Trade Promotions – Rajawali Adikarya

What Is?

Trade promotions refers to the management and control of various company-specific rules concerning pricing, promotions, special offers, rebates, etc., that are extended to customers in your supply chain.

Promotions of many forms are routinely offered. Some are temporary price reductions subtracted from the invoice. Others are accrued for later redemption by the customer (possibly against future expenditure according to agreements such as advertising bill-backs). Still another type is free goods which is like a ‘buy-10-get-1-free’ program. An individual line item on an order may have multiple promotions attached. There may also be lump sum fees that are paid to the retailer in exchange for promoting the manufacturer’s products.

One way that promotions are paid is through invoice deductions. The retailer typically deducts the cost of promotions and lump sum fees from the manufacturer’s invoice. Line items on the remittance advice may contain some information about the deduction taken, but often do not. The process of cash application is tedious and time consuming for the manufacturer. Furthermore, the deductions taken may be unrelated to the invoice against which they are applied to (e.g. a check may come from the corporate headquarters of a retail chain. A deduction taken against an invoice for an advertising bill-back for one store may be applied against an invoice for another store in a different chain).

It is essential to be able to easily apply any promotions that are available to a customer, and to manage any deductions that the customer may take.

The main aim of trade promotions is to increase sales in the short term by using promotional schemes that effectively decrease the cost of an item to the consumer. Additional aims include introducing a new product, creating brand equity, positioning a product in the market and responding to competition.

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SYSPRO Solution

The Trade Promotions system enables you to manage and control promotions, special offers, rebates, etc., by providing facilities that include:

Complex promotions pricing
Promotions types
- Off-invoice
- Free Goods
- Accruals
Accrual deduction processing
Multi-tiered credit checking

The system maintains the different forms of promotion separately; generates charges off the invoice; and tracks accruals and customer deductions. Accounting transactions are generated at each stage.

Promotions can take the form of temporary price reductions taken off the invoice, monies accrued for redemption by the customer, (possibly against future expenditure according to agreements like advertising bill-backs) and special offer goods at no cost (such as ‘buy-one-get-one-free’ programs) or at minimal cost (such as ‘buy one, get the second one at half price’ programs). In addition, promotional pricing in the form of single level price reductions can be applied to a company’s list price based on the units of measure purchased by a customer.

Process Flow

A company will negotiate trading terms, including promotions and discounts with its customers. Once agreed, these will become standard within their trading relationship and should apply whenever a transaction, a sales (promotion, discount and accrual) or payment (deduction), takes place between the company and its customer.

At specific intervals, usually monthly, accruals and deductions are reviewed and processed by either accepting the transactions or rejecting them with a reason. In addition, credit limits can be agreed between the company and a customer for all companies within its enterprise, thus providing an automatic process of credit checking at multiple levels within the customer’s enterprise.

Trade Promotions Process Flow

Trade Promotions Process Flow.png

Integration

The Trade Promotions solution cannot run standalone. It integrates with the following solutions:
• Accounts Receivable
Customers are linked to promotions.
• General Ledger
Accruals, deductions and off-invoice line promotions are posted to the General Ledger.
• Sales Orders
Promotions are selected and applied to sales orders at the time of order processing.
• Counter Sales
Promotions are selected and applied to sales orders at the time of order processing.
• Inventory
Stock codes are linked to promotions and price breaks. Product groups are selected against stock codes.

Essential and recommended modules

Essential
• Accounts Receivable
• Sales Orders
Recommended
• Inventory

Trade Promotions Integration to other SYSPRO Solutions

Trade Promotions Integration.png

For more info about Syspro, you can also visit the Syspro website at Syspro

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