What is cancellation reserves in SAP ICM - Incentive and