date, to determine the product cost and to derive the claimback amount per unit and total.

  • Create a claimback contract on January 1, 2005. Neither the Cost Defined on Contract option nor the Cost Fixed from Date option is selected for this claimback contract.

  • 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 increases 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 are entered in 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 × .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 × .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

Use the Generate Claim Request page (CB_CLAIM_RQST) to create claimback claims to submit to the supplier and generate accrued revenue transactions for the claimback contract.

Navigation:

Order Management > Claimbacks > Generate Claims and Accrue Rev > Generate Claim Request

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

Field or Control

Description

Run Process By

Select the claim processing option to use as the basis for generating claims. The options are:

Claimback SetID: Generate claims for all the claimback contracts that belong to the specified claimback contract SetID.

Single Claimback Contract: Generate claims for the specified claimback contract.

Supplier ID: Generate claims for the specified supplier ID.

Create Claimback Claims

Select this option to create claimback claims for the specified Claimback SetID, Claimback Contract, or Supplier ID. This process automatically recalculates claims for claimback contracts with the Recalculate Claims flag set to Y if the Create Claimback Claims option is selected.

Accrue Claimback Revenue

Select this option to automatically accrue incurred revenue for claimbacks that have not gone through the settlement process.

See Reviewing Claimback Accruals.

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.

Field or Control

Description

Claim ID

Click this link to view the claimback activity for the claimback contract.

Claim Status

Select the appropriate search criteria for the claimback status.

For example, if you want to view approved claimback claims, select Approved from the Claim Status option.

Apply Claim Action

Approve: Change claims with an open status to an approved status.

Cancel: Change claims with an open, approved, or deferred status to a canceled status.

Defer: Change claims with an open or approved status to a deferred status.

Unapprove: Change claims with an approved status to an open status.

Apply Process Action

Cancel Deduction: Submit the claim to the deduction process in order to reverse the adjustment voucher previously sent to Payables for an overdue action and to send back the Pending Accounts Receivable item to Receivables so that they will again expect the payment from the supplier. This option is only valid for claims with a status of pending payment or partial payment where the overdue status is Y, and the overdue deduction is set to an adjustment voucher.

Claim Settlement: Submit the claim to the settlement process and send an expected payment from the supplier to Payables in the form of an adjustment voucher if the settlement method is adjustment voucher, or to Receivables if the settlement method is other check, draft, EFT, and so on. This selection also changes the claim status to Pending Payment and notifies the Claimback Settlement Manager if configured to do so.

Overdue: Submits the claim to the deduction process in order to reverse the pending Accounts Receivable item sent to receivables and then to send an adjustment voucher to Payables. This option is available only for claims with a status of pending payment, partial payment, and a settlement method other than adjustment voucher, with the overdue flag set to N.

Note: For claims with a status of partial payment, overdue action is only allowed if no related Active Claim Settlement has a Collected Amount greater than zero.

Payment Reconciliation: Submit the claim to the incoming payment reconciliation process, which reconciles the claim with the incoming payment from receivables. This action can only be applied to claims with a status of pending payment or partial payment.

Print for Dispatch: Print the formal claim document to send to the supplier. This action can only be performed on claims with a status of pending payment or approval.

Submit for Processing

Click to load all of the claimback claims applicable to the specified claimback ID.