Setting Up and Working with Incentives Version

Contents

Overview

The Incentives Feature

The Incentives Feature in Sourcing and Contract Management is a powerful tool for defining incentives and tracking earnings and payments. This feature offers robust definition options for incentive terms, and sophisticated tracking of earned amounts, payments made, payments due, and written-off earnings.

The Incentives Feature lets you...

• Set up incentive definitions that contain the supplier's incentive terms and requirements for any supply or services contract.
  
• Display earnings and understand how they are calculated for each incentive.
• Proactively review spend and earnings to make purchasing decisions that exploit favorable incentives.
  - Summary earnings can be filtered by type of incentive, supplier (entity), contract, and organization over a selected timeframe.
  - Details on earnings, payments, and spend proximity to threshold requirements (volume, market share, growth) can be displayed by contract, incentive type, and supplier (entity).
  - For quick reference, a link sends the summary of incentive earnings to your Dashboard.
• Quickly target contracts with volume, market share, and/or growth incentives where you are close to earning incentive dollars.
  - Spend that is within 10% of a required threshold (volume, market share, growth) is flagged so that you can see it at a glance.
  - You can also filter the entire list of incentive earnings to display only contracts whose spend is within 10% of thresholds.
  - Red text shows you the difference between total spend and a threshold amount required to begin earning incentives.
  - Potential earnings are calculated and appear for incentives with threshold terms.
  - Unit volume thresholds are translated to dollars on the Earnings display for easy comparison.
  
• Record payments on earned incentives, and write-off earned amounts that you do not expect to be paid.
  
• Review current earnings due from incentives, the cumulative total due, and earned amounts past due formatted in an aging breakdown.
• Generate purchasing evidence by contract and incentive to send to suppliers via a downloaded Excel spreadsheet.
  - The spreadsheet contains: spend summary by item; spend details by item, purchase order, and purchase order line; incentive earnings by month; payments made and payments due by month, and more.

With the incentives setup tools, you can...

• Define incentives of various types; for example, rebates, sharebacks, loyalty incentives, and others.
  You can also define incentives for contracts whose prices are not yet activated.
• Set up different incentives for the same contract/supplier; for example, a contract that has both administration and shareback incentives.
• Create multiple requirements for the same incentive type; for example, a rebate incentive that has different terms for each of five years.
• Exclude spend from selected organizations in the calculation of an incentive.
• Include spend only from selected items in an incentive calculation.
• Set a start date for calculating contract incentives.
• Recalculate incentives when terms change.
• Define and calculate incentives for expired contracts.

• Incentive Type.
• Payment Schedule.
• Calculation Start Date (which can be different from the contract effective start date).
• Incentive Percent or Flat Amount. (You can specify both, as applicable.)
• Recurring time period/frequency for which an incentive is available.
  Within each recurring period, incentive terms are newly applied to contract spend.
  For example, if the recurring frequency is three months, the incentive terms must be met over each three-month period to generate earnings for that period.
• Days until payment is due for earned incentives.
  A payment may be calculated quarterly, for example; but you can set the payment to be due ten days after a quarter ends, for example.

You can specify additional details for incentive terms, such as:

• Volume requirements: a total spend threshold, a total spend range, a unit volume quantity threshold, and/or a unit volume range.
  
• Growth requirements: comparing spend in a current time frame to a previous time frame.
• Market share requirements for one or more contract categories.
• Limits for the maximum and minimum payable incentive dollars.

The Incentives Feature must be enabled for any site that wishes to use it. Contact the Help Desk/Solutions Center for assistance.

Using This Topic - Monitor Existing Incentives or Set Up New Ones

This topic provides information on setting up new incentives and working with existing ones. Depending on your need, you should focus on the sections that are most appropriate to your task:

• To work with earnings and payments that have already been set up, read "Use the Incentives Workbench to Track Earnings and Payments"
• To set up new incentives, read “Incentives Setup."

Security

The security role object "CAFees" controls access to the Incentives Workbench. The Incentives option only appears on the Sourcing and Contract Management main Contents when your User Profile role has "CAFees" minimally set to View. If "CAFees" is set to None, you cannot click the Incentives menu option to open Incentives. See "Work with Roles" for details on security settings.

If the Incentives feature is not enabled at your site, you will not see the Incentives menu.

Incentive setup and tracking is subject to contract security. Contracts can be restricted by department, organization, and region. If a user is not allowed access to a contract, the contract number link on the incentives panels will not work.

Calculation Process Notes

Incentive amounts are calculated daily and reported using the normal calendar, rather than a site's fiscal calendar. As long as spend exists in a given month for a contract/supplier, any incentives set up for the contract are calculated. (Calculation is done in a nightly process that runs automatically.)

The notes below use the term recurring period. If this term is unfamiliar, you may wish to read the discussion.

• For both services and supply contracts, incentives can only be associated with contracts and entities.
  Vendor entities can have incentives; vendor locations cannot.
• Services contracts cannot have market share incentives or unit threshold incentives.
• Incentives are processed nightly.
• In the nightly processing, the application looks at spend for the current month and for the three prior months.
  For example, suppose a recurs period is six months long, and today is in month five. In processing tonight, the system will use spend for month five -- the current month -- and months four, three, and two.
  Suppose further that the terms of the incentive include a total spend threshold. Spend did not meet the threshold in prior months (four, three, and two) but did meet the threshold this month (five). Calculations in each of the prior months showed no earnings, but this month (i.e., tonight), the calculation will show earnings.
• If terms for an incentive change in the current period, the calculation uses the changed terms for the current period, and uses the prior terms for any prior period whose spend is included in the calculation.
  For example, an incentive has a recurring period of three months. Today is the end of the first month of the recurring period. The incentive percent has changed in this current period from 3% to 4%. In calculating earnings for the current recurs period (one month, so far), the system would use 4%. In calculating earnings for the three months in the prior recurs period, the system would use the prior value -- 3%.

Access the Incentives Feature

From the top of the Sourcing and Contract Management main Contents, click either the Supplies or Shared Services tab.

• To work with existing incentives on the Incentives Workbench, select Incentives > Incentives Workbench (Figure 1).
• To set up incentives, select Incentives Setup.

Figure 1 - The Incentives Menu

Use the Incentives Workbench to Track Earnings and Payments

The Incentives Workbench displays earnings for incentives and lets you record and track payments. It also provides the means for verifying to suppliers that incentive amounts have been earned.

The Incentives Workbench is in Figure 2.

• The Summary panel (Figure 2) displays earned amounts, earned percents, and total spend information. Use the Type, View by, and Period filters on the left to change the data on the panel, according to your interests. The Type filter also appears on the Earned and Due panels.
• The Earned panel displays earned amounts, associated contract spend, thresholds (total spend, unit volume, market share, and growth), and potential earnings available when contract spend reaches a threshold. You can determine at a glance how close contract spend has come to reaching a threshold and earning incentives. Links on the panel allow you to download Excel item spend data.
• The Due panel contains an overview of incentive payments that are earned and due in an aging breakdown format. From the Due panel, you can record payments and write-offs.

Figure 2 - The Incentives Workbench Summary Panel

Earned Amounts

Earned amounts are calculated daily, as long as the contract/supplier has associated Total Spend, and the spend is equal to or exceeds any threshold requirement. A calculation for a contract's incentive(s) begins with the contract's activation date or the incentive eligibility Start Date (depending on how the incentive is defined). Recurs in an incentive definition identifies the incentive period: how often incentive requirements must be met for earnings to be calculated. See "Calculation Process Notes."

Total Spend

The Total Spend value in the Totals row equals the Total Spend for the contracts that are in the filtered display.

Actions and links on the Incentives Workbench panels

The Incentives Feature uses the standard application panel tools:

• Filters for the data are on the left side.
• Click any underlined column header to sort the column. A green arrow indicates the direction of the sort.
  For example, the data in Figure 2 is sorted by Type.
• Click the refresh icon to refresh the display.
• Click the Search icon to search the list.
• Click an entity name to display the entity family.
• Click any contract number in purple text to open the "Work with Contract" page.
• Click the Excel icon for a spreadsheet version of the Earned or Due panel list.
  
• On the Summary panel, click Add to Dashboard to add panel data to your application dashboard(s). See Using Dashboards for details.
• On the Earned panel, mouse over a row to display the inquiry (i) link. The incentive Type and current (Recurs) period appear.
  - Click i to view incentive details.
  
• On the Due panel, mouse over a row to display several action icons:
  - Click to create notes.
  - Click to view notes.
  - Click to add payments.
  - Click to view received payments.
  - Click + to display multiple incentive details that exist for any contract/supplier.

Display Summary Earnings and Spend

The Summary panel (Figure 2) displays earnings on incentives by dollar value and percent of total spend. This panel appears by default when you open the Incentives Workbench.

Summary Panel Filters

Using the filters on the left side, you can display data by incentive type, supplier (entity), contract, or organization. You can also specify the time frame for the data.

• Type: Displays earned amounts, earned percents, and total spend for each incentive type. This filter defaults to All incentives.
• View by: Displays incentive data by type, entity (manufacturer or vendor), contract, or organization. The default is Type.
• Period: Displays incentive data by selectable timeframe. The default is Last 6 Months.

To return to the default settings, click the Refresh button (top right of the page).
Details for using the filters are on the panel Help. For help, click ? in the right-hand corner of the Summary panel (or any panel).

Summary Panel Columns

By default, the top line on the Summary panel (Figure 2) displays the type of incentive or All Types. The line contains the total Earned Amount for total eligible spend for the suppliers.
Depending on the filters that you set on the left side, these columns of data appear:

• Type: The type of incentive. Incentive types are defined for your site in your Administration tables.
• Entity: A supplier with incentives for contracts set up.
• Earned Amount: The total earned incentive dollar amount for all incentives for the supplier for the type selected (using the Type filter on the left side), or All Types. This value excludes amounts that were written off and will not be received.
• Earned Percent: The total earned incentive percent for all incentives for the supplier for the type selected, or All Types. The calculation is: Earned Amount / Total Spend.
  
• Total Spend: The spend dollars used in the calculation of each supplier's incentive.
  Note: Depending on the supplier and contract, incentives may involve complex terms and Total Spend may only be part of the data used to calculate incentives. A discussion of calculations is located in the setup section.
  

Examples: Filtering Summary Panel Data

Figure 3 is an example of the Summary panel, setting the filters as follows:

Type: Rebate
View by: Entity
Period: Last 6 months.

Notice that three suppliers -- A&E Medical, 3M, and Baxter -- have accumulated earned incentive amounts (Earned Amount column) over the timeframe (last 6 months).

At least one supplier -- Deroyal -- has no earnings, although has accumulated spend.

Figure 3 - Incentives Summary Panel: View By Entity (Supplier),

Figure 4 is an example of the Summary panel, setting the filters as follows:

Type: Administrative - 1
View by: Contract
Period: Last 3 months.

Contract PH0027 has accumulated an earned incentive amount over the selected timeframe. Another contract -- AE-1222 -- has spend, but no earnings. The contract HS-29-10-1 has no spend.

A contract may have multiple incentives of the same or different types.
If a contract's incentives are of different Types, are based on different spend amounts, and one amount is higher, then the higher amount is displayed as Total Spend.

Figure 4 - Incentives Summary Panel: View by Contract - Last 3 months - Administrative 1

Figure 5 is an example of the Summary panel, setting the filters as follows:

Type: Administrative - 1
View by: Organization
Period: Last 6 months.

All of the organizations have earnings. The data are sorted by the Earned Amount column in ascending order.

Figure 5 - Incentives Summary Panel: View by Organization - Last 6 months - Administrative 1

View and Interpret Earnings Amounts

The Earned panel (Figure 6) displays earnings for All incentive types for the current (Recurs) period.

Several tools on the Earned panel help you determine the difference between spend on contracts and any thresholds required to earn incentives. You can also explore situations in which your earnings are less -- or more -- than you expected.

