Configuring a mechanism

Once a mechanism has been selected for a program line, it is important that you configure the selected mechanism accurately by using certain settings that will become available to you in the ‘Mechanism details’ section on the right of your page (as shown in the screenshot below, using ‘Fixed %’ as an example).

Dimensions

For almost every mechanism you select in Trading Programs, you will be required to assign at least one item from each of your dimensions to the program line you are creating. This setting is simply labeled Dimensions and will require you to first select a dimension collection and then to click on either a 'select all items' option or a 'manually select items' option.

Included dimensions determine what entities should earn rebate (e.g. which products or product groups or product categories are earning the rebate specified in that program line).

Clicking the 'select all' option will include all current items and any future items that belong to the ‘current items’ collection. For more complex program lines, however, it is advised that you choose the 'manually select items' option in order to directly select items, configure selection rules and nominate items to be specifically excluded from the particular program line.

Non-retrospective, retrospective and fully retrospective

Enable is able to retrospectively handle rebate calculations meaning that it is possible for new rates that have been achieved to be applied to past months transactions and to update the earnings for each month.

This is handled through multiple available retrospective settings: Non-retrospective, Retrospective and Fully retrospective.

Retrospective vs. Non-retrospective

If you have a program line with incremental percentage rates for specific target bands then you will be able to choose to make it retrospective or non-retrospective.

If retrospective, the percentage rate for the band of transactions reached will be applied to all historic transactions that apply to the program line. If not, the percentage rate is only applied to the transactions that fall within the qualifying band.

Consider for example a program line that has target bands as follows:

If the total for included transactions is $1,800,000:

• Enable will calculate the earnings as: 3% x $1,800,000 = $54,000 if the Retrospective? box is ticked.
• 2% x ($1,500,000 - $1,000,000) + 3% x ($1,800,000 - $1,500,000) = $19,000 if the Retrospective? box is not ticked.

Fully Retrospective

Growth program lines, that are calculated as growth over a baseline value or volume, have an additional setting of Fully retrospective? (with the exception of the rebate earned being a fixed amount).

When Retrospective? is selected without Fully retrospective? being selected, the percentage rate will only be used to update historic transaction earnings on the growth element of the program line.

If both Retrospective? and Fully retrospective? are selected, then the percentage rate will be applied historically to update the earnings for all qualifying transactions.

Consider for example a program line that has growth target type of ‘% by value’ with target bands as follows:

If for the above program line the total for included transactions is $2,350,000 and the baseline value is $2,000,000 (such that the % growth by value is 2,350,000 / 2,000,000, or 117.5%), Trading Programs will calculate the earnings as:

• 3% x $2,350,000 = $70,500 if the Fully retrospective? box is ticked.
• 3% x ($2,350,000 - $2,000,000) = $10,500 if the Fully retrospective? box is not ticked but the Retrospective? box is ticked.
• 2% x $2,000,000 x (115% - 110%) + 3% x $2,000,000 x (117.5% - 115%) = $3,500 if the Fully retrospective? and Retrospective? boxes are both unticked.

Accruals

A user can set their accruals manually within each targeted program line in Trading Programs by navigating to the target band they wish to accrue at and selecting it. To set the accrual band you will need to click on the set accrual/forecast button. You will then be required to fill out the target that you wish to accrue for and write a note alongside it to explain why you are setting this accrual band. Depending on your configuration you may also be prompted to enter a forecasted value. The blue 'C' icon will then change from unallocated and instead place itself next to the band that you have set.

If you have the Forecasting module enabled, it is possible to set the accruals automatically. There is a button next to the set accrual/forecast called use forecasting module for accruals. Once selected, the program line will use the forecasted figures as the accrual figures and automatically assign this as the accrual band in the program line. When the figures in the forecasting module are changed, the accrual band will automatically adjust to reflect this.

There is also a checkbox within the forecasting module config section, which will automatically use the forecasting figures for accruals within every program line by default.

The A, F, and C which are shown in the above screenshot of the target bands stand for:

A - actual band achieved. Trading Programs will automatically allocate the A to the correct transaction band;

C - the accrual band. You need to set the accrual band;

F - the band that is forecasted to be achieved.

