Skip to content
Home » Supplier Rebates

Supplier Rebates


A rebate is an arrangement in which suppliers agree to return a portion of a purchase price to customers if they buy a specified value of products within an allotted period. Rebates differ from discounts and coupons in a few distinct ways, namely in that the savings occur after the sale and the purchases are made at full price. Vendor rebates in Dynamics 365 Finance & Supply Chain Management help companies better manage their supplier rebate programs by automating tasks that are required in order to administer, track, and claim rebates that are earned. This is achieved through a vendor rebate agreement.

A vendor rebate agreement is a record of a contract with a vendor that specifies the negotiated terms and conditions under which the company qualifies for a monetary reward in return for achieving preset purchase targets.


Rebate agreements can be beneficial to businesses on either end of the supply chain (and anywhere in between). Customers get better deals on the products they buy while suppliers incentivize customer loyalty. They can help improve supplier performance and loyalty and reduce costs by increasing efficiency and reducing waste within the supply chain.


A vendor supplying HDMI cables to Company X specifies the negotiated terms and conditions under which Company X qualifies for a monetary reward in return for achieving preset purchase targets.

The supplier quotes these volume/price combinations.

Then, at the end of the agreed time period, the supplier measures company X’s actual purchases and issues a volume rebate equivalent to the calculation based on volume.

In Dynamics 365

On the Supplier rebate agreements page, you can create new vendor agreements and add details about the negotiated conditions of a vendor agreement. Navigate to Procurement and Sourcing > Supplier Rebates > Rebate agreements.

The agreement’s header specifies the general conditions that qualify a company for rebates. In effect, the header information specifies that a vendor grants a rebate when a specific product is bought in a specific quantity/amount. On the header, in the overview section, populate the supplier, item, date, rebate line break type (quantity or amount) fields. Other setups like workflow approval can be activated.

On the Lines FastTab, different quantity tiers can be set up to grant different rebates. For example, the From value and To value fields indicate that a product quantity between 20 and 30 units will qualify for a rebate of an amount per unit of 20.

When purchase orders are placed with a vendor that the company has a rebate agreement with, the program identifies any future vendor credit payments. If the purchase orders qualify for a rebate, a rebate claim is generated for every order line as soon as a purchase invoice has been posted. This process is automatic.