A rebate is a partial refund earned by a buyer or paid to a customer after specific volume, spend, or performance conditions in a contract are met. Rebates are typically calculated retrospectively based on actual transactional data and settled at the end of an agreed period.
How rebates work
A rebate agreement specifies the thresholds (typically volume or spend) that trigger a percentage back, and the frequency at which the rebate is settled - monthly, quarterly, or annually. Actual purchasing or sales data is measured against the thresholds to determine what has been earned.
Why rebates matter
Rebates are one of the largest sources of contract value in commercial relationships - often 5-15% of the underlying spend. They are also one of the most under-tracked, because the entitlement depends on continuous reconciliation between contract terms and transactional data. Without that reconciliation, rebates get accrued but not claimed.