Figure 6 - Data on the Earned Panel For the Previous 3 Months - All Incentive Types

Notes:

• Any contract with zero spend and a zero Threshold amount is not displayed.
• When an incentive's Recurs value is zero (months), the entire eligibility period is treated as the Recurs period. In this case, the Total Spend column value is for the entire Eligibility Period, and any Threshold defined for the incentive only needs to be met once for the incentive to be earned.

Contracts with two separate sets of incentive details may appear on separate lines, as does the Stryker contract STR0720 in Figure 6, and . This situation is addressed in Earnings for Multiple Incentives on a Single Contract. However, you may wish to read the next few sections first to gain a better understanding of the Earned panel fields and threshold calculations before digging into the complexities of multiple contract incentives.

Earned Panel Filters

You can filter the Earned panel by entity and contract, in addition to incentive Type and Threshold (Figure 6, left side).

Type is the type of incentive. Clicking any value under Type displays only incentives of that type.
Threshold filters the panel data according to the difference between a contract's current spend and a required threshold (total spend, unit volume, market share, or growth).
Clicking Within 10% displays incentives that are within 10 percent of a required threshold. All displays all incentives.

Note: Market share incentives are based on a percentage that represents the site's market share of spend from all suppliers in the specified Category(s). The market share threshold amount increases as spend from all suppliers increases.

Entity and Contracts let you find earnings and spend for a particular entity and/or contract.

To filter the Earned panel data by Entity,

1. Under Entity, click Show.
   A list of supplier entities appears (Figure 7).
2. Click the box next to each entity whose earnings you wish to display.
   To close the list of entities under the filter, click Hide.

Figure 7 - Filtering the Due Panel by Contract

To filter the Earned panel data by contract,

1. Under Contracts, click Show.
   A list of contracts appears, similar to the list of entities (Figure 7).
2. Select the contract(s) of interest.
3. To close the list of contracts under the filter, click Hide.

Earnings for Multiple Incentives on a Single Contract

As in Figure 6, a single contract may have multiple incentives with similar terms ("details"), or with different terms. For example, the Stryker contract STR0720 in Figure 6 has two rows that display earnings (Figure 6 ). When the incentive Type, Eligibility Dates, and/or Recurs periods are different, the Earned panel displays earnings for a single contract's incentives on different lines. Otherwise, the system rolls up earnings for a single contract into one line.

Multiple lines display: For a single contract with multiple incentive details, earnings are displayed on separate lines when...
- the incentive Types are different, or
- Eligibility Dates are different, or
- Recurs periods are different, or
- Both Eligibility Dates and Recurs periods are different, or
- The Eligibility Dates and Recurs periods are the same, but the Baseline periods for the Growth incentive are different.

• If the multiple incentives (different Types) have different Recurs periods, then the Total Spend for the contract is calculated using the spend amount from the earliest Recurs start date to the latest Recurs end date.

Rolled up, one line display: For a single contract with multiple incentive details of the same type Type, where the incentive details have the same Eligibility Dates and Recurs period, earnings are rolled up and displayed on one line.

• Total Spend: In each row, the current total spend on the contract for the Recurs period. (Spend is not summed for each set of incentive details.)
  Similarly, the overall Total Spend on the Totals top row of the panel only includes the contract total spend for the Recurs period.
• Threshold is the very next highest threshold level to be achieved across all the incentives' threshold terms. (See the section on earnings for incentives with thresholds.)
• A Unit Threshold is displayed as an amount equal to Unit Price * Number of Units.
• Once the highest threshold for all rolled up incentive details is reached or exceeded within a Recurs period, it is displayed.
  In the case of a From/To range, the highest From value is displayed (even if $0.00).
  
• Difference is the difference between the current Total Spend within the Recurs period minus the next highest threshold to be achieved. Once the highest threshold level is met, the difference is always $0.00.  
• The Earned Amount  is the total earned amount within the current recurs period.
• Potential earnings reflect what would be earned if the next Threshold level were met. Once the highest threshold is met, Potential Earnings are $0.00. 
  When multiple incentives exist for a contract, depending on the terms, the Potential Earnings is either:

  the next highest Flat Amount (if used)
  or the next highest Threshold * the incentive Percent
  or the next highest Flat Amount + (the next highest Threshold * the incentive Percent).

Earned Panel Columns and Tools

Links and mouse-over tools for column values provide more information about incentives and earnings.

Entity

A supplier (manufacturer or vendor entity) with one or more contract incentives set up. Manufacturers are in green text; vendors are in red text.

Tools:

• Click the entity to display the entity family.
• Mouse over the entity to display the i (inquiry) link. The incentive Type and Current Period appear.
• Clicking the i link opens a pop-up panel with incentive details. See the discussion and example below.
  

Contract

The number and description of a contract in Sourcing and Contract Management.

Period Ending

The end date of the current recurring period.

For example:
- Suppose that the recurring period is 12 months, and today's date is in month 6. If the contract has earned incentives, then earnings over 6 months -- up to today -- would be displayed. The date in the Period Ending column would be 6 months hence -- the end of the 12-month recurring period.
- Suppose that the recurring period is 3 months, and today is month 2 of the current recurring period. Then earnings during two months -- up to today -- would be displayed. The date in this column would be one month hence -- the end of the 3-month recurring period.

Tools:
Mouse over the Period Ending value to display the incentive type and the beginning and ending dates of the current incentive period.

Earned Amount

The Earned Amount is the total earned amount for the recurs period at the time that you open the Earnings panel.

Calculated as: Flat Amount +/or (Total Spend * Incentive Percentage) when Total Spend equals or exceeds any defined threshold. (Other terms may apply as well.)
- When Total Spend has not reached a defined threshold, the value in the Earned Amount column is zero.

Note: The value may be zero for other reasons, even if the contract has spend. For example, a growth requirement may exist, as well as a threshold for total spend or unit volume. The discussion below is an example.

- Spend that is within 10% of a required volume threshold amount is marked with the symbol.
- Earned amounts are calculated daily once any threshold values are met, regardless of the Period Ending value.

Tools:

• Mouse over the Earned Amount value to view the calculation. (See Figure 6, - center, on the second row.)
  When the Earned Amount is zero, if additional requirements must be met, a message appears.

Total Spend

The total spend on which the incentive's earned amount is based.

Tools:

• Mouse over the Total Spend value to view the incentive period.
• Click the Total Spend value to open an Excel spreadsheet of item spend details for any supply contract.

Threshold

A dollar amount of contract spend at which incentive earnings begin to accumulate.
This column value can be either a total spend threshold, unit threshold, market share threshold, or growth threshold.
For a unit threshold, unit terms are calculated in dollars (Unit Price * Number of Units) for easy review and comparison.
- In the case of multiple items, the application uses the average of the unit prices.
- The Threshold amount is rounded to the nearest dollar, with no cents. The Threshold amount must be reached for each incentive period (see Recurs value) in order to earn an incentive.

Multiple Threshold Terms

A contract may have multiple details for the same incentive; for example, when terms change over several years. When multiple threshold requirements exist in the incentive details, the Threshold amount displayed on the Earned panel is the next threshold being approached.

A contract has two Unit From/To requirements, for the same incentive Type, Recurs period, and Eligibility Dates.
- The first incentive earns 2% when the unit quantity reached is between 20,000 units and 34,999 units.
- The second incentive earns 3% when the unit quantity reached is 35,000 units and greater.
The price per unit is $2.00, and stays the same throughout the eligibility period.

Purchases on the contract so far total 18,000 units; in dollars, 18,000 * $2.00 [unit price] = $36,000.00 current spend.

• The Threshold displayed on the Earned panel is the 2% threshold of $40,000.00.
  This value is the threshold that the spend is approaching.
  (Calculation: 20,000 units [lowest required incentive unit quantity] * $2.00 [unit price] = $40,000)

Difference

When a threshold amount is defined and the Earned Amount is zero, this field displays the difference between the Threshold and Total Spend. The Difference value is in red text and parentheses. The calculation is: Difference = Threshold - Total Spend.
See Figure 6, (bottom right, second to last row).

When an incentive has multiple thresholds, the Difference is the difference between the total spend and the next highest threshold (i.e., the threshold being approached).

Tools:

• Mouse over the Difference value to display the calculation.

Potential Earnings

The amount that can be earned when a spend threshold is reached. Once the threshold is reached, the value in this column is $0.00.
Potential Earnings are calculated and appear for incentives with volume spend requirements.

Threshold-Driven Incentive Earnings - At a Glance

Figure 8 is an example of the Earned panel, filtered for spend that is within 10% of any required thresholds.

Figure 8 - Flags for Threshold-Driven Incentives on the Earned Panel

marks spend that is within 10% of a required threshold. (This flag appears whether or not you use the Within 10% filter.)
Mouse over the to display a message about additional spend needed to meet the threshold and capture the Potential Earnings.

The Threshold column displays established thresholds for the incentive as a dollar amount. The threshold can be a volume threshold (total spend or unit quantity), a growth threshold, or a market share threshold. When multiple threshold terms exist in the incentive details, the Threshold amount displayed is the next threshold being approached.

The Threshold column values entered on the incentive details are displayed as follows in Table 1 on the Earnings panel.

Table 1 - Values in the Threshold Column

(Red text) is the difference between total spend and the amount required to begin earning incentives. In Figure 8, this value is $87.82. ($6,500 spend required - $6,412.18 total spend).

Note: Unit quantity requirements are not available for services contracts. Total spend threshold requirements are available for services contracts, however.

Using Inquiry i to Display More Incentive Information

Rows on the Earned panel (Figure 6) display earnings by contract and supplier. Earnings for the same contract can appear in multiple rows on the panel or on a single row only, depending on whether multiple incentives exist for the contract and how the incentives are structured. You can look at a summary of calculations and incentive details from the Earned panel for any contract to determine if multiple incentives are defined, as well as their terms.

For example, in Figure 6, multiple lines of data appear for the same Stryker STR0720 contract (among others). Figure 6 shows $1538.00 as the Earned Amount, and separately, the same contract Figure 6 shows $384.50.

An inquiry i lets you view the calculation and incentive terms details.

• On the Earned panel (Figure 9), mouse over an Entity name and click i .
  The Incentive Calculation Summary pop-up panel appears. (If no calculation is available, a message appears.)
• On the Incentive Calculation Summary pop-up panel, click View Incentive Detail to display details for the incentive. The details match the terms outlined for the incentive in the setup.
  

Figure 9 is an incentive with relatively simple terms: a 10% incentive is calculated when a $10,500 spend threshold is reached in each 3-month recurring period.

Figure 9 - Inquiring on a Summary Panel Incentive Line

In Figure 9 , the inset Incentive Detail pop-up panel shows the incentive Type as Rebate and the Percent used in the calculation as 10.000. This incentive has a volume threshold requirement of $10,500.00. The total spend for the contract is $15,380.00 in the current three-month Recurs period, so the threshold requirement for the Rebate incentive is met for this period, and earnings of $1,538.00 are calculated.

Figure 10 is an inquiry on the same contract for Stryker, but in a different row because it represents a different incentive type and recurs period. The incentive type is Handling, the Percent is 2.5%, the recurs period is four months, but no threshold requirement is specified.

Figure 10 - Details on an Incentive from the Summary Panel Inquiry i Link

In Figure 10, month 5 had total spend of $15,380.00, so the earnings of $384.50 were calculated. Months 6 and 7 had no additional spend, so no other earnings occurred for those months. The total earnings for the Recurs period (so far) for the Handling incentive are $384.50. Additional spend in month eight -- the last month of the four-month Recurs period -- would likely generate more earnings.

Incentives with Multiple Thresholds: Spend and Growth

The contract in Figure 11, displayed on the Earned panel, has a total spend threshold of $500.00 (green arrow). For each Recurs period of one month, total spend on the contract must reach $500.00 for an incentive to be calculated. Click i to display the calculation summary, and then click View Incentive Detail to display details.

Figure 11 - The Incentives Earned Panel for a Contract

This contract incentive also has a Growth term (Figure 12, ), which also affects whether spend is earned in each recurring period. You can see the growth requirement on the "Work with Incentives" Details panel.

