Understanding PeopleSoft Claimbacks

The claimback functionality of PeopleSoft Order Management facilitates collaboration among manufacturers, distributors, and customers.

A claimback refers to money paid to a distributor by a 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 PeopleSoft system users. They buy from manufacturers and sell to many different entities; most often to contractors. A claimback is an agreement between the distributor and the manufacturer based on sales (orders that are entered and shipped) to a contractor (or customer of the distributor).

This diagram shows the relationship of manufacturers and distributors with their customers within the wholesale distribution environment:

 Wholesale distribution environment showing the relationship of manufacturers and distributors with their customers

The distributor (the PeopleSoft system user) might have a contract to buy doors from a specific manufacturer (supplier) for 100 USD per door. 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 to get this price. The distributor needs to pay the manufacturer 100 USD per door and needs to sell it to the contractor for 90 USD. The difference of 10 USD is a claimback that must be managed using the claimback functionality of PeopleSoft Order Management. The difference of 10 USD will apply to each door shipped to the specified contractor, and it will be a reimbursement paid to the distributor by the manufacturer. The claimback ensures that the distributor can maintain its target sales margin for the door.

Note: In this example, a 0 percent sales margin is assumed. The claimback amount would be greater if the distributor maintained a larger sales margin.

Claimback Process Overview

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

 Overview of claimback process flow

The following steps are an example of a typical business process for claimbacks:

  1. Enable claimback functionality for PeopleSoft Order Management.

  2. Create a claimback contract for a specific product and customer.

    Note: You can also create claimback contracts 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 order entry, the Customer Service Representative (CSR) enters an order line that matches a claimback contract. In our example, the claimback contract for product 123 is applied when the CSR clicks the Calculate Price button on the order entry form.

  4. The system generates claims for orders that are applied to the claimback contract and shipped.

  5. Using the Claims Management Workbench, process and adjust claims.

    You can defer claims to the next period, and you can settle claims by cash, credit notes, check, electronic funds transfer (EFT), draft, direct debit, or adjustment voucher.

  6. The system generates accrued revenue transactions, as requested, for unsettled claims. Users with appropriate security can then:

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

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

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

See Understanding the Claims Management Business Process for Vendor Rebates

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

  1. Enable claimback processing in Order Management. You do this 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 you in creating claimback contracts.

  5. Create special customer groups for claimback contracts.

  6. Create special product groups for claimback contracts.

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