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A Sell Through Allowance (STA) is a rebate that the manufacturer gives the retailer on specific products after they have been sold. The sale of the products must be accounted for and reported to the manufacturer. The manufacturer suggests a new retail price, but the actual retail price used is at the retailer’s discretion.
Inventory costs display net of the STA (Net Promo Cost) for the salespeople on the floor, as it is a competitive closing tool and protects profit margins. Sales of STA items during promotions reflect the Net Promo Cost for daily and monthly sales reporting to accurately indicate the store’s gross profit dollars. Items that are returned after or during STA promotion take Net Promo Cost and salespersons commissions into account.
For taxation purposes, the accounting processes recognize the income and corrected cost during the promotion’s time period and set up a receivable to be collected at a later date. The invoice can contain detail or a report can be created to be attached with it. An invoice to the manufacturer is created after completion of sell through period or on a monthly basis.
Actual landed inventory value in stock is unchanged by the STA.
The STA management process allows for STA reporting at regular intervals filtered by End Date in order to view any STA’s soon to expire. This allows the user to proactively determine if an extension needs to be set ahead of time. This process ensures salespeople always have current information since they will not be able see STA’s once they have expired.
At the point of sale the user can see items that have STA’s (the part number is underlined), allowing them to look up the STA value as well as the cost net of STA (visible only on demand so that customers will not see it if they can look at the screen). The margin based on the STA reduced value is available to view.
When the STA billing is performed, the STA amounts accumulated in the STA clearing account are moved to the A/R or A/P ledger account to await manufacturer’s payment (based on configuration options selected).
To enable Sell Through Allowances complete the following steps.
Adding or Creating Sell Through Allowances
To add or create a Sell Through Allowance for an inventory item, complete the following steps.
Important Notes:
You might be thinking that this is all very helpful, however I have 400-500 Sell Through Allowance Inventory Items and their allowances change every Month or two. How can I effectively manage this situation. Good news, we have developed a STA Data Load which can update your parts.
Follow this link to the article on how to use it:
employee : Sell Through Allowance Load
Sell Through Allowance Load
When selling STA items the discounted retail price will automatically show if it was specified in the Sell Through Allowance Billing setup for that item. When using the typical STA configuration setup (as shown in the section above called Enabling Sell Through Allowances) the STA discount is automatically deducted from the Landed Cost of the item. The figure below shows a typical example.
If you do NOT check the flag next to the option Allow salespeople to include sell through allowances in Invoice costs and margins in the Setup Wizard, the Sell Though Allowances notification dialog box shown in the figure below will appear when selling an item with an STA.
STA Billing
To create the STA billing invoices to the manufacturer for all STA items sold complete the following steps.
Additional Notes:
The figure below shows an example of the ledger postings that occur at the point of sale when and STA item is sold.
Using ‘Reduce Cost of Goods’ option: Retail price: 599.00 Selling price: 559.00 STA given: 50.00