Define allowances to apply discounts, charges, and accruals on sales order lines or headers before the time of invoice creation. You can see the effect and the amount of allowances at any stage in the sales order life cycle by opening the Allowances page from a Sales Order, but they are not accounted for (applied) until an invoice is created either by ad hoc creation or by invoice grouping rule process.

All the prerequisites for creating sales orders and invoices are required for allowance processing. Refunding of allowance accruals by manual claim require accounts set with a bank account to create payments.

Setting the allowance type determines the base allowance behavior.

Allowance Types

Type	Description
Discount	Allowance discounts reduce the customer invoice amount charged on the product line item or on the header according to how you define the allowance rules. Some examples of allowance discounts are: promotions, concessions, quantity discounts, preferred or professional customer group price discounts.
Charge	Allowance charges add to the customer invoice according to how you define the allowance rules. For example, you could use this allowance to add freight charges based on product or product group or add shipping and handling charges not covered by freight costs.
Accrual	Allowance accruals don't affect the customer invoice and sales order amounts, but credit an accrual account for the customer or for another beneficiary. Allowance accruals create separate customer invoice credits that can be claimed by the customer and paid back with a credit refund. For example, you can use allowance accruals to credit the customer account as an incentive for future sales, or you could credit a broker or distributor account for purchases made by a referred customer.
New Price	Change the list price of products on the sales order line using a percentage markdown, markup, multiplier, or using a flat amount. The allowance rule matching details will dictate what customer, customer group, product, or product hierarchy will be entitled to the new price allowance.

Allowances have many other fields with values that determine how the allowance will be applied. To learn more about Allowance field definitions see the Allowance Page Definitions table.

While the Allowance type (discount, charge, accrual or new price) determines the base allowance behavior, the allowance rules that are part of the allowance define how and when that allowance may be applied.

Allowances can have one or many allowance rules and each allowance rule may be applied independently of the other allowance rules.

Allowance Manual Checkbox

By selecting the Manual checkbox on the allowance you give the user creating (or modifying) the sales order the ability to manually apply allowance rules on the sales order lines or header.

To apply allowances automatically leave the manual checkbox cleared. When the manual checkbox is not selected, allowance rules are applied automatically according to the matching details defined in the allowance rules.

To learn more about Allowance field definitions see the table Allowance Page Definitions.

You can generate an allowance accrual for your customers on either standard or resale orders. Allowance accruals allow you to:

• Track, audit, and settle sales order accruals
• Channel related accruals in an efficient and timely manner
• Pass sales benefits to customers, end customers, reseller, and broker
• Apply accrual benefits to beneficiaries. Allowances allow you the flexibility to apply funds to a beneficiary that is not listed on a sales order

When applying allowances, there are several types of customers and the terminology here is different from the Parent Customer, Bill To, Sold To, and Ship To. The definition of customer here is important to credit allowance accruals to the proper account for sales orders of type resale. For allowance rule matching with sales orders the following definitions apply:

• Customer: Anyone to whom you sell goods and services.

  A customer is generally the recipient of the goods and services, but in the case of a resale sales order the customer can be a broker, distributor, or reseller, and the recipient of the goods and services is called the end customer (or end customer reference).

• End Customer: For a resale sales order, the recipient of goods and services is the end customer, whereas the broker, distributor, or reseller takes on the label of customer. End customers must be defined as real customer records in Kenandy if they are to receive allowance accrual credits. End Customer Reference is a similar field (any string value) that is an alternative to fulfill the audit trail requirements to save a resale sales order, but end customer reference strings are ineligible to receive allowance accrual credits.
• Beneficiary: Any customer (customer, end customer, distributor, or reseller) who receives the benefits of the allowance accrual. The value entered into the beneficiary field must be defined as a customer bill to.

  For example: On a sales order of type resale, the distributor or reseller (the customer in SO header) is the beneficiary when an allowance accrual rule is set to accrue to the Customer. When the accrue to is set to End Customer, the end customer specified by the sales order line gets the allowance accrual.

