Distributor settlement
Distributor rebate settlement for ice cream: calculate promotional refunds during the season
Image generated with AIThe ice cream season ended in September. It’s October, and your team is settling volume rebates, promotional refunds and free goods with every distributor and wholesaler that sold your products. For one distributor, your figure is lower than the figure on its claim. Spreadsheets go back and forth, and the settlement takes weeks.
I work with FMCG manufacturers on distributor data at Asseco Platform. Both sides signed the same terms before the season, then calculated them using their own data, so they agree on the terms and disagree on the figures. You can do that calculation during the season. Calculate promotional refunds while products sell, on distributor sell-out data: the record of what the distributor resold to shops, kiosks and cafés. The distributor sends you this record. By October, both sides work from the same data, apart from the last invoices of the settlement period.
Same terms, different figures
Terms for an ice cream season are simple to write. A distributor earns a volume rebate when it reaches an agreed volume target. In a promotion, you pay the distributor back the discount it gives its customers on promoted products: that’s the promotional refund. A promotional order can bring free goods.
Your invoices to the distributor are your sell-in. Its invoices to shops, kiosks and cafés are distributor sell-out, and the promotional refund depends on them, so it depends on data in the distributor’s system. Without that data, a manufacturer uses its own sell-in, or distributor reports that don’t show every invoice line.
Four ordinary sources of difference affect the settlement:
- Invoice corrections that come later: a correction changes the volume the refund is based on.
- Products under the distributor’s own codes: a code that isn’t linked to your product drops out of the calculation.
- Prices that already include a fixed discount: if one side measures the promotional discount from the list price and the other from the discounted price, their refunds differ.
- September invoices that arrive in October: they change the volume after one side has closed its calculation.
Volume targets come from a forecast, and the weather changes sales
The Magnum Ice Cream Company, in its registration document submitted to the US SEC, calls May to September “the peak selling season in the Northern Hemisphere” and says that weather in those months “can have a disproportionate impact” on its results. Volume targets are set well ahead of the season, on the basis of a forecast, and a hot June or a cold August makes actual sales differ from the plan.
So in September, some distributors are just below their volume target and some are far above it. For those close to the target, a small difference in counting decides whether a rebate is due, and questions about corrections, product codes and late invoices start to change the amount.
In the busiest weeks, a national price promotion, a leaflet offer and a local promotion can run at the same time. If nobody wrote down before the season which one applies to an invoice line that matches two of them, it gets decided in October.
Calculate promotional refunds during the season
You can update the settlement every day of the season. In Asseco Platform, this takes two products. Trade Data Hub collects the data that distributors send and combines it with your sell-in. Trade Terms & Settlement calculates the refunds from that data in its Distributor Promotional Settlement module, which receives distributor sell-out data every day and recalculates promotional refunds every night for the settlement period set in the terms. You know the cost of a promotion before the period closes.
Refunds by distributor
| Distributor | Main promotion type | Distributor sell-out value | Refund value | Refund % of sell-out |
|---|---|---|---|---|
| Distributor A | National price promotion | 1,840,000 | 58,900 | 3.2% |
| Distributor B | Leaflet offer | 1,210,000 | 41,200 | 3.4% |
| Distributor C | National price promotion | 960,000 | 30,700 | 3.2% |
| Distributor D | Local promotion | 720,000 | 19,400 | 2.7% |
| 10 more distributors | Various | 1,280,000 | 36,200 | 2.8% |
| Total | 6,010,000 | 186,400 | 3.1% |
The module reads invoices with their corrections, links the distributor’s own codes to your product so the same product is counted once, and adjusts the price for fixed discounts before it compares the actual discount with the discount threshold in the trade terms, the discount level that decides what the promotion refunds. What happens when a discount exceeds that threshold depends on your terms: the module can cap the refund, block it or flag the line for review, as configured. A grace period after the period ends lets the last invoices arrive before the final calculation.
When several promotions match one invoice line, the module takes the one with the highest discount, and a priority order set in advance decides between equal discounts. The module applies this rule to every invoice line, so explain it to your distributors and agree on that order with them before the season starts.
Every amount can be traced from the payment document back to the invoice line it came from. Your team checks and approves the settlement in the module. The module then produces files for your finance system, which issues correcting invoices to the distributor for its purchases from you. The refund is paid through those corrections.
Volume rebates work differently. The terms decide whether the volume target counts the distributor’s purchases from you (your sell-in) or its resales to shops (distributor sell-out). Trade Data Hub holds both figures, so you can track each distributor against its volume target while the season runs. Check which distributors are coming close to their target. If your terms leave open how corrections and late invoices count, agree on it with those distributors before those questions decide a rebate. Before the season ends, you and each distributor can agree on the expected rebate, and after the season you settle the rebate itself under the terms you signed.
Checks before any money is paid
Before payment, the module runs four controls. One shows promotional orders above the quantity that the promotion allows. Another reports errors in the source data before they reach the calculation, such as a distributor product code that isn’t linked to your product, or a faulty promotion definition.