Once you have set your accrual band and saved the program line, the accrual rate within your reports will display as:

1. Zero, if the program line has not yet reached the first target band and no accrual band has been selected for the program line.
2. The accrual rate, if an accrual band has been selected for the program line and both of the following apply:

• The actual band is not higher than the accrual band
• The current date is not later than the accrual reset period (see below)

3. The actual rate, if the actual band is higher than the accrual band.
4. The actual rate, if the current date is later than the accrual reset period for the program line.

Accrual reset period - The timeframe at which your accruals reset (and become actual earning) can be configured by the Enable Customer Success team. For example, this can be configured to reset at the end of a program line or several days, weeks or months after the program line has ended to offer flexibility for your claims/payment processes. Please get in touch if you would like our team to configure any changes.

For more information, read our FAQs article on the target band letters.

Baseline transactions (for Growth program lines)

A user might configure the baseline transactions in a ‘Growth’ program line as the value of the transactions from the previous period, found in the Baseline earnings area of Trading Programs.

Rebate will then be earned based on the transactional value that is achieved over that baseline (the ‘growth element’). This will then encourage growth by acting as a benchmark and incentivizing the improvement on last period’s targets.

Separate target and earning transactions?

The Separate target and earning transactions? setting allows you to indicate, on a per-program line basis, whether the program line has separate target and earning transactions.

Often, to encourage overall transactions with a trading partner, rebate rates may be earned for specific dimensions (e.g. products) when targets are achieved against other (or more) dimensions.

For example, a supplier may offer high rebate rates on a few specific high-volume products based on the buyers' overall sales of that trading partner's product range. Enable provides separate target and earning transactions to allow this type of program line to be represented in Trading Programs.

For this setting, which is presented to you as a Separate target and earning transactions? tick box, the default is unticked (= NO). If, however, you tick the box (= YES) for a given program line, Trading Programs will:

• Require you to select two sets of dimension items: one for the target transactions and one for the earning transactions.
• Use the target dimension item selections to:
• Assign matching transaction lines to the program line as target transactions;
• Calculate the target transactions for the program line;
• Determine which target band applies to the program line.
• Use the earning dimension item selections to:
• Assign matching transactions to the program line as earning transactions;
• Calculate a program line earnings result for each transaction line that is assigned to the program line as earning transactions.

If you accept the default selection or untick the Separate target and earning transactions? option for a given program line, Trading Programs will:

• Only allow you to select a single set of dimension items.
• Use the selected dimension items to assign matching transaction lines to the program line (as both target and earning transactions).
• Use the matching transaction lines to:
• Calculate the target transacted value for the program line;
• Determine which target band applies to the program line;
• Calculate a program line earnings result for each transaction line that is assigned to the program line.

For determining the target transactions, determining which target band applies to the program line, and deriving the earnings, Enable performs two separate calculations: 1 for actual transacted value and 1 for forecast transacted value.

For reporting transacted value for a program line where the Separate target and earning transactions? option is ticked, Enable’s default approach is to use the earning as opposed to the target transacted value. This default approach is adopted for each of the following:

• The Analysis page.
• The Program earnings report.
• The Daily earnings report.

Discount %

Often, as well as being awarded rebate for earning transactions targets, an initial discount of the list price of a product may be given. It is possible to record the Discount % in Trading Programs so that the rebate is calculated on the transaction net of the discount (the net price).

Deductions

You might find that you have earnings duplicated from the same transactions because two program lines may cover multiple dimensions (for example, one program line’s earnings are calculated from all branches in Warwickshire and another's earnings are calculated from just the Warwick branch — you can see here that there is an overlap where earnings would be duplicated).

It is possible to handle this case in Enable with the use of ‘strung rebates’ where the user can select one or more program lines whose earnings should be deducted from the qualifying transactions before the earnings are calculated for the current program lines.