In this case, on the Earned panel (Figure 11), for some future recurring period, Total Spend may contain a value that is at or above the Threshold of $500.00, but the Earned Amount will be zero unless the Growth Threshold of $50.00 is also reached.

Figure 12 - Details Panel from the "Work with Incentives" Page

To Open the "Work with Incentives" Page from the Earned Panel

The Details panel (Figure 12) on the "Work with Incentives" page provides information about the incentive terms.

1. On the Earned panel, click the purple contract number.
   The "Work with Contract" page appears.
2. On the "Work with Contract" page Actions panel, click Open Incentive Setup.
   The "Incentives Setup" page appears, with a list of incentives set up for the contract.
3. Click the applicable incentive.
4. The "Work with Incentives" page appears (Figure 12).
   The Details panel is at the bottom.

Incentive Details Panel Columns

Here are the column explanations (Figure 12):

- Percent: An integer or decimal percentage. This value appears when the incentive payment is calculated as a percentage of spend.
- Flat Amount: A fixed dollar incentive amount.

- Eligibility Date From/To: The beginning (From) and ending (To) dates when purchases are eligible for incentive payments.
Some suppliers may build in From/To eligibility dates as an incentive requirement.
- Recurs: Defines the incentive period: how often incentive terms must be met, including any threshold amount requirement.
The Recurs field and the Schedule field (on the Header panel) work together.- Total Spend From/To: A dollar value range of total spend at which incentive payments begin (top value: From) and end (bottom value: To).

- Total Spend Threshold: A total spend threshold spend in dollars. Incentives are available when spend reaches the threshold dollars.
- Unit From/To: A unit volume range at which incentive payments begin (top value: From) and end (bottom value: To). When the quantity of items purchased reaches the From value, the system begins calculating incentive payments for the recurrent months, up to the To unit volume. (Not available for services contracts.)
- Unit Threshold: A purchased unit volume quantity. Incentives are available when spend reaches the quantity (threshold).

- Growth Threshold: With a growth incentive, this field contains the threshold percentage at which growth in spend earns an incentive.
- Market Share Threshold: The threshold percentage market share of spend in particular categories needed to earn an incentive. (Not available for services contracts.)

Export Item Spend Details for a Contract and Supplier

From the Earned panel, you can generate an Excel spreadsheet that contains item spend details for any incentive. The tabs at the bottom of the spreadsheet contain Summary, Details, and Earned  information and amounts. If multiple incentives exist for the contract/supplier, they are included on the spreadsheet.

To generate a spreadsheet that contains spend details,

1. Mouse over an amount in the Total Spend column. Figure 13 is an example.
   The Excel icon appears.
2. Click the Excel icon .

Figure 13 - Getting Item Spend Details for an Incentive

A message instructs you to open or save the spreadsheet.

3. Open the spreadsheet to display item information and spend by item. Figure 14 is an example.
   The incentive type is on each tab for three worksheets at the bottom.

Worksheets:

• The (Summary) worksheet is in Figure 14. Notice the columns for catalog Item number, Manufacturer Name and MIN, Vendor ID, Vendor Name, and VIN, the ordered
  Quantity, UOM for the quantity, and the Total Spend for the item.
• The (Details) worksheet (not shown) contains these additional columns for each item: Region and Organization for the item; Transaction Date, Invoice Number and Invoice Line for the item invoice; the Purchase Order containing the item, PO Number, PO Line; the Unit Cost, and Line Amount.
• The (Earned) worksheet (see Figure 18 for an example) contains: the recurring Period for which item data and spend is displayed, the From/To dates of the recurring period, the month, year, and total spend for the incentive, the earned amount, the written-off amount(s), any payment amount(s), the due amount, setup details on the incentive, and the calculation.

Figure 14 - An Excel Spreadsheet Containing Spend by Item for an Incentive

Record and Track Payments Due

The Due panel (Figure 15) displays incentive payments that are due and overdue. Overdue payments are listed by age: 1-30 days overdue; 31-60 days overdue; etc.

With tools on the Due panel, you can:

• View incentive payment history by supplier (Entity) and contract. This information includes received incentive payments and the current outstanding balances.
• Record payments on earned incentives and write-offs for payments that you do not expect to be made.
• Create an Excel spreadsheet of summarized and detailed purchasing evidence, by contract, for an incentive period.
• Drill down to received payments.

Figure 15 - The Incentives Workbench Due Panel

Review Amounts Due and Record Payments/Write-Offs

The Due panel initially displays total earnings due, current amounts due, and the total overdue. You can filter the panel data to review amounts for specific incentive types, suppliers (entities), and/or contracts. You can also select the timeframe for overdue payments that you wish to review.

For each supplier (Entity), Total Due contains earnings for due dates that have passed, including the amount due (Current Due) at the end of the current recurring period. Once the due date arrives, the Current Due earnings are aged on the right side of the panel. See the discussion in the setup section for Schedule and Days to Payment Date.

Overdue incentive amounts are aged in 30-day increments, up to those overdue by 120 days or more.

Several tools are available when you mouse over row values in each row (Figure 15):

• Add a payment or enter a write-off - click .
  (You can also enter payments from the contract's "Work with Incentives" page. See the instructions for adding payments and write-offs.)
• Display received payments - click .
• Display information for multiple incentives - click the + sign. This link appears when multiple incentive details exist for a single contract/supplier.
• Create/read user notes - click to create a note and to read a note.
  

  You can export spend information to Excel.

1. Mouse over a value in any of these fields: Contract, Current Due, or any of the 30 day aging columns.
   The Excel icon appears .
2. Click the Excel icon .
   You can open the spreadsheet, or save it to a network location if you wish to send it to the supplier as evidence for spend.
   

Due Panel Filters

You can filter the Due panel by entity and contract, in addition to incentive Type and Days Overdue (Figure 15, left side).

To filter the Due panel data by entity,

1. Under Entity, click Show.
   A list of supplier entities appears (Figure 16).
2. Click the box next to each entity whose due amounts you wish to display.
   To close the list of entities under the filter, click Hide.

Figure 16 - Filtering the Due Panel by Contract

To filter the Due panel data by contract,

1. Under Contracts, click Show.
   A list of contracts appears, similar to the list of entities (Figure 16).
2. Select the contract(s) of interest.
3. To close the list of contracts under the filter, click Hide.

To filter the Due panel data by days overdue,

• Under Days Overdue, select the timeframe for overdue payments.
  The panel refreshes to display only payments that are overdue by the interval selected.
  The Overdue amount (at the top of the aging range, on the right) changes to the amount due just for the selected timeframe.

Due Panel Columns

Entity

A supplier (manufacturer or vendor entity) with one or more contract incentives set up.

Contract

A supply or services contract with one or more incentives defined.

Total Due

Earned amounts whose period ending date has passed, plus the amount due (Current Due) at the end of the current recurring period. The Total Due amount for all incentives is at the top of the list.

Current Due

For any contract, the earned amount for which the due date has not passed. An amount only appears when the recurs period has ended. If an incentive is set up with Days to Payment Due equal to zero (0), then the current due amount is displayed only in the column Overdue 1-30, and does not appear in the Current Due column.
The total Current Due for all incentives is at the top of the list.

Overdue: Aging Dates 0-30, 31-60, 61-90, 91-120, Over 120

Each column lists earning payments that are overdue, exceeding the defined payment day by increments of 30 days. The payment day is the day following an incentive recurs period when earnings for the incentive period are to be paid. See Figure 49 for an example of timelines associated with an incentive.

Export Current Due and Overdue Amounts to Excel

From the Due panel, you can generate Excel spreadsheets that contain item spend information and Current Due or Overdue amounts for any incentive. These spreadsheets include details on how the amounts were calculated, making them easily verifiable by the supplier when you request payment.

Each spreadsheet contains a set of three tabs per incentive (Figure 18): Spend Summary, Spend Details, and Calculation Details. If multiple incentives are set up for a single contract, then the spreadsheet will contain a set of these three tabs for each incentive.

To generate a spreadsheet that contains Current Due or Overdue amounts:

1. On the Due panel, mouse over an amount in either the Current Due column or any of the 30-day aging columns. Figure 17 is an example.
   The Excel icon appears.



Figure 17 - Getting Current Due and Overdue Amounts for an Incentive

2. Click the Excel icon .
   A message instructs you to open or save the spreadsheet.
3. Open the spreadsheet to view the incentive information, divided into three tabs: Spend Summary (Summary tab), Spend Details (Details tab), and Calculation Details (Earned tab). Figure 18 is an example.
   You can open the spreadsheet or save it to a network location if you wish to send it to the supplier as evidence for spend.

Figure 18 - An Excel Spreadsheet Containing Current Due/Overdue Amounts for an Incentive

Note: An Excel icon also appears when you mouse over the Contract Number. Clicking the Excel icon opens data for the contract.

See the previous discussion of Worksheets for information about data displayed on each worksheet.

Access Incentive Information for a Single Contract

For any individual contract, links on the "Work with Contract" page let you access incentive details, earnings, and savings from incentives for that contract. Changes to a contract's historical spend are also accessed from this page (see View Changes to Historical Spend).

• From the Contract Workbench (or from any list of contracts), clicking a contract number (in purple text) opens either the "Work with Contract" page or the "Work with Services Contract" page, as appropriate.
  

Figure 19 is the "Work with Contract" page for a supply contract. Figure 20 is the "Work with Services Contract" page for a services contract. You can review existing incentives (and setup new incentives) using an Actions panel link.

Figure 19 - Work With Supply Contract Page: Top Part

Figure 20 - Work with Services Contract Page: Top Part

Note: In Figure 20, the services vendor is registered as a local entity, flagged by the designation "(Local)". For incentives, vendors must be registered to entities. You cannot create an incentive for a vendor location. See "Using the Product Index Layer (PIL) Tools" for details on entities.

To work with incentives for a contract:

1. On the "Work with Contract" page Actions panel, click Open Incentive Setup.
   The "Incentives Setup" page appears, with a list of incentives set up for the contract.
2. Click the applicable incentive.
   The "Work with Incentives" page appears (Figure 21).

View Changes to Historical Spend that Affect Incentive Amounts

Incentive amounts can be affected when changes to historical spend occur due to manual or automatic recalculation of prior periods. The nightly process that calculates incentives may produce appropriate adjustments in incentive amounts as a result of changes in your spend.
- The automatic calculation process only applies to contracts whose incentive setup is complete.
- Deleted items with spend in the incentive period are included in the incentive calculation.

Changes to total spend that affect incentives appear on the Spend Adjustment Details panel, available from a link on the "Work with Incentives" page Actions panel (Figure 21). This link provides adjustment details and reasons for the adjustment.

Figure 21 - Accessing the Spend Adjustment Details Panel for an Incentive

To view changes to historical spend:

1. Open the "Work with Incentives" page for an existing incentive.
2. Click Spend Adjustment Detail in the Actions panel.
   The Spend Adjustment Detail panel appears (Figure 22).

Figure 22 - The Spend Adjustment Details Panel

You can see the Total Spend value -- the spend amount after adjustment -- compared to the Original Total Spend (before adjustment).

The column Adjustment Source summarizes why spend -- and thus, incentive amounts -- were adjusted.

• The nightly process gets new spend updates. Current plus prior three months spend is used.
  Whenever spend changes as a result of the nightly process, the Adjustment Source is:
  New Spend from Nightly Process Posted.
• Whenever spend changes as a result of a user selecting  Recalc All Prior Periods,
  the Adjustment Source is: Most Recent Spend Posted (from Recalc).
• When spend is adjusted because of activation or de-activation of a contract item, the Adjustment Source is: Contract Spend Amount Adjusted (Item Changes).

Work with Earnings and Payments for an Individual Contract

Tabs at the bottom of the "Work with Incentives" page open various panels. Figure 23 displays the page with the Received Payments panel open.