From either the Allowances page or the Manage Allowances page you can create a new allowance using these steps.

1. Click New Allowance.
2. Set the Type as Charge, Discount, Accrual, or New Price.
3. On the Create Allowance page, set values for the Allowance field definitions.

See the table Allowance Page Definitions, for descriptions of the settings and their effects on your allowance.

4. Click Save.

From an Allowance detail page or from the page listing all Allowance Rules you can create a new allowance rule using these steps:

1. Click New Allowance Rule.
2. On the New Allowance Rule page that is displayed, complete the appropriate fields.

   See the table Allowance Rule Page for descriptions of the settings and their effects on your allowance rule and the parent allowance.

3. Click Save.

Example: Creating allowance accruals for customers

You can reward customers with credit for purchases in the form of allowance accruals. Allowance accruals are customer credits collected as a bill back commitment or liability owed to the customer account which can be refunded to the customer at a later date.

To create an allowance that credits the customer:

1. Create and name an allowance of type: Accrual.
2. Set the allowance class to Accrual.
3. Define the basis and the fields associated with that basis according to the way you wish to calculate your allowance for your customer(s).

   Note: Accruals support use of Rate By or Percentage as your basis.

4. Specify a GL Account to be credited with the accruals.

   Contact your accounting group to verify what account should be used for your company as the account number depends on your accounting implementation. It may be ok to use the pre-existing accounts 220000 - Accrued Expense or 230500 - Allowances Payable, but really you should check because the proper account for accruals needs to be specified.

5. Click Save and you get the Allowance detail page for the allowance created.
6. Click New Allowance Rule from that detail page.
7. Name the allowance rule.

   Most useful allowance rule names will summarize the matching details that will be used to qualify the sales order line as valid for applying the allowance.

8. Define the matching details used to screen and qualify sales order lines for this allowance rule.

   Every matching details field entry acts as an additional query condition behaving as a logical 'AND' requiring all matching details to be true before the sales order line can qualify for the allowance.

   To learn more about matching conditions see Allowance Rule Page.

9. Set the value of the Accrue To field to Customers, and when an allowance accrual is created from your allowance rule applied on a sales order line, then the customer named by the field, Bill To, for that sales order will receive the accrued credit for the sale.

Allowance accruals can be awarded based on restricted membership in a customer group or by purchase of specific products within a product hierarchy. Specify the matching details values in the allowance rule to limit application of the allowance to those sales orders that match the allowance rule setting. The allowance will apply to all standard sales orders that match the details specified by the allowance rule.

In the allowance and allowance rule example shown below, any customer purchasing the "Amazon Product-20" will automatically receive the accrual credit of $0.10 per unit purchased. The allowance is applied automatically (because the Manual checkbox is cleared) when the allowance rule matching details are true when compared to the sales order.

Allowance accruals can be used to support reseller agreements to reward brokers, resellers, or distributors with credits based on sales orders from customers. Whether the basis is a flat fee, percentage or a rate multiplied by quantity sold, the allowance accrual provides a way to credit the account of a third party beneficiary for qualified sales order lines.

To create an allowance that credits a third-party beneficiary:

1. Create and name an allowance of Type: Accrual with an Allowance Class: Accrual.
2. Define the Basis and the fields associated with that basis according to the way you will compensate the third party.
3. Specify a GL Account to be credited with the accruals.

   Contact your accounting group to use the proper GL account for accruals for your company. Some default accounts that may be suitable for use are: 220000 (Accrued Expense) or 230500 (Allowances Payable), but the proper account to use will depend on your company's implementation and business process.

4. Click Save.
5. Click New Allowance Rule from the detail page of the allowance you just created.
6. Name the allowance rule for the specific matching details that will be used to qualify the sales order line as valid for applying the allowance.
7. Set the Sales Order Type to "Resale" to restrict allowance accruals for sales orders of type resale.

