Trade Allowance Management in the D365F&O- Part 1 (Introduction, Setups and Configuration)

Hello AX Users,

I hope you are safe and healthy.

We are going to start a blog series, which covers topics related to supply chain management in the D365F&O.

In this blog, we are going to learn below points of Trade allowance management in the D365F&O:

• Basic terminology of trade allowance(In general) and trade allowance management in the D365F&O
• Setups and configuration required for configuring trade allowance functionality in the D365F&O

Introduction

Trade allowance is a discount given by vendors to its distributors to stimulate the organization's sales. Trade allowance management functionality in the D365F&O helps organizations in the following ways:

• Managing trade allowance agreement
• Analyzing the usage of fund allocated for promotional events
• Compare and analyze marketing activities

Example of trade allowance:

• Asian paint offers special prices to its retailers and wholesalers for a particular period to increase demand for its paints.

Setups and configuration

The following are the setups and configuration required for using trade allowance management in the D365F&O.

Trade allowance management parameters

D365F&O Path: Sales and marketing à Setup à Trade Allowance à Trade allowance management parameters

Trade allowance management parameters define default setups that the system will use for processing trade allowance if any lower level setup is missing in the system.

One time promotion template

The default template that the system can use for creating a trade allowance fund.

Planned Status

Default promotion status to set before the user uses promotion in further analysis.

Customer hierarchy

Default customer hierarchy that can be used for new promotions. User can change it manually on promotion form.

Expense account

Default ledger account from which lumpsum expense will be funded.

Procurement category

The default procurement category to be used when the lump sum amount is paid to the vendor.

Default journal name

The journal name selected will be used for matching, denying, and writing off deductions. Users must define the journal name in the journal ledger module before it can be selected here.

Include closed

If this checkbox is selected then while analyzing funds, the system will include funds that have closed status.

Default rebate program ID

Default rebate program ID that will be assigned automatically to a new promotion or merchandising events. User can change it manually on the merchandising event form. 

Fund Usage

Define fund usage, which can be used while defining the fund amount for promotion.

D365F&O Path: Sales and marketing à Setup à Trade allowance à  Fund Usage

Marketing objective

The marketing objective is basically the purpose of using sales promotion.

D365F&O Path: Sales and marketing à Setup à Trade allowance à Marketing objective

Trade allowance agreement period

Users can define the period during which terms and conditions related to the trade allowance agreement will be applied.

D365F&O Path: Sales and marketing à Setup à Trade allowance à Trade allowance agreement period

Merchandizing event category

Merchandizing event category is generally used for comparing trade allowance during the analysis period.

D365F&O Path: Sales and marketing à Setup à Trade allowance à Merchandizing event category

There are three default merchandizing events:

• Bill back: When distributors achieve preset sales targets, then reimbursement is given to them on the actual invoice amount of purchase order.

• Lumpsum: When distributors achieve preset sales targets, then the lump sum amount is given to them.

• Off invoice: It is a merchandising event, where distributors/retailers are offered discounts before they make actual invoice payment.

Funds

In the fund, master users can define and allocate budgeted funds amount to various trade allowance.

D365F&O Path: Sales and marketing à Setup à Funds à Funds

General (Fast tab)

• There are two types of funds: Discretionary and Non-discretionary
• Define the period during which the trade allowance fund's amount will be valid.
• Add fund usage type applicable to the trade allowance fund.
• Enter budgeted fund amount
• Users can also add any additional considerable notes related to particular funds.

There are three different status of funds:

Planning: Funds in planning status indicates that this particular fund is required decision of being used in trade allowance activities.

Approved: Approved status of funds indicates that, this fund is approved to allocate and use in the trade allowance process.

Closed: If the fund amount is no longer to be used in the trade allowance process then the user can set its status to close.

Customers(Fast tab)

In this tab, user can select a customer from the customer hierarchy, to whom this fund amount is applicable while processing transactions.

Items(Fast tab)

Users can add items individually or select products from product hierarchy(Click on add products). Only those items which are selected on items fast tab are valid for particular funds in transactions.

Once all these fields entered are validated, the user can change status of particular funds as "Approved" (if it is finalized to use for trade allowance) or "Planning"(if the decision is pending for funds to be used).

Trade allowance template

This topic explains how to set up trade allowance templates that you can use to create trade allowance funds that are based on a predefined set of values. For example, you can specify the currency to use, the marketing objective, and the agreement period. By using a template, the user can ensure that his/her organization's marketing objective is consistent.

D365F&O Path: Sales and marketing à Trade allowances à Templates

Trade allowance agreement

Now the final part of setups and configuration is trade allowance agreement. Trade allowance agreement form is divided into two sections i.e. Header view and Line view. Let us first look at the details that need to be filled in the header section.

D365F&O Path: Sales and marketing à Trade allowances à Trade allowance agreement

Header View

General (Fast Tab)

• The general tab includes basic details like description, details, owner, currency, order from date, order to date, marketing objectives, base units, lift percent, requested ship from and to date, requested a receipt from and to date.

Customers (Fast Tab)

• Select customers from customer hierarchy. Trade allowance agreement will only apply to customers which have been selected here.

Items (Fast tab)

• Select items individually or from product hierarchy (click on Add products). Trade allowance agreement will only apply to items which have been selected here.

Note: If an item needs to be selected variant vise then the user can add dimension. ( Click on dimension and enable required dimension) accordingly.

Funds (Fast tab)

• Select respective fund id which the user has created. Selected funds Id will be utilized further wherever this trade allowance agreement is used.

Line View

General and customers (Fast tab)

• All details in these two tabs are brought from the trade allowance agreement header.

Agreement lines (Fast tab)

• Users can select the respective merchandising event category.
• In the amount, tab user can define from and to the quantity and enter the respective amounts in the value field. These details indicate that whenever sales order created for respective customer and item and if it falls under these conditions then the amount defined in the value field will be applicable as a rebate to a customer on the particular sales order.

Once all the above details are filled and verified, confirm the trade allowance agreement, which will change the status of an agreement to"Confirmed".

I hope all the above-discussed points will be useful to you in understanding trade allowance management and its configuration in the D365F&O.

In the next blog, we are going to learn the following points:

• Impact of the trade allowance agreement in the D365F&O
• Rebate payment in the D365F&O.

Till then keep learning.