Panels on the "Work with Incentives" page are:

• Details - contains incentive details for the contract and supplier. A single contract may have multiple sets of details -- for example, different Total Spend Thresholds over subsequent periods -- for the same incentive type (e.g., Rebate).
• Items - lets you identify items to include in the incentive.
• Organizations - lets you select organizations for the incentive.
• User Fields - contains additional incentive fields created for your site, and lets you select and save values.
  
  The Details, Items, Organizations and User Fields tabbed panels are explained in "Select Items, Exclude Organizations, and Enter User Field Values."
  For services contract incentives, the Items tabbed panel is grayed out.

• The Received Payments tabbed panel (Figure 23) is the location of earnings, payments, and written off earnings for the contract's incentives.

Figure 23 - Payments and Earnings for Incentives on a Contract

• Figure 23 is the Received Payments panel for a supply contract. The Received Payments panel displays earnings, payments, write-offs, and cumulative spend for the incentive. This information is similar to that provided on the Incentives Workbench Summary tabs.

From the Received Payments panel (Figure 23), you can...

• Record a payment or written-off amount
• Display calculations for each Earnings transaction: Mouse over the Earned Transaction Type and click i.
• Edit a payment: Mouse over a Payment transaction and click the edit icon .
• Export the panel list to Excel: click the Excel icon in the upper right.

Filters

The Type filter on the left lets you filter the data in the panel by transaction type.

Earned Amount - The earned amount from the incentive once the due date has occurred.
Written Off - The amount that you have written off.
Payment - Payments that you have recorded for earned incentives.
All - All transactions types.

The Period filter lets you select the timeframe for displaying data.

Received Incentives Payments Panel Columns

Here are the column explanations (Figure 23).

• Transaction Types (first column, center) are:

Balance Forward (Top line) - The running Balance net of payments and written off amounts.
Earned - Earned amounts based on the terms of the contract, and the Due Date.
Payment - Payments by Check Number, Date, and Amount.
Write Off - Written-off amounts by Date and Amount.

Clicking i next to any Transaction Type provides details about the incentive, including how it is calculated.

• Check # is the check number from the contract supplier for an earned incentive.
• Balance is the cumulative amount of earned incentives minus any payments and write-offs. You can track your balance by entering payments or amounts that you wish to write off.

Enter a Payment or Write Off Incentive Earnings

You can enter payments for incentives on an individual contract from the "Work with Incentive" page for the contract, or from the Incentive Workbench Due panel.

Payments are applied to the contract's incentives with the oldest due amounts first. Adding or modifying a payment to an incentive affects all incentives related for the contract/supplier.

1. Click the Create Payment icon (Figure 23). The Create - Payment panel appears (Figure 24).

Figure 24 - Entering a Payment for an Earned Incentive

2. On the Create - Payment panel, enter fields as follows:

Type: Click the down arrow and select Payment or Write Off, as appropriate.
- Write Off zeros out the entire balance. You can record a partial payment and a partial write off, as described below.
Date Received: Click the calendar icon to select the date when you received payment, or the date that you wish to record as payment received.
For today's date, click Today.
Funds Received: Enter the dollar value of funds received. Use two decimal places for the cents. No initial dollar sign is needed.

Important: You cannot enter a payment that is greater than the balance due.

Check Number: Enter the check number for the payment.
Paid in Full: Select this field if the payment is a full payment, or if you wish to write off the earned amount.
Here are the options for the Paid in Full field:

Full Payment: Select Paid in Full. This field signifies that the outstanding balance is being paid. The system zeros the Balance.
Partial Payment: Do not select Paid in Full; leave the field unchecked. The Balance will equal the unpaid amount.
Write off: Select Paid in Full, but enter a partial amount that is less than the Balance. The system writes off the difference between the Balance and the amount. The Balance then displays zero. (Two records are created: one for the payment and one for the write off.)

3. Click Save. The Balance column on the Received Payments panel updates to reflect the payment or write-off.

Contract Savings Includes Received Incentives

For a supply contract, the Savings panel (Figure 25) displays earned amounts for any incentives set up for the contract.
The graph of Contract Savings by Month (right side) includes contract savings and any received amounts from from incentives to display total savings on the contract (Figure 25).

Figure 25 - The Supply Contract Savings Panel with Earned Incentives

To display the same data as a table, click the table icon on the upper right of the graph. Figure 26 is an example.

Figure 26 - The Supply Contract Savings Panel with Tabular Savings and Incentive Data

Incentives Setup

Setting up incentives involves these steps:

1. Define the incentive Types that you will take advantage of; for example, rebate, shareback, etc.
   - Enter types in the Incentive Types table, accessible from the Administration menu.
2. Specify Delivery Locations if you have distribution incentives.
   - Enter values in the Delivery Locations table, also on the Administration menu.
3. Create a header for each incentive.
   - The header contains general information, such as: the incentive type, the start date for calculating the earnings, and more.
4. Enter the detailed terms for each type of incentive.
   - Details panels contain the terms of an incentive. Multiple sets of detailed terms can exist for a single incentive type.

Notes:

- Dollars entered on setup panels are rounded by the system to two decimal places.

- Incentive setup is incomplete when required details are missing. Incomplete appears next to the incentive type. The incentive remains incomplete until the required values are entered. Earnings are not calculated while the incentive details are incomplete.

Define Incentive Types

The Incentive Types table contains incentive types for your site. Add new Types to the table.

To define new incentive Types:

1. From the Sourcing and Contract Management main Contents, click the Supplies or Shared Services tab, then select Administration > Tables > Incentive Types (Figure 27).

Figure 27 - Accessing the Incentive Types Table from the Main Contents

The Incentive Types panel appears (Figure 28). The panel displays incentive types, if any have been created. Otherwise, the panel is blank.
2. Click Create Incentive Type (Figure 28).

Figure 28 - Defining a New Incentive Type

The Create - Incentive Type panel appears (Figure 28).
3. Enter the Description of the incentive type.
4. Click Save.

You can now set up incentives of the type that you created. If you need to create additional incentive types, follow the same steps (1-4, above).

Create Delivery Locations for Distribution Incentives

A distribution Type incentive may need to include only spend for internal distribution centers in its calculations. Distribution centers may be used when a site handles distribution of a supplier's items that are acquired for the site's associated institutions. If you use this option for a distribution incentive, you also need to define your service center location(s) in the Delivery Locations for Distribution table. A flag on the incentive header can be set to include spend from distribution centers.

To access the Delivery Locations for Distribution table and define delivery locations:

1. From the Sourcing and Contract Management main Menu, click either the Supplies or Shared Services tab and select Administration > Tables.
2. Click Delivery Locations for Distribution.
   The table appears.
3. To create a new delivery location, click Create Delivery Location, and enter a value (Figure 29).

Figure 29 - Delivery Locations for Distribution Table

Create Incentive Definitions

Use the setup panels to define incentives for suppliers and contracts. Enter a Start Date for an incentive; at the Start Date, the earnings are immediately calculated for past spend (if any) and displayed on the Incentives Workbench panels (Figure 2).

• You can set up incentives for contracts with non-file items, as well as contracts with one or more matching file items.
• You can set up an incentive for an entire contract, or you can select items on the contract to which the incentive is assigned.
  This strategy is useful when you only want particular items on the contract to have associated incentives.
• You can identify organizations whose spend is excluded from the calculation of a particular incentive.

Use the Incentives Setup Panel

• From the main Contents, click the Supplies or Shared Services tab, then select Incentives > Incentives Setup (Figure 1).

The Incentives Setup panel appears (Figure 30). The Incentives Setup panel defaults to the Contract view (Figure 30, red arrow on left). Also, by default, the panel displays suppliers and contracts that already have established incentives: in Figure 30 (purple box on left) Contracts is Current w/Incentives. In the Contract view, you can switch the display to Supply contracts only, or Services contracts only. The Adjustments filter displays incentives that have been adjusted because spend changed.

Note: On the View by filter, w/Errors refers to contracts (whether current or expired) that have incentives where the async job has errored out or failed to run. In the case of Errors, you can open the Incentive Details (click the incentive type for the contract) and re-run the incentive calculation. Or, you can edit the incentive details altogether.

• When multiple incentives exist for a supplier/contract, the incentives are ordered alphabetically by incentive type.
• The Add Incentive button appears to the right. Clicking this button opens panels for creating an incentive.
• If a start date for the incentive calculation was not set, the Set Start Date link appears.
  Click Set Start Date to select a start date. Incentives cannot be calculated without a Start Date.

Figure 30 - The Incentives Setup Page List

• Note that clicking the incentive type for any existing incentive on the Incentives Setup list opens the "Work with Incentives" page.
• Incentives marked Incomplete have required fields that are missing. To complete an incomplete incentive setup, click the incentive Type on the Incentives Setup panel.
  The "Work with Incentive" page Create - Incentive Detail panel appears for you to enter missing fields. See the discussion of details below.
  

Display Options (left side)

• With View by set to Contract, you can filter the list for either Services or Supply contracts.
• To view the list by supplier instead of by contract, under View by (Figure 30, red arrow) click Entity.
• To view suppliers/contracts with and without established incentives: under Contracts click All (Figure 30, purple box on left).
• For current contracts, under Contracts click Current, Adjustments, Current with Incentives, or Current with Errors.
• For expired contracts, under Contracts click Expired, Adjustments, Expired with Incentives, or Expired with Errors.
• To view contracts with incentives that are complete, incomplete, or all, under Status click All, Complete, or Incomplete.
  Incomplete contracts have required fields -- such as incentive percent or recurring period -- that are missing information.
• To display incentives with and without a Start Date -- or all -- click the appropriate option under Start Date.

Filters

On the Incentives Setup panel you can filter by supplier, by contract, or by both. Figure 31 is an example of the filters when using View by Entity.

Figure 31 - Incentives Setup Panel Filters

1. Mouse over the entity (to filter by supplier) or over the contract (to filter by contract).
   The Filter link appears.
2. Click Filter.
   Figure 32 is an example filtered by entity (supplier). The Filters and the Clear link appear on the top, left (above View By). See Figure 32, purple box.
   
3. Click Clear to return to the unfiltered format.

Figure 32 - Filter Controls

Note: When more incentive definitions exist for a contract than can be shown in the selected view, the Add Incentive link does not appear.

• Click Status All to display any other incentives that were set up. The Add Incentive link will then be visible.

Create a Header for a New Incentive

The header contains basic information for the incentive, including its type.

To create an incentive definition header:

1. Open the Incentives Setup panel (Sourcing and Contract Management Main contents > Supplies or Shared Services > Incentives > Incentives Setup).
2. Locate the supplier or contract of interest. (Use the filters and views on the left side. Click the search icon if you need to search.)
3. Click Add Incentive (Figure 33).

   The Create - Incentive header panel appears (Figure 33, inset).

Figure 33 - New Incentive Header Panel

4. Enter required data in the header panel's fields: Type, Schedule, and Start Date.
5. Click Save.
   The "Work with Incentives" page appears, with the Create - Incentive Detail panel open (Figure 34).
   The next step after creating the header is to enter the incentive details.

Header Fields

The Type, Schedule, and Start Date fields are required.

Type - required

The incentive type.

• Click the down arrow in the Type box and select a type (Figure 33).
  Types must be defined (in an Administration table) before they are available for selection.

Schedule - required

The base time period over which incentives are paid. Options for the schedule are: Monthly, Quarterly, Semi-Annually, Yearly, or Custom (Figure 33).

The Recurs field (on the Details panel, explained below) and the Schedule work together. (Recurs identifies how often incentive criteria must be met for earnings.)
The Schedule value you select also determines the Recurs field value. For all but the Custom option, the system populates the Recurs field, as in Table 2.

If you select Custom, enter a value in the Recurs field, located on the Details panel (Figure 34).
(You may wish to briefly look at the discussion of Recurs on the Details panel before continuing at this point. The Details panel is the next panel you will need to fill out.)

Table 2 - Schedule Field Options and Associated Recurs Field Values

Click the down arrow in the Schedule box and select a schedule.