   When set this way, other sales order types will not qualify for this allowance rule accrual even if the matching details criteria are met. You can set the SO type to Standard or None to open the allowance rule to apply to all sales orders.

8. Define the matching details used to screen and qualify sales order lines for this allowance rule.

   Every matching details field entry acts as an additional query condition behaving as a logical 'AND' requiring all matching details to be true before the sales order line can qualify for the allowance.

   To learn more about matching conditions see Allowance Rule Page.

9. Set the Accrue To value to Customers and set the Beneficiary value to the third-party customer (broker, reseller, etc) who will get allowance accrual credits after the matching details qualify the sales order line to apply the allowance at time of invoice creation.

Example: Creating Allowance Accruals for a reseller based on a percentage of gross sales

An agreement with a reseller named BuyItHere.com would reward them with 3% of gross sales for purchases made by their referred customer, ABC. The following field settings would create an accrual allowance and associated allowance rule to support this agreement.

Your allowance would be of type: accrual, with 3% of target field: Gross. Your allowance definition would have field settings like the following:

Note: Some default values and optional settings have been omitted for clarity and page layout is subject to user customizations.

Your allowance rule would be applied to sales orders of type resale that have matching details to qualify all purchases made by end customer ABC to accrue the allowance credit on behalf of the beneficiary, your customer BuyItHere.com.

When BuyItHere.com starts referring more customers it's easy to add more allowance rules to the Allowance for BuyItHere.com. Go to the related allowance rule and click the Clone button to start a new allowance for a new referred end customer, XYZ, who would have allowance rule field set values like the following:

When you create a sales order, all sales order lines that match allowance rule details for allowances configured with the Manual checkbox is clear (automatic), get the allowance rule applied automatically. Allowances applied on the SO header can be seen as AP-00000XXXXX lines in the Allowances Applied section of the sales order. You can view all sales order allowances as well as modify, delete, or add manual allowances from the Allowances page, accessible from the sale order detail page.

1. From the Sales Order detail page, click Allowances or click Actions and select Allowances.

   The Sales Order Allowances page shows all allowances applied on the sales order regardless of whether they are applied on the header or on specific sales order lines.

   For resale sales orders and adjustment orders automatically applied allowances can be deleted. If needed, they can also be restored by clicking Reapply Allowances.

2. Click Add Allowance under the order header section or under a sales order line.
3. Select a value in the Allowance Rule field or select an Allowance Code.

   Only allowance rules that match the sales order are available. See Allowance Rules Matching Details to learn what criteria qualify an allowance rule for use with a sales order.

   Some allowance rules allow override to change the allowance amount or the value used to calculate the amount.
   Enter an override value if the default value should be changed.

4. Click Save.

   The allowance you applied will appear under the section where you added it. If you need to change or delete it you can click edit or del on the left side of the row.

5. Click Go Back to return to the sales order detail page.

   The sales order details page displays and you can scroll down to the Allowances Applied section which shows only the applied allowances at the header level. You can open Allowances page with a click on the Allowances button or open the sales order lines to view the allowances applied at the line level.

The following table lists the fields that Kenandy provides. Your system administrator selects the fields that are displayed on your user interface.