The third control compares what each distributor resold with what it bought from you, and shows where resales exceed purchases before the refund is approved. For example, a distributor reports 12,000 promoted units resold in July but bought 9,000 from you in June and July. Your team sees the gap and can check it with the distributor, since stock bought before June can explain it. This control needs sell-in and distributor sell-out in one place, and Trade Data Hub holds both.
| Distributor | Promoted product | Bought from you (sell-in) | Resold (distributor sell-out) | Resold minus bought | Status |
|---|---|---|---|---|---|
| Distributor C | Cone Classic 120 ml | 9,000 | 12,000 | +3,000 | To check |
| Distributor F | Stick Almond 90 ml | 4,200 | 5,000 | +800 | To check |
| Distributor A | Cone Classic 120 ml | 15,500 | 13,900 | −1,600 | OK |
| Distributor B | Tub Vanilla 1L | 6,800 | 6,100 | −700 | OK |
The fourth control estimates the value of a likely claim before the distributor files it, and shows transactions with an unusually high discount and no promotion assigned, such as invoice lines sold at a promotional price in the week after a promotion ended. If a claim is justified, you can prepare the payment before the claim arrives. If it isn’t, you can discuss it with the distributor first.
In our own FMCG manufacturer deployments, incorrectly settled promotional refunds fell from 6.5% to 0.1%, and discounts activated in error fell from 1.5% to 0.05%. Your own figures will depend on your data and your terms.
Before and after a promotion
Before a promotion starts, Asseco Platform checks stock at the distributors taking part, using Trade Data Hub stock data, and flags those with too little, so you can send an extra delivery or change the scope of the promotion. After it ends, the settlement shows what volumes the distributors sold and which refunds are due, and Trade Terms & Settlement compares the free goods due with the free goods actually issued.
Agree the terms before the season
You’ll still discuss the terms with your distributors before the first delivery of the season, while both sides can change them. Agree on these points:
- the volume targets
- the discount threshold in the trade terms and what happens when a discount exceeds it
- how invoice corrections are handled
- how the distributor’s own codes are linked to your products
- which products a promotion covers
- the priority between promotions that overlap
- the date a period closes and the length of the grace period for late invoices
For promotional refunds, the main work left at the end of the season is to check the final period and approve the payment.
Andrzej Masłowski
Deputy Director of Sales and Implementations
Asseco Business Solutions
Andrzej runs sales and implementation for Trade Data Hub and Trade Terms & Settlement. His work is bringing the data distributors send into the settlement of trade terms: the agreed rules, the daily data and the checks before a refund is paid.
If your settlement with distributors still takes weeks after the season, talk to him.
Frequently asked questions
What is distributor rebate settlement?
It’s the calculation of the rebates, promotional refunds and free goods a manufacturer owes its distributors under agreed trade terms. Promotional refunds depend on what distributors resold, so the calculation needs distributor sell-out data, taken from the distributors’ own invoices to shops.
How do you settle rebates and promotions with ice cream distributors and wholesalers at the end of the season?
For promotional refunds, you check the final settlement period, wait for the grace period for late invoices and approve the payment. This works best when the refunds were recalculated during the season on distributor sell-out data, so both sides start from the same figures. Volume rebates are settled after the season under the signed terms, on figures you tracked against each distributor’s volume target during the season.
Why do ice cream settlements with distributors lead to disputes about numbers?
Volume targets are set well ahead of the season, on the basis of a forecast, and the weather changes sales. Some distributors end the season close to their target, where small counting differences decide the rebate. After the season, each side calculates using its own data. Invoice corrections, product codes, prices with fixed discounts and late invoices can give the two sides different figures.
How can a manufacturer calculate promotional refunds for distributors during the season?
By receiving distributor sell-out data every day and recalculating refunds while the season runs. In Asseco Platform, Trade Terms & Settlement recalculates promotional refunds every night on data from Trade Data Hub, chooses the highest applicable discount for each invoice line, with an agreed priority for equal discounts, and runs four controls before payment. For volume rebates, Trade Data Hub holds both the distributor’s purchases and its resales, so the manufacturer can track each distributor against its volume target during the season and agree on the expected rebate before the season ends. The final settlement of promotional refunds follows after the grace period for late invoices.
Prepare next season’s settlement
Start with the distributors that have the largest promotional volume, and with the data they already send. Trade Data Hub accepts the formats distributors use today, such as Excel, CSV, PDF reports, EDI or API.
Trade Data Hub integrates 1,600+ distributors across 27 countries, giving 85+ FMCG manufacturers distributor sell-out visibility into 900,000+ outlets.
If your settlement with distributors takes weeks after the ice cream season, contact my team through the Trade Terms & Settlement page or the Trade Data Hub page. Tell us how many distributors you settle with and what data they send today, and we’ll go through one promotion from last season and where your figures and theirs differed.