Start Date - required

The date when calculation of incentives begins (Figure 33).
You can enter a date in this field as you are setting up the incentive, or you can enter it later from the Set Start Date link on the Incentives Setup list (Figure 30).
A Start Date can be any day in a month; it does not need to be the first day of a month.

• Click Today to set today's date as the Start Date, or
• Click Contract Begin Date to set it as the Start Date, or
• Click the calendar icon to enter a date manually.
  The date that you select must be within the contract's Effective Dates; i.e., greater than or equal to the contract's start date and less than the contract's end date.
  You can change the Start Date at any time. If you change the Start Date, incentives are re-calculated from the new date.

Days Until Payment Date

The integer number of days at the end of a payment schedule by which the payment is due (Figure 33). For example, if you enter 10 in this field, and your Schedule is Quarterly, then payment is due ten days after the end of each quarter. This field defaults to zero if you do not enter a value.

Include Spend for... All Spend from Internal Distribution Center

When selected, the application includes only spend from one or more defined internal distribution centers to calculate an incentive. Distribution centers may be used when a site handles distribution of a supplier's items that are acquired for the site's associated institutions. If you use this option for a distribution incentive, you also need to define your service center(s) on the Delivery Locations table. See Create Delivery Locations for Distribution Incentives for details.

Enter Details for a New Incentive

Clicking Save on a new incentive's header panel opens the Create - Incentive Detail panel (Figure 34).

The Create - Incentive Detail panel (Figure 34) contains the incentive's detailed terms. Once entered and saved, incentive details are on the Incentives Details panel for review and editing. You can also designate items and organizations to include/exclude in the incentive spend calculations. (See the "Work with Incentives" page.)

When you enter and save the incentive details, the system calculates earnings for the new incentive. A message that the calculation is running appears.

The Create - Incentive Detail panel has several sections: All Incentives, Volume, Growth, and Market Share.
By default, the sections are hidden, except for the All Incentives section.

• To display any section, click "+" (Figure 34).
  You can hide any section again by clicking "-".

If you are editing existing data in the Volume, Growth, or Market Share sections, the sections with data will already be open.

Figure 34 - Create - Incentive Detail Panel: Required Fields for All Incentives

On the All Incentives section, you must enter a Percent or a Flat Amount. Depending on the terms of your supplier agreement for incentives, you may need to enter data in one or more of the Volume, Growth, and Market Share sections. Explanation of fields are below.

All Incentives Fields

(Figure 34) displays fields for all incentives.

Percent

When this field contains a value, incentive payments are calculated as a percentage of spend.

• Enter the incentive percentage. Use a whole number or a decimal. For example, 1 or 3.5 for 1% and 3.5%.

The basic calculation is: Incentive = Total Spend * Percent
Total Spend is total spend for the contract items during the span of months entered in the Recurs field.

Note: Other incentive terms may affect the calculation; for example, volume, growth, or market share.

You can enter a Percent, a Flat Amount, or both.

Flat Amount

When this field contains a value, the incentive is a fixed dollar amount. You can enter a value in this field and in the Percent field.

• Enter a dollar amount. Dollar values entered on all incentive setup panels are rounded by the system to two decimal places.
  The Flat Amount incentive is applied for the period specified in Recurs.

You can enter a Flat Amount, a Percent, or both.

Note: As with the Percent field, the incentive earnings are influenced by other terms that you specify, such as a total spend threshold.

Recurs

Recurs defines the incentive period: how often incentive criteria/terms must be met, including any threshold amount requirement.
For example, if Recurs is 6, then incentive criteria must be met every six months. Assuming a January 1 start date, the recurring period cycles twice within a year.

The Recurs field and the Schedule field (on the Header panel, explained previously) work together.
The value you select for Schedule determines the Recurs field value. For all but the Custom option, the system populates the Recurs field, as in Table 2.

• If the Schedule value is Custom, enter the number of months as an integer 0 to 12 in Recurs.
  Otherwise, if Schedule is any value other than Custom, you cannot edit the Recurs value.
  

The incentive recurring cycle begins with the Eligibility From Date, if required by the supplier, and repeats up to the Eligibility To Date.

Eligibility Date - From / To

Some suppliers may build in From/To eligibility dates as an incentive requirement. These fields let you enter the eligibility dates.
Note: If you do not enter from/to eligibility dates, the defaults are the Contract Effective dates.

• Click the calendar icon to select a date.

- The selected From date must be on or after the Contract Effective Start Date. If you do not enter a date in this field, the default is the Contract Effective Start Date.
- The selected To date must be on or before the Contract Effective End Date. If you do not enter a date in this field, the default is the Contract Effective End Date.

Incentive Limit Minimum/Maximum

A dollar limit that equals the minimum or maximum incentive for the recurrent period. Incentive Limits apply to all details that you specify for Volume, Growth, or Market Share.

• Enter a dollar value in the Minimum field.
• Enter a dollar value in the Maximum field, or leave the Maximum field blank and let the system default to $99,999,999,999.00
  Clicking Max enters the maximum value automatically, but you can edit the value downwards if you wish.

When the incentive amount is calculated,
- If it is less than the Minimum, no incentive is payable.
- If it is greater than the Maximum, the incentive amount is adjusted to equal the Maximum.

The Incentive Limit fields can be used with other incentive terms.

Volume Fields and Calculations

Figure 35 displays the Volume section of the details panel. Volume fields are used when an incentive has volume requirements: either for total spend or for units purchased. When you set up a volume requirement on an incentive detail, you must specify whether the requirement is for a total spend amount (dollars) or a unit quantity.

The Recurs value determines how often an incentive requirement must be met, including volume terms.
For example, with a Recurs value of 3, any volume requirement must be reached in each three-month period to earn an incentive.
Whichever is specified -- the Threshold amount (or quantity) or the From/To amount (or quantity) -- must be reached in every recurring period to earn the incentive.

You can set up multiple volume terms for the same contract and supplier, for the same incentive and calculation method (flat amount or percentage). For example, you could set up several (progressively higher) total spend amounts parallel to (progressively higher) incentive percents. Some restrictions apply for multiple volume terms:

- You cannot have threshold and from/to limits on the same incentive.
- You cannot have both a total spend requirement and a unit volume requirement on the same incentive detail.

Note: In addition to volume requirements, terms that you enter in other Details panel fields may also apply. You can enter volume terms in the same incentive detail as market share and growth terms.

Services Contracts: The Unit fields are not available for services contracts.

Figure 35 - Create - Incentive Detail Panel: Volume Section

To set up volume threshold requirements,

1. Check the box for either Total Spend or Unit.
   - When you select Total Spend, the fields for Unit Threshold and Unit From/To remain grayed out. You can only enter values in the Total Spend fields.
   - Similarly, Total Spend Threshold and Total Spend From/To remain grayed out when you select Unit. You can only enter values in the unit fields.
2. Enter values as follows in the field explanations below.

Total Spend Threshold
A dollar amount. An incentive is calculated for purchases above this amount. The calculation is based on total spend (but spend must be higher than the threshold amount for any incentive to be calculated).
- On any single incentive detail, you can have a Total Spend Threshold, or a Unit quantity Threshold, but not both. They must be on separate detail entries.
- You cannot enter both a Total Spend Threshold and a Total Spend From/To range on the same incentive detail or under the same incentive header. (In other words, you need to set up a separate incentive if you have both.)

• Enter a dollar value.
  - Entering $0.00 makes all spend on the contract eligible for the incentive (if no other qualifiers exist).

When spend equals the Total Spend Threshold for the recurrent period (Recurs field), the system calculates incentive earnings as:

If Total Spend ≥ Total Spend Threshold,
Incentive (Earnings) = Flat Amount +/or (Total Spend * Percentage)

Total Spend From/To

A dollar range of total spend at which incentive earnings begin to accumulate (From) and end (To). The calculation is based on total spend (but spend must be higher than the From value amount for any incentive to be calculated).
- When you have multiple incentive details with different From/To ranges, the ranges cannot overlap.
- On any single incentive detail, you can have a Total Spend From/To range, or a Unit From/To range, but not both. They must be on separate detail entries.
- You cannot enter both a Total Spend From/To range and a Total Spend Threshold on the same incentive details, or under the same incentive header. (In other words, you need to set up a separate incentive for the contract if you have both.)

For an incentive to be calculated, total spend must equal or exceed the Total Spend From value, but be less than the To value for the recurrent period.

• Enter dollar values:
  From: A dollar amount that begins the range.
  To: A dollar amount that ends the range. You can leave the To amount blank, and let the system default to $99,999,999,999.00. (Clicking Max enters this amount.)

When spend falls within the From/To dollar range for the recurrent period, the system calculates incentives, as follows:

If Total Spend ≥ Total Spend From amount and ≤ Total Spend To amount,
Incentive (Earnings) = Flat Amount +/or (Total Spend * Percentage)

Only calculated spend that is greater than or equal to the Total Spend From amount is included in the incentive calculation.
When the calculated spend is greater than the Total Spend To amount, only the spend that equals Total Spend To amount is included in the incentive calculation.

Unit Threshold

A unit quantity of purchases. An incentive is calculated for purchases above this quantity.
- On any set of incentive details, you can have a Total Spend Threshold or a Unit Threshold, but not both. They must be on separate detail entries.
- You cannot enter both a Unit Threshold and a Unit From/To range on the same incentive details, or under the same incentive header. (In other words, you need to set up a separate incentive for the contract if you have both.)

• Enter a quantity.
  - Entering zero makes all spend on the contract eligible for the incentive (if no other qualifiers exist).

The system converts the Unit Threshold quantity into a dollar value using the unit price of the items:
Unit (Each) Price * Unit Threshold value

When the Unit Threshold for the recurrent period (Recurs field) is reached,

For a percent alone or for a percent plus a flat amount, the calculation is:
Incentive (Earnings) = Flat Amount +/or (Total Spend * Percentage)

In no percent is specified, but only a flat amount, the calculation is:

Incentive (Earnings) = Flat Amount * Total Units Purchased

Unit From/To

A unit quantity range at which incentive earnings begin to accumulate (From) and end (To).
- When you have multiple incentive details with different From/To ranges, the ranges cannot overlap.
- On any set of incentive details, you can have a Unit From/To or a Total Spend Unit From/To, but not both. They must be on separate detail entries.
- You cannot enter both a Unit From/To and a Unit Threshold on the same incentive details, or under the same incentive header. (In other words, you need to set up a separate incentive for the contract if you have both.)

For an incentive to be calculated, unit quantity of purchases must equal or exceed the Unit From value, but be less than the Unit To value for the recurrent period.

• Enter quantity values:
  From: A quantity that begins the range. Entering zero (0) makes all spend on the contract eligible for the incentive (if no other qualifiers exist).
  To: A quantity that ends the range. You can leave the To amount blank, and let the system default to 999,999,999. (Clicking Max enters this quantity.)

When the quantity of items purchased reaches the From value, the system begins calculating incentive payments for the recurrent period, up to the To unit quantity, as follows.

If Total Quantity Purchased ≥ Unit From and ≤ Unit To ,

- Flat Amount incentive calculation:  Incentive (Earnings) = Flat Amount * Total Units Purchased 
Flat amounts can only be earned once per recurrent period. As soon as spend reaches the lower range value, the flat amount is applied to earnings.

- Percent incentive calculation: Incentive (Earnings) = Total Spend * Percent

If the calculated total units purchased is greater than the Unit "To" value, the system uses the number of units that equal the "To" value.

Summary: Restrictions/Rules on Using Volume Thresholds

• You cannot use both a total spend requirement and a unit requirement on the same incentive detail.
  Set up two different incentive details for the contract.
• You cannot enter both a Total Spend Threshold and a Total Spend From/To range on the same incentive details or under the same incentive header.
  Set up separate incentives -- separate headers and details -- for the contract.
• Similarly, you cannot enter both a Unit Threshold and a Unit From/To range on the same incentive details or under the same incentive header.
  Set up separate incentives -- separate headers and details -- for the contract.