Allowance Page Definitions

Field	Description
Allowance Class	The allowance class value is evaluated by an accounting rule to categorize the customer invoice line allowance. Accounting rules specify how to account for each class. At installation the following classes are included in the product: Freight, Discount and Accrual. Additional allowance classes may be added, but an associated invoice accounting rule must also be defined to handle allowance additions when they are applied to the invoice.
Allow Override checkbox	When selected the user can change either the amount or the value that is used to calculate the amount of the allowance on the sales order line depending on what basis is being used. When not selected the amount of the allowance is calculated and fixed according to the basis defined in the allowance being applied to the sales order line or header.
Amount	The exact meaning of the Amount field depends on the Basis selected. Four significant digits to the right of the decimal are retained. When the basis is Flat, Amount is the specified value of the allowance. When the basis is Rate By, Amount is the multiplier times the quantity on the sales order line. When the basis is Percentage, Amount is not present or used.
Apply at Header checkbox	You can apply an allowance and its allowance rules to either the sales order header or the sales order lines, but not both. When checked the allowance can be applied on the sales order header. When cleared the allowance can be applied on sales order lines.
Basis	The method used to calculate the value of the allowance. Options include: Flat Specifies a static amount to be applied on either the sales order header or line depending on Apply at Header check box setting. This option is not compatible with accruals. Rate by Allowance will be calculated based on the amount multiplied by the quantity of the measure chosen in the Rate Field: Rate by Quantity. Based on the number of units ordered on the sales order line with respect to the product UOM. Rate by Weight. Use only on the sales order line for a restricted set of products. The amount will be multiplied on the weight unit-of-measure. Allowance rule matching details should restrict use of rules with this basis to a single product or product group on sales order lines because of potential for errors if mixing weight units of measure. Use this basis only under limited conditions with caution and testing. Percentage Allowance amount will be calculated as a percentage of the Net or Gross for either the line or for the total order amount, depending on whether the check box for Apply at Header is selected or not. % of Target Field The decimal value (precise to hundredths of a percent) used to calculate the allowance against the field specified by Target Field. Basis for New Price allowances: Markdown and Markup: These are shown and used when the basis is set to New Price. Markdown decreases the price and markup increases the price by the amount entered in the % of Target Field multiplied by the original list price. Two decimal places support precision to hundredths of a percent. Flat: When the basis is flat, the value set in the amount field will be the new price. Multiplier: When the basis is set to multiplier the value field is multiplied with the original list price to calculate a new price. The value can be specified to seven significant digits. Deprecated: Manual. Any predetermined amount. You can apply this amount to the header or the line if the allowance is not for the freight allowance class. Deprecated: User Entered. A user defined amount. You can apply this amount to the header or the line if the allowance is not for the freight allowance class. Deprecated: CWT Fuel Surcharge. The cubic weight (from the freight information on the Transit Route) multiplied by 100. Use only for freight allowance classes. Deprecated CWT Fuel Surcharge by Distance. The cubic weight (from the freight information on the Transit Route) multiplied by distance for the freight.Use only for freight allowance classes.
Charge	Deprecated. Type now determines the sign of the allowance. Designated whether the amount is positive or negative. Clear this checkbox for allowances customer must pay. Unselect the checkbox for discounts, fee waivers, and refunds.
Currency	Not shown by default. Currency is initially derived from the company preference and the Customer Bill To preference, but the customer currency named on the SO will take precedence. If the currency for the company and the Customer Bill To do not match then allowance is not supported.
External ID	Not shown by default. Displays an allowance's external identifier used by imported records.
GL Account	The General Ledger account is the record of financial entries where credits and debits are saved and stored as an official record of financial transactions. Enter a value like: 230000 - Accrued Expenses or 230500 - Allowances Payable
Manual checkbox	The calculation mode that designates the method of allowance application. Options include: Manual. You apply these allowances manually to the sales order or the sales order line. For example, you can apply a manual invoice directly to a sales order. Automatic. (Manual checkbox is cleared.) These allowances are triggered and applied at the time the sales order is released and only when the sales order, sales order line and the allowance rule share matching details. Automatically applied allowances don't appear as options for manual application on the SO from the Manage Allowances page. If automatically applied allowances are also set to allow override then they can be removed from the SO from the Manage Allowances page. Automatic allowances removed in that way can also be restored using the Reset Allowances button from the Manage Allowances page.
One-Time checkbox	When selected, this prevents the allowance from recurring for every Customer Invoice (CI) when there are multiple invoices from separate fulfillments or from a recurring rental. When selected the allowance (charge, discount, or accrual) will be counted against only the first CI generated. When cleared, the allowance may be applied to multiple CI when the sales order is split and when allowance rule matching criteria are met. This may be suitable for allowance discounts or charges based on sales order line quantities.
Name	The user-defined name of the allowance.
Rate Field	A value used in conjunction with Rate By. Options include Quantity and Weight.
Target Field	Used with allowances that use Percentage as a basis for calculation of the allowance. Target Field may be set to Gross or Net, where net is defined as the value of the sales order line after discount.
Type	The allowance type determines how the allowance will behave and affect sales order field attributes. Type may be: Discount, Charge, Accrual, or New Price. Discount, Charge, and Accrual have similar field definitions, but new price has a basis only.
% of Target Field	Shown and used when the basis is set to Percentage. The allowance amount is calculated from the % of Target Field value multiplied by the value of the target field selected, divided by 100. Two decimal places support precision to hundredths of a percent.

