Accrued Purchases definition
Accrued Purchases. Payables are accrued for receipts of inventory, materials, freight, services, operating supplies, etc. based on physical receipt or completion of services which the supplier’s invoice has not been processed for payment. This valuation is based on the SAP system GR/IR accrual system. This accrual excludes inter-company purchases. Accrual for Customer Rebates: Customer rebates are reviewed 3 times a year with expected rebates and criteria updated in the SAP system based on customer rebate agreements. Accrual for rebate payable is based on system data of actual sales and volumes at a transaction level. Accrual for Vendor Rebates: Vendor rebates accruals are calibrated quarterly based on projected volumes. The accrual for estimated vendor rebates is generally 80% to 90% of the projected rebate pro-rated for the rebate period. Specifically, composites rebates are accrued at 90%, plastic rebates are accrued at 80%, chemical rebates are accrued at 80% except for the Dow kicker rebate which is accrued at 50%. Accrual for Vendor Price Support: The accrued amount due from vendors for price support is a SAP system calculation based on actual transactions and vendor agreements.