Growth Fields

Figure 36 displays the growth fields. Use these fields when the incentive requires you to show an amount of growth in spend over a period of time.

Figure 36 - Create - Incentive Detail Panel: Growth Section

Growth Threshold Percent

A percentage that specifies growth in spend: e.g., "spend growth of 3.8%." This field is used with the Baseline Period which defines a time frame for comparing growth in the past to growth in the current Recurs period.

• Enter an integer or decimal in Growth Threshold Percent. Zero and negative values are allowed.
  - With zero (0%), all spend that equals or exceeds the baseline incentive period spend earns an incentive.
  - With a negative value (e.g., -6%), earnings are calculated even when the spend is below the baseline incentive period spend. (This situation means negative growth.)

- You can include volume and/or market share terms in the same incentive detail as growth terms; for example a volume threshold that is applied to the growth incentive calculations.
- You can use a Percent incentive, a Flat Amount type of incentive, or both.
- You can specify a Category of items for which the incentive is calculated (contracts that use  Categories only).

Baseline Period From/To or make selection

The Baseline Period From/To date range or the selected time frame are used in calculating incentives based on growth. The baseline period must span the same number of months as the Recurs period (otherwise, an error message appears).

• Click the calendar to select a From date and a To date.
• Or, click the down arrow to select a time frame: Last Month, Last Quarter, Last Semi-Annual, Last Year, Last Year Same Period.

Growth Calculations

Here is a summary of how growth calculations work in the simplest case:
- a Percent or Flat Amount incentive
- with only a Growth Threshold Percent for spend and Baseline Period.

The system would perform additional calculations (below) if a Total Spend Threshold or range, or a Unit Threshold or range were also entered.

1. Evaluate the Baseline Period range (or specified time frame) to determine that it falls within the Eligibility From Date and Eligibility To Date. (Otherwise, no incentive is calculated.)
2. When the Baseline Period is within the eligibility dates,
   Compute Total Spend as spend for the recurrent period preceding the Eligibility From Date.
   - For example, if the recurrent period is three months, Total Spend is computed for the three months preceding the Eligibility From Date.
3. Compute Base Spend as spend for items in the recurrent period that falls within the Baseline Period range (or the specified time frame).
   
   
4. Compute the difference between Total and Base Spend:
   Total Spend - Base Spend = Difference
   
   
5. Compute a growth percent to compare to the Growth Percent field.
   Computed Growth Percent =  Difference/Base Spend * 100
   
   
6. Is the computed growth percent ≥ the Growth Percent field value?
   - If no, an incentive is not calculated.
   - If yes, calculate the incentive:
   Incentive (Earnings) = Flat Amount +/or (Total Spend * Percentage)

Note:

For a growth incentive, when the Recurs period is set to zero months, SCM treats the entire Eligibility Period as the Recurs period.
On the Incentives Workbench Earned panel,

• Total Spend spans the entire Eligibility Period.
• Total Spend only needs to reach/exceed) the threshold once to earn an incentive.

Additional Calculations with Spend Growth

Below are sample calculations when a Total Spend volume requirement or a Unit quantity requirement exists for an incentive, along with spend growth. These calculations would be done after calculating Total Spend.

Spend Growth with Total Spend Threshold Amount or Total Spend Range

Test: Is the computed Total Spend ≥ the Total Spend Threshold? If yes, proceed to evaluating the growth percent.

Test: Is the computed Total Spend ≥ the value of the Total Spend From amount and ≤ the Total Spend To amount?
   If yes, proceed to evaluating the growth percent.

Spend Growth with Unit Threshold or Unit Range

Test: Is the computed Units Purchased ≥ the Unit Threshold value for the current period?
- If no, no incentive is earned.
- If yes, compute a growth percent (as above).
- Proceed to evaluating the growth percent.

Test: Is the Units Purchased quantity ≥ the value of the Unit From amount and ≤ the Unit To amount for the current period?
- If no, no incentive is earned.
- If yes, proceed to evaluating the growth percent.

Growth Threshold and Recurs Period

The Growth Threshold can change depending on the Recurs period.  The application's spend tables are updated for the current month and the prior three months, so data associated with those months can change.  For example: 

Recurs: 1
Growth Threshold Percent: 80%
Baseline Period: 8/1/2016 – 8/31/2016, $100,000
Current Period: 9/1/2016 to 9/30/2016, $150,000

Growth Threshold calculation (Earned panel) = $100,000 x 1.80 = $180,000.
Therefore, at least $30,000 more in spend must be accumulated before eligible for an incentive amount

When the nightly process runs, new spend is received for August in the amount of $10,000.  Thus, the Baseline Period amount becomes $110,000. 
The new Growth Threshold calculation (Earned panel) = 110,000 x 1.80 = $198,000
Therefore, the amount needed for eligibility for an earned amount would increase to: $48,000

Market Share Fields

Market Share incentives are based on a percentage that represents the site's market share of spend from all suppliers in the specified Category(s).
Market Share is always changing because as spend from all suppliers increases, the market share threshold amount also increases. Figure 37 displays the Market Share fields for incentives.

Services Contracts: The Market Share fields are not calculated for services contracts.
- Clicking the + will not expand the market share section of the Details panel for services contract incentives.

Important: Market share incentives can only be set up for contracts that use  Categories and the  PIM ( Item Master). For sites without the PIM, the market share fields are not available.

Figure 37 - Create - Incentive Detail Panel: Market Share Section

Market Share Threshold Percent

• Enter a percent as an integer or decimal. Zero is allowed.
  - With zero (0%), all spend earns an incentive because all spend is above the 0% market share requirement.

Category

• Select a Category. The categories are from the  Category list and define groupings of supplies that characterize contracts. This field is required when a Market Share Threshold Percent is entered. Categories associated with contract items are displayed for selection.

Market Share Calculation

The calculation for a market share incentive determines if spend on the contract has reached the market share percent threshold. The calculation occurs for the recurrent period that follows the Eligibility From Date and precedes the Eligibility To Date.

The Market Share percent equals total spend for the contract supplier for the selected category (or categories) divided by total spend for all suppliers for the same category (categories).

The calculation is:

- For market share threshold (within the current recurs period), the dollar amount is calculated as:

Incentive (Earnings) = Market Share Threshold Percent * Targeted Category Spend within Current Recurs Period.

As an example, suppose the contract Category is "Gloves." The Market Share Threshold Percent is 78.

- For the supplier's "Gloves" contract, the site's spend on the contract must equal or exceed 78% of all spend for items in the category ("gloves"). All spend for all suppliers' items in the category is computed, and compared to the contract spend to determine if the contract spend equals the market share threshold percent.

You can include volume and/or growth terms in the same incentive detail as market share terms.
If any other requirements are specified, such as a Volume Threshold amount, they must also be met for the incentive to be earned.
With a Percent incentive, the calculation can also compute and test for a Total Spend Threshold or range.
With a Flat Amount incentive, the calculation can also test for a Unit Threshold or range

More Details: Select Items, Exclude Organizations, and Enter User Field Values

• When you have completed setup information in fields on the Create - Incentive Detail panel according to the supplier's or contract's incentive terms, click Save.
  The "Work with Incentives" page appears (Figure 38).

The Incentive Details panel at the bottom of the "Work with Incentives" page outlines terms for incentives that you have set up for a single contract, supplier, and incentive type. The Details panel (Figure 38, bottom), lets you work with existing incentives. From the Details tabbed panel, you can edit incentive details, make a copy, delete the details, and add/read associated notes. You can also create multiple sets of details for a single contract/supplier and incentive Type.
For example, imagine a five-year contract with a rebate incentive that has different terms for each year. You could create five sets of details for the incentive terms for each year.

On the "Work with Incentives" panels, you can do the following:

• Create new incentive details.
• Delete incentive details. (You can also delete an entire incentive -- header and details.)
  
• Copy and/or edit incentive details.
• Select items for which the incentive applies. (Note: The Items tabbed panel is not available for services contracts.)
• Exclude organizational spend for an incentive.
• Enter values in any user fields defined for incentives.
• View your earned incentives from the Received Payments tabbed panel.
  - The panel displays a running balance of your earned incentives minus payments and write-offs.
  - You can enter amounts and dates for full and partial received payments, and write off earned incentive amounts that you do not expect to collect.
  
• Create another incentive for a contract/supplier.
  

Figure 38 - Incentive Details Set Up For a Contract's Administrative-1 Type Incentive

Copy, Edit, Delete, Create Incentive Details

Tools on the "Work with Incentive" page Details panel let you copy, edit, or delete existing details, and create new details for an incentive.

To copy/edit incentive details,

1. On the incentives Details panel (Figure 38), mouse over the incentive line to display icons.
2. Click the copy icon or the edit icon as appropriate.
   The Edit - Incentive Details panel appears, similar to the Create - Incentive Details panel. The header fields are on the top.
   

Notes:
- When you copy an incentive, all attributes of the incentive are copied, including any included selected items, excluded organizations, or user fields.
- In services contracts that have been rejected by the owner, you cannot modify existing incentives. These services contracts have a Status of Rejected. Mousing over the edit incentive icon displays a message that the incentive cannot be edited.

To delete incentive details,

Important: Several restrictions apply when deleting incentive details.

1. On the incentives Details panel (Figure 38), mouse over the incentive to display icons.
2. Click the delete icon .
   - A panel appears asking you to confirm the deletion.
3. Click Delete.

To create new incentive details,

1. On the incentives Details panel (Figure 38), click the link Create Incentive Detail.
   The Create Incentive Detail panel appears.
   Notice: the header information is already complete because you are creating only a new set of details.
2. Follow the instructions for entering fields on the panel.
3. Click Save. Click Refresh.
   The new set of details appears as a line on the Details panel.

Specify Item Spend to Include in an Incentive

On the "Work with Incentives" page, for supply contract incentives, the Items panel lets you identify items whose spend should be included in the calculation of incentives. By default, spend for all items is included. Use this panel when only some items on the contract have an applicable incentive.
(The Items panel is not available for services contracts.)

• Click the Items tab to display a list of selectable contract items.

The Select Items to Include panel appears (Figure 39). You can select individual items or accept the default (all items). The filters on the left under Items become active after you select items (Figure 39), purple box).

Figure 39 - Select Items Whose Purchases Will Earn an Incentive

The columns are the manufacturer (Mfr) , the manufacturer item number and the item description (Mfr Item) , and the item number from your site's item catalog (Item No) .
You can sort these columns by clicking the underlined header. A green arrow shows the direction of sort (ascending or descending ).

In the Item No column, if several catalog item numbers are associated with the manufacturer item number, Multiple appears.

• Click Multiple to display item details (Figure 40).

Figure 40 - Item Details from the Multiple Link

To Include/Exclude Items from Incentive Spend

• Go to the Include spend for... fields at the top of the items list (Figure 39, green arrow).
• To include spend for all items in the calculation of incentives, leave the default box All Items this Contract selected (Figure 39, green arrow). The application includes items that were deleted from your master item file.
• To select individual items whose spend should be included, check Selected Items this Contract (Figure 39, red box).
  A select box appears next to each item in the list. Lines that contain Multiple items display the specific items, each with a select box (Figure 41).
  - You can locate items of interest using the search or you can sort a column by clicking its underlined header. In Figure 41, the user has searched using part of an item description.
  - Click the select box for each item that you wish to include.
  The number of items that you select appears in ( ) on the panel's top margin.

Figure 41 - Selecting Items for an Incentive

Once you have selected items, the filters on the left under Items become active. You can display selected items, unselected items, or all items.

• To unselect an item,
  - Click the refresh icon . Selected items move to the bottom of the list.
  - Locate the item (at the bottom of the page) and click the check box to remove the check.

Note: The list for Selected Items this Contract is at the Mfr/MIN level, not the Mfr/Min/ItemNo level.

Contracts With the Same Items and Overlapping Periods

You can create incentives for different contracts with the same items when the incentive periods overlap.
The calculation process contains tests that “decide” which contract item “gets” the spend for the period (used for calculating any incentive).