Below is a simplified example of how this calculation would be carried out:

• The user is creating a promotion program line which will give a rebate of 1%. However, there is already an incentive program line which gives rebate of 10%, both being calculated on the same transactions.
• Let’s assume in this case that the relevant transaction amount is $100.
• Without applying any deductions, Enable will calculate the total earnings for both program lines as $11, with the calculation being (1% of $100) + (10% of $100) = $11.
• However, if the user includes the incentive program line in the Deductions area of the settings, the calculation of the rebate will change; the earnings of the incentive program line will be deducted before the promotion program line is calculated.
• The earnings of the incentive program line are still 10% of $100 = $10. This is then deducted from the transactions before calculating the 1% for the promotion program line.
• Therefore, the calculation of earnings for the promotion program line becomes 1% of ($100 - $10) = $0.90
• Therefore, the total earnings for both becomes ($10 + $0.90) = $10.90, rather than $11.

It is clear from this example that if configuring Deductions in program lines with a large number of transactions, the difference in the calculations of earnings would be significant.

Manual overrides

Occasionally, adjustments to program lines are agreed outside of Enable. For example, you may be very close to achieving your next target band at the end of a program line and agree with your trading partner that the rate from the next target band will be used in calculating the earnings for the program line. Trading Programs allows Manual overrides to allow this type of agreement to be represented in Enable.

A manual override can be applied to a program line that is linked to any of the following mechanisms:

• ‘Value incentive $’.
• ‘Volume incentive $’.
• ‘Value incentive %’, for which the Retrospective? setting is ticked (= YES).
• ‘Volume incentive $ per unit’, for which the Retrospective? setting is ticked (= YES).
• ‘Volume incentive %’, for which the Retrospective? setting is ticked (= YES).
• ‘Value incentive $ per unit’, for which the Retrospective? setting is ticked (= YES).
• ‘Growth incentive $’.
• ‘Growth incentive %’, for which the Fully retrospective? setting is ticked (= YES).
• ‘Growth incentive $ per unit’, for which the Fully retrospective? setting is ticked (= YES).

Applying a manual override disables Enable’s calculation process for determining which target band applies to the program line.

You can remove the manual override and reinstate Enable’s calculation process for determining which target band applies at any time.

While a manual override is in place for a given program line, the corresponding calculation is disabled, and the corresponding metric is set to n/a, for each of the following:

• Risk margin.
• Risk amount.
• Reward margin.
• Reward amount.

Removing a manual override reinstates the corresponding calculations for risk margin, risk amount, reward margin and reward amount, such that these metrics are calculated in the normal way rather than set automatically to n/a.

Any program line to which a manual override has been applied is automatically assigned a ‘Manual override’ flag, which is then reported as part of the set of attributes that are logged for a program line by the version capture process.

‘Externally calculated’ mechanism

The ‘Externally calculated’ mechanism allows program lines for which the earnings cannot be calculated in Trading Programs to be represented.

For program lines that are linked to the ‘Externally calculated’ mechanism, you will be required to select included dimension items for the program line, as per any other program line. You will also be able to enter an earnings value for the program line.

The selected dimension items are then used, in conjunction with the start and end date of the program line, to compile a set of included transaction lines for the program line. Note that, for an inverse earnings program line:

• The change of sign that is applied to convert between positive and negative earnings is applied by Enable as part of the calculation routine that is implemented by the assigned mechanism.
• Where the assigned mechanism is ‘Externally calculated’, you should enter the earnings value ‘as is’ and rely on Enable to apply the change of sign.

For a program line that is linked to the ‘Externally calculated’ mechanism, the program line edit page displays the total earnings value, with a change of sign applied to this total if the program line has the inverse earnings box ticked.

Types of targeted program lines

Please click the links below for further information about each targeted mechanism:

Targeted amount with monetary transactions

Targeted percentage rate with monetary transactions

Targeted unit rate with monetary transactions

Targeted amount with transactions in units

Targeted percentage rate with transactions in units

Targeted unit rate with transactions in units

Targeted amount with growth targets

Targeted percentage rate with growth targets

Targeted unit rate with growth targets

Support

If you would like some support setting up your program lines, please raise a Helpdesk ticket or book an appointment with one of our Customer Success team.