The following table lists the fields that Kenandy provides. Your system administrator selects the fields that are displayed on your user interface.

Allowance Rule Page

Field	Description
Accrue To	Determines the organization that receives credit for the transaction. The settings are End Customer, Beneficiary, and None. When None is selected, this setting defaults to the customer.
Allowance Code	Optional: Alpha-numeric string defined for an allowance rule. The allowance code can be used to tell a customer about a discount they can ask for or to add an allowance. The code can also be used to find applied allowance.
Allowance Rule Unique Key	Not shown by default. Internal use only.
Allowance Type	Synonym for allowance to which the allowance rule belongs. The actual type can be charge, discount, or accrual and that type determines the behavior of the allowance. See the Allowance Page Definitions table to learn more.
Beneficiary	Defines the party that received the credits from the allowance accrual.
Customer	The customer for the allowance rule.
Customer Group	The customer group for the allowance rule.
End Date	The end date for the allowance rule. The start and end dates are automatically validated before applying the allowance rule to an invoice.
End Customer	Required when SO type is resale. Used to determine which customer this rule will apply to. Usually, the end customer is the entity that receives your goods or services. Values must be a pre-defined customer record. If your reseller names a customer that is not recorded as a customer in Kenandy, then you can enter that customer name as an End Customer Reference to bypass the requirement for an End Customer entry when saving a sales order.
End Customer Reference	Required when SO type is resale. Not shown by default. Information only (string 255 chars) field which may be used in place of an End Customer entry to audit reseller reports of sales to an end customer that earned an allowance. Because End Customer Reference can be any string, it allows save of a resale order when the End Customer is not a defined record in the system.
External ID	Displays the external identifier used by integrated records.
Sales Order Type	A matching filter value that can be either Standard or Resale. The allowance rule will only be available for sales orders that match the type specified in addition to any other matching detail criteria specified. For the purposes of allowances matching details "Standard" means all sales orders types that are not "Resale".
Product	The product for the allowance rule. The allowance rule can apply to a single product, a product group, or a product hierarchy.
Product Group	The product group for the allowance rule. The allowance rule can apply to a single product, a product group, or a product hierarchy.
Product Hierarchy	The product hierarchy for the allowance rule. The allowance rule can apply to a single product, a product group, or a product hierarchy.
Start Date	The start date for the allowance rule. The start and end dates are automatically validated before applying the allowance rule to an invoice.

The following table lists the fields that Kenandy provides. Your system administrator selects the fields that are displayed on your user interface.

Allowance Applied Page

Field	Description
Allowance Amount	The monetary amount of the applied allowance.
Allowance Rule	The allowance rule for the applied allowance.
BillBack Commitment	The billback commitment is the amount the company is committed to pay to the beneficiary of an applied allowance.
Customer Invoice	The customer invoice for the applied allowance.
Customer Invoice Line	The customer invoice line for the applied allowance.
Description	The user-defined description for the applied allowance.
Name	The system-generated reference for the applied allowance.
Override Value	If the Allow Override checkbox is selected then the user may replace the existing value used in the selected allowance rule on the SO.
Sales Order	The sales order for the applied allowance.
Sales Order Line	The sales order line for the applied allowance.