Here are the tests:

Test 1. Was the item activated for the year/month?  

If yes, the activated contract gets the item spend.
If no, continue to test 2.

Test 2.  Which contract has the most recent Contract Start Date?  

When one contract has the most recent Contract Start Date, that contract gets the spend.
If all contracts have the same Contract Start Date. continue to test 3.

Test 3. Which contract has most recently been accepted? 

When one contract was most recently accepted,  that contract gets the spend.
If all contracts were accepted for the same date, continue to test 4.

Test 4. (Final tie breaker) Which contract was most recently created?  

The contract with the most recent Create Date gets the spend.

Note: Incentive setup must be complete.

Specify Organizational Spend to Exclude from Incentives

On the "Work with Incentives" page, the Organizations panel (Figure 42) lets you exclude organizations' spend from the calculation of incentives. (By default, all organizations' spend is included.)

• Click the Organizations tab to display a list of organizations.

Figure 42 - Organizations to Exclude for Selection

You can locate organizations of interest using the search or you can sort the organization column by clicking its underlined header.

• To select organizations whose spend should be excluded, check the select box next to the organization(s).
  Once you have selected one or more organizations, the filters on the left under Organizations become active (Figure 41, purple box). You can display selected organizations, unselected organizations, or all organizations.
• To re-include an organization that you previously excluded, click the check box next to the organization to remove the check.

Enter Values in User-Defined Fields

Sourcing and Contract Management lets you create new fields that are specific to your needs. Such fields are user-defined fields. Your System Administrator may have created user fields for incentives. If so, the user fields are on the User Fields panel.
For instructions on setting up user fields, see "Work with User-Defined Fields."

• Click the User Fields tab.
  The User Fields panel appears. (Figure 43).
  

Figure 43 - Accessing User Fields For Incentives

To Display a Description of a User-Defined Field and Enter Values

1. Mouse over the label for any field. The Desc link appears.
2. Click the Desc link . The field description appears.
   - To remove the description, click the Desc link again.
3. Click the edit icon to enter or edit values for user defined fields.
   - Click Save to save the values you entered.

Record and View Received Payments

The Received Payments panel displays earned amounts, payments, and write-offs for a contract incentive, and provides a cumulative balance of payments. Figure 21 is an example.

You can record payments and write-offs by clicking the payment icon on this panel. Instructions on how to use this panel can be found in the section Enter a Payment or Write Off Incentive Earnings.

Get Incentive Information and Set Up an Incentive from a Contract Page

You can link to incentive information from the "Work with Contract" or the "Work with Services Contract" page and you can also add an incentive for the supplier/contract.

1. To open a contract from any list, click the contract number.
   The "Work with Contract" (or "Work with Services Contract") page appears.
2. Locate the Actions panel on the upper right.
3. Click the Open Incentive Setup link.
   If one or more incentive definitions exist for the contract/supplier, they appear.
4. Click Add Incentive to create a new incentive.

• To recalculate all incentives for the contract:
  On the "Work with Incentives" page for the contract, click Recalc All Prior Periods.

Add a Services Contract and Incentive for a Vendor

From the Incentives Setup panel, you can create a services contract and immediately add incentive terms.

To create a new services contract and set up contract incentives:

1. From the main Contents, click the Supplies or Shared Services tab, then select Incentives > Incentives Setup (Figure 1).

   The Incentives Setup panel appears.

2. Click Create Service Incentive (at the top of the panel, next to the Search icon).

   The Select Services Vendor panel appears (Figure 44).

Figure 44 - Selecting a Service Provider for a New Services Contract

3. Enter characters for the services vendor of the new contract in the search box and click the search icon . A select list of providers appears.
4. Click Select next to the service provider for the contract.

   The Create Services Contract panel appears (Figure 45). (See Work with Services Contracts for details on services contracts.)

Figure 45 - Create Services Contract Panel

5. Enter as much information as you have and click Save.

   The Create - Incentive panel appears (Figure 46). This panel is the header panel described previously in Create a Header for a New Incentive.

Figure 46 - New Incentive Header Panel: Services Contract

6. Enter required data in the header panel's fields.
7. Click Save.
   The "Create Incentives Detail" page appears. Follow the instructions in Enter Details for a New Incentive to complete fields on the details panel.
   Note: For services contracts, you cannot specify market share parameters, nor can you include/exclude items.

Recalculate Incentives For All Prior Periods

A nightly process calculates incentives. Incentives are due for recalculation when any of the following occur:

- an incentive is changed.

- contract effective dates are changed. The incentives amounts are recalculated to only include values within the new date range.

- a contract detail line is added or deleted. .

• To keep an incentive from recalculating, set both the incentive percent and the flat amount to zero.
  Setting the incentive percent to zero will remove the current month's amount for the incentive, but will leave the previous history intact.

You can manually recalculate incentives for all prior periods. You may wish to recalculate an incentive if, for example, you have changed an incentive percentage or added a flat amount, and want to see updated revenues for past periods.

• You can recalculate from the "Work with Incentive" page Actions panel (Figure 38), as follows:

1. On the "Work with Incentives" Actions panel, click the link Recalc All Prior Periods to recalculate the incentive (Figure 38).

A confirmation panel appears (Figure 47).

Figure 47 - Confirm Incentive Recalculation

2. Click Submit to recalculate all prior incentives.

Incentive Amounts for Historical Spend

When you set up an incentive, the incentive amount is immediately calculated for past spend and can be displayed.

To view incentive amounts for past spend:

1. Open the "Incentives Workbench" page Summary panel.
2. Select View by: Contract or by Entity.
3. Click the search icon to search for the contract or supplier (if needed).
4. Select a past period (such as Last Year or Last Quarter).
5. Select an incentive type or All. Amounts appear for the incentive(s) that you set up.

Delete an Incentive

You can delete an entire incentive -- both header and details -- using the "Work with Incentives" page, Info panel (Figure 48). (You can also delete the details only, as described previously.)

Several restrictions apply when deleting an incentive:

• An incentive definition can only be deleted if the incentive was created during the current month. When the incentive is deleted, all history for the incentive is also deleted.
• When you delete an incentive header (on the "Work with Incentive" page Info panel) the system deletes the entire incentive and any existing detail records. However, on the Incentive Details panel, you can delete incentive details records separately without deleting the entire incentive.
• An incentive definition cannot be deleted if the definition was created in a prior month.

1. To delete an incentive, open the "Work with Incentives" page.
2. Click the delete icon on the Info panel.
   The system asks you to confirm the deletion.
3. Click Delete.

Figure 48 - Deleting an Incentive from the Work with Incentives Panel

Calculations for Multiple Thresholds in Incentive Details

On the incentives Details panel (Figure 38), you can create multiple sets of details for a contract/supplier. This approach would be useful when a supplier offers greater incentive percentages for spend that increases over time. For example, a percent offered on a contract may grow proportionally to the Total Spend Threshold and/or the Total Spend From/To range; Unit Threshold and/or Unit range; Growth Threshold; or Market Share Threshold.

When the incentive percent offered is tied to increasing spend, the incentive calculation is designed to use the highest spend point (highest qualifying threshold point) for any recurring period. This section contains examples. In the examples, three sets of details exist for an incentive associated with a single contract/supplier. The recurring period is three months.

Examples for a Volume Threshold

Total Spend Threshold - Percentage Based

As long as Total Spend equals or exceeds Total Spend Threshold: Incentive Amount = Total Spend * Incentive Percent

Table 3 - Total Spend Threshold Details Increasing 1%

Table 4 - Earnings for Recurs Period: Three Months (04/01/2017 - 06/30/2017)

The Incentive Amounts in Table 4 were generated as follows:

Calculation for Month 1:
$120,000.00 * 0.00 =$0.00 (Spend is $5,000.00 short of the $125,000.00 threshold.)

Calculation for Month 2:
($400,000.00 * 0.03) - (Month 1 [$0.00]) = $12,000.00

Calculation for Month 3:
($520,000.00 * 0.04) - ({Month 1 [$0.00]} + {Month 2 [$12,000.00]}) = $8,800.00

Total Incentive Amount for Recurs Period (Table 5)
$0.00 (Month 1) + $12,000.00 (Month 2) + $8,800.00 (Month 3) = $20,800.00

Table 5 - Total Spend Threshold/Percent Earnings at End of Recurs Period: 6/30/2017

Unit Threshold - Percentage Based

As long as Total Units Purchased equal or exceed the Unit Threshold,
 Incentive Amount = (Total Spend [calculated by: Total Units purchased * Unit Price]) * Incentive Percent

In the example, units are $2.50 each.

• If multiple Unit Threshold values are entered in incentive details, only the new recurs period spend immediately above the Unit Threshold is calculated.
  

Table 6 - Unit Threshold Details: Increasing 1%

Table 7 - Earnings for Recurs Period: Three Months (04/01/2017 - 06/30/2017)

Calculation for Month 1:
$120,000.00 * 0.00 =$0.00 (48,000 units)

Calculation for Month 2:
($400,000.00 * 0.03) - (Month 1 [$0.00]) =$12,000.00 (160,000 units)

Calculation for Month 3:
($520,000.00 * 0.04) - ({Month 1 [$0.00]} + {Month 2 [$12,000.00]}) = $8,800.00 (208,000 units)

Total Incentive Amount for Recurs Period (Table 8)
$0.00 (Month 1) + $12,000.00 (Month 2) + $8,800.00 (Month 3) = $20,800.00

Table 8 - Unit Threshold/Percent Earnings at End of Recurs Period: 6/30/2017

Total Spend Threshold - Flat Amount

As long as Total Spend equals or exceeds Total Spend Threshold, Incentive Amount = Flat Amount

• Only the flat amount that is associated with the Total Spend Threshold that is immediately surpassed by the Total Spend is earned.

Table 9 - Total Spend Threshold Details: Flat Amount Increasing by $100.00

Table 10 - Earnings for Recurs Period: Three Months (04/01/2017 - 06/30/2017)

Calculation for Month 1:
Cumulative Spend is below $125,000 so $0.00 Flat Amount is earned. Earnings: $0.00

Calculation for Month 2:
Cumulative Spend is above both $125,000 and $250,000.00 but below $500,000, so only the $500.00 Flat Amount is earned. Earnings: $500.00

Calculation for Month 3:
Cumulative Spend is above all thresholds $125,000, $250,000.00, and $500,000, so only the $600.00 Flat Amount is earned.
Earnings: $600.00 - $500.00 (previous Flat Amount Earned) = $100.00

Total Incentive Amount for Recurs Period (Table 11)
$0.00 (Month 1) + $500.00 (Month 2) + $100.00 (Month 3) = $600.00

Table 11 - Total Spend Threshold/Flat Amount Earnings for Recurs Period: Three Months

Unit Threshold - Flat Amount

As long as Total Units Purchased equal or exceed the Unit Threshold, Incentive Amount = Flat Amount * Total Units Purchased

In the example, units are $2.50 each.

• Only the flat amount associated with the Unit Threshold that is immediately surpassed by the Total Units Purchased is earned.

