No, this isn’t a variation of that joke, when is a door not a door? (Answer at the bottom of this blog)
Before we answer this paradox, let’s review the text book definitions of these two method-of-payments for trade promotions, off-invoice and bill-back.
Off-invoice: Off-invoice, also called on-invoice internationally, is an allowance or discount that is applied at the time of the transaction.
Bill-back: A bill-back is a rebate, allowance and/or discount that is given after the transaction.
Now that we have the definitions, you can also understand the confusion. Off-invoice discounts appear to be the opposite of bill-backs.
The answer is rooted in the nature of how customers receive off-invoice allowances. For a customer to receive an off-invoice discount, the ERP must apply and show the off-invoice allowance on the customer’s invoice. For this to happen, the off-invoice discount must be in the ERP’s pricing and promotion module. That sounds, simple, so what could go wrong?
Unfortunately, many errors and omissions can happen to a promotion over its life-cycle. Here are just a few:
- The promotion wasn’t entered in the ERP.
- The promotion was created in a third-party TPM solution, but didn’t get synchronized to the ERP.
- The promotion is in the ERP, but it wasn’t approved in time.
- The promotion has errors that prevented it from being applied to the invoice.
- The promotion was missing items that should have been included.
- The promotion dates do not match the customer’s agreement.
- Delays caused some product to be shipped or ordered outside the official promotion window.
- The ERP didn’t apply the promotion to customers that qualified for the discounts.
- And many more human data entry errors….
When one or more of these errors happen, we still need to get the discounts to the customer. That’s when an off-invoice becomes a bill-back:
Missed-Off-Invoice: This is an off-invoice allowance that is valid but wasn’t on the invoice. This missed off-invoice allowance must be paid after the transaction in the form of a bill-back.
All TPM solutions must be able to process and account for missed off-invoice. We all make mistakes sometimes. When our off-invoice allowances don’t make it onto the invoice, we pay our off-invoice discounts as a bill-back and call it Missed Off-Invoice.
If you use NetSuite as your ERP, we invite you to see how iTPM accounts for missed-off-invoice.
CG Squared, Inc.
Answer: When it’s ajar.