Rebate accrual is the accounting recognition of rebates earned but not yet claimed or settled. It is a variable consideration line under IFRS 15 and ASC 606 that must be estimated at contract inception and reassessed continuously.
How accrual is calculated
Accrual estimates rebate earned by applying the contractual formula to expected or actual purchasing volume. Most organizations set assumptions annually and update them quarterly - producing large variances at true-up when actual behavior diverges from the estimate.
Why continuous reconciliation improves accrual quality
When the accrual is calculated from live ERP transactions and structured contract terms rather than an estimation model, month-end variance drops materially. This is one of the most measurable finance improvements from Contract Performance Management.