Table 12 - Unit Threshold Details: Flat Amount Increasing by $100.00

Table 13 - Unit Threshold/Flat Amount Earnings for Recurs Period: Three Months

Calculation for Month 1:
Cumulative Spend is below $125,000. Flat Amount = $0.00.
Total Units Purchased
= Total Spend divided by Unit Price = $120,000.00/$2.50
= 48,000 Units
Earned Incentive
= Flat Amount * Total Units Purchased = $0.00  * 48,000 Units
= $0.00
Total Incentive Amount (for Month 1) = $0.00

Calculation for Month 2:
Cumulative Spend is above both $125,000 and $250,000.00, but below $500,000 so only the $0.05 Flat Amount is earned.
Total Units Purchased
= Total Spend Divided by Unit Price= $400,000.00/$2.50
= 160,000 Units
Earned Incentive
= Flat Amount * Total Units Purchased = $0.05  * 160,000 Units
= $8,000.00

$8,000 - $0.00 (previous Flat Amount Incentive Earned) = $8,000.00
Total Incentive Amount (for Month 2) = $8,000.00

Calculation for Month 3:
Cumulative Spend is above all thresholds $125,000, $250,000.00 and $500,000, so only the $0.06 Flat Amount is earned.
Total Units Purchased
= Total Spend Divided by Unit Price = $520,000.00/$2.50
= 208,000 Units
Earned Incentive
= Flat Amount * Total Units Purchased
= $0.06  * 208,000 Units
= $12,480.00

$12,480 - ($8,000.00 [Month 2] + $0.00 [Month 1]) (previous Flat Amount Incentives Earned) = $4,480.00
Total Incentive Amount (for Month 3) = $4,480.00

Total Incentive Amount for Recurs Period (Table 14)
$0.00 (Month 1) + $8,000.00 (Month 2) + $4,480.00 (Month 3) = $12,480.00

Table 14 - Unit Threshold/Percent Earnings at End of Recurs Period: 6/30/2017

Total Spend From/To - Percentage Based

As long as Total Spend equals or exceeds the Total Spend From amount and is less than or equal to the Total Spend To amount,
Incentive Amount = Total Spend * Incentive Percent

Table 15 - Total Spend From/To Details: Increasing 1%

Table 16 - Earnings for Recurs Period: Three Months (04/01/2017 - 06/30/2017)

Calculation for Month 1:
$120,000.00 * 0.01 = $1,200.00

Calculation for Month 2:
($125,000.00 - $120,000.00) * 0.01 = $50.00
($250,000.00 - $125,000.01) * 0.02 = $2,500.00 (Rounded Up Amount)
($400,000.00 - $250,000.01) * 0.03 = $4,500.00 (Rounded Up Amount)
$50.00 + $2,500 + $4,500.00 = $7,050.00 (Rounded Up Amount)

Calculation for Month 3:
($500,000.00 - $400,000.00) * 0.03 = $3,000.00
($520,000.00 - $500,000.01) * 0.04 = $800.00 (Rounded Up Amount)
$3,000.00 + $800.00 = $3,800.00 (Rounded Up Amount)

Total Incentive Amount for Recurs Period (Table 17)
$1,200.00 (Month 1) + $7,050.00 (Month 2) + $3,800.00 (Month 3) = $12,050.00

Table 17 - Total Spend From/To Earnings at End of Recurs Period: 6/30/2017

Unit From/To - Percentage Based

As long as Total Units purchased equals or exceeds the Unit From value and is less than or equal to the Unit To value,
Incentive Amount = (Total Spend [calculated by: Total Units purchased * Unit Price]) * Incentive Percent

In the example below, the unit price is $2.50.

Table 18 - Unit From/To Details: Percentage Based

Table 19 - Earnings for Recurs Period: Three Months (04/01/2017 - 06/30/2017)

Calculation for Month 1:
$120,000.00 * 0.01 = $1,200.00

Calculation for Month 2:
($125,000.00 - $120,000.00) * 0.01 = $50.00
($250,000.00 - $125,002.50) * 0.02 = $2,499.95
($400,000.00 - $250,002.50) * 0.03 = $4,499.93
$50.00 + $2,500 + $4,500.00 = $7,049.88

Calculation for Month 3:
($500,000.00 - $400,000.00) * 0.03 = $3,000.00
($520,000.00 - $500,002.50) * 0.04 = $799.90
$3,000.00 + $799.90 = $3,799.90

Total Incentive Amount for Recurs Period (Table 20)
$1,200.00 (Month 1) + $7,049.88(Month 2) + $3,799.90 (Month 3) = $12,049.78

Table 20 - Unit From/To Earnings at End of Recurs Period: 6/30/2017

Total Spend From/To - Flat Amount

As long as Total Spend equals or exceeds the Total Spend From amount and is less than or equal to the Total Spend To amount,
Incentive Amount = Flat Amount

• All flat amounts associated with individual Total Spend From/To amounts whose From amounts are surpassed by the Total Spend have earnings.

Table 21 - Total Spend From/To Details: Flat Amount

Table 22 - Earnings for Recurs Period: Three Months (04/01/2017 - 06/30/2017)

Calculation for Month 1:
Cumulative spend is within $0.00 - $125,000.00 range so $400.00 flat amount is earned.
$400.00

Calculation for Month 2:
Cumulative spend is within both:
$125,000.01 - $250,000.00 Range so $500.00 flat amount is earned.
and
$250,000.01 - $500,000.00 Range so $600 flat amount is also earned
$500.00 + $600.00 = $1,100.00

Calculation for Month 3:
Cumulative spend is within $500,000.00 - $99,999,999.99 range so $1,000.00 flat amount is earned.
$1,000.00

Total Incentive Amount for Recurs Period (Table 23)
$400.00 0 (Month 1) + $1,100.00 (Month 2) + $1,000.00 (Month 3) = $2,500.00

Table 23 - Total Spend From/To Earnings at End of Recurs Period: 6/30/2017

Unit From/To - Flat Amount

As long as Total Units purchased equals or exceeds the Unit From value and is less than or equal to the Unit To value,
Incentive Amount = Flat Amount * Total Units Purchased

• All flat amounts associated with individual Unit From/To values whose From values are surpassed by the Total Units Purchased have earnings.
• In the example below, the unit price is $2.50.

Table 24 - Unit From/To Details: Flat Amount

Table 25 - Earnings for Recurs Period: Three Months (04/01/2017 - 06/30/2017)

• Calculation for Month 1:
Cumulative Spend is within $0.00 - $125,000.00 (0 - 50,000 units) range, so $0.04 flat amount is earned.
Total Units Purchased
= Total Spend divided by Unit Price
= $120,000.00/$2.50 = 48,000 Units
Earned Incentive
= Flat Amount * Total Units Purchased
= $0.04 * 48,000 Units
= $1,920.00

Total Incentive Amount (Month 1) = $1,920.00

• Calculation for Month 2:
Cumulative Spend is within $0 - $125,000.00 (0 - 5000) range, so $400 flat amount is still earned.
$125,000.00 - $250,000.00 (50,001 - 100,000) range so $500.00 flat amount is also earned.
$250,000.00 - $500,000.00 (100,001 - 200,000) range so $600 flat amount is also earned.

Total Units Purchased between range 1 (beginning of 2nd Month) and Ending Point of range 1
= $125,000.00 - 120,000.00
= $5,000.00
= Total Spend divided by Unit Price = $5,000.00/$2.50
= 2,000 Units
Earned Incentive
= Flat Amount * Total Units Purchased
= $0.04  * 2,000 Units
= $80.00

Total Units Purchased between starting point of range 2 and ending point of range 2
= $125,000.00 - 120,000.00
= $125,000.00
= Total Spend divided by Unit Price = $125,000.00/$2.50
= 50,000 Units
Earned Incentive
= Flat Amount * Total Units Purchased
= $0.05  * 50,000 Units
= $2,500.00

Total Units Purchased between starting point of range 3 (beginning of Month 2) and end of month
= $400,000.00 - 250,000.00
= $250,000.00
= Total Spend divided by Unit Price
= $250,000.00/$2.50 = 100,000 Units
Earned Incentive
= Flat Amount * Total Units Purchased
= $0.06  * 100,000 Units
= $6,000.00

Total Incentive Amount (Month 2) = $80 + $2,500.00 + $6,000.00 = $8,580.00

• Calculation for Month 3:
Cumulative Spend is within
$400,000.00 - $500,000.00 (100,001 - 200,000) Range so $600 Flat Amount is also earned.
$500,000.00 - $99,999,999.99 (200,001 - 999,999,999) Range so $1,000.00 Flat Amount is earned.

Total Units Purchased between Starting Point of Range 3 (beginning of 2nd Month) and End of Month
= $400,000.00 - 250,000.00
= $150,000.00
= Total Spend Divided by Unit Price = $150,000.00/$2.50
= 60,000 Units
Earned Incentive
= Flat Amount * Total Units Purchased
= $0.06  * 60,000 Units
= $3,600.00

Total Units Purchased between starting point of range 3 (beginning of Month 3) and end of month
= $520,000.00 - $500,000.00
= $20,000.00
= Total Spend Divided by Unit Price = $20,000.00/$2.50
= 8,000 Units
Earned Incentive
= Flat Amount * Total Units Purchased
= $0.10  * 8,000 Units
= $800.00

Total Incentive Amount (Month 3) = $3,600.00 + $800.00 = $4,400.00

Total Incentive Amount for Recurs Period (Table 26)
$1,920.00 (Month 1) + $8,580.00 (Month 2) + $4,400.00 (Month 3) = $14,900.00

Table 26 - Unit From/To Earnings at End of Recurs Period: 6/30/2017

Example for a Growth Threshold

You can create multiple incentive details containing different Growth Thresholds for the same incentive header. In this case, the system calculates the incentive using the highest growth threshold applicable to the percent of growth in spend for the recurrent period.

In the example below, growth in spend for the current recurs period is 16.23%. This percentage is above all Growth Threshold Percentages defined in the incentive details: it is immediately above 2%. Hence, the earned amount is calculated as Total Spend * 16% (Table 27).

If, for example, the growth in spend were 1.5%, the system would use 8.0% in the calculation of the incentive, since 1.5% growth is immediately above the 1.00% Growth Threshold.

Table 27 - Growth Threshold Details for Recurs Period: 12 Months

Calculation:
$1,537,830.37 * 0.16 = $246,052.86 (Table 28)

Table 28 - Growth Threshold Earnings for 12 Month Recurs Period (10/01/2016 - 9/30/2017)

Example for a Market Share Threshold

You can create multiple incentive details containing different Market Share Thresholds for the same incentive header. In this case, for the recurrent period, the system calculates the incentive using the highest market share threshold applicable to the spend percent in the selected category.

• In the example below (Table 29), market share percent (for the selected categories) in the current period is of 69.76% Total Spend for the categories. This value is above the first three Market Share Threshold Percentages defined in the incentive details: it is immediately above 60%. Hence, the earned amount is calculated as Total Spend in Targeted Categories * 8%.
• The system ignores the 95% Market Share Threshold Percent because market share spend (69.76%) is not as high as 95%.
  

Table 29 - Market Share Threshold Details for Recurs Period: 12 Months

Calculation: (Table 30)
$210,159.36 * 0.08 = $16,812.75

Table 30 - Market Share Threshold Earnings for 12 Month Recurs Period (10/01/2016 - 9/30/2017)

Example for Multiple Calculation Methods: Volume, Growth, and Market Share

You can create multiple incentive details containing Volume, Growth, and Market Share terms for the same incentive header. The highest (higher, for two) calculated threshold is the threshold value displayed on the Earnings panel.

Table 31 - Incentive Details with Volume and Growth Terms

Calculation:
Current Recurs Period Spend = $15,000.00
Baseline Period = $10,000.00
Total Spend Threshold = $5,000.00
Growth Threshold = 2%

Growth Threshold as a Dollar Amount = Baseline Period Spend * 1.02
$10,000.00 * 1.02 = $10,200.00

The threshold that must be equaled or exceeded to earn an incentive is $10,200.00.
This higher threshold is displayed on the Incentives Workbench Earnings panel.

In the above example the Earned Amount = $15,000 * 1%
= $150.00

Incentives for Declined/Rejected Services Contracts

When a services contract owner sets the Status of the contract to Rejected, incentives for the contract are affected as follows:

Incentives cannot be changed:
You cannot modify any incentive associated with a rejected contract.

Existing incentives are not recalculated:
Any existing incentives for a services contract will not recalculate as long as the contract's status is Rejected.

Important: If you "unreject" a services contract and wish to display currently accurate incentive amounts, you must manually recalculate the incentives. See Recalculate incentives for all prior periods for instructions.

Sample Incentive Timeline

Figure 49 is an example of a timeline for an incentive that has been created. In the figure, you can see how the various time periods associated with an incentive are related.

Figure 49 - Sample Timeline for Incentives Earned and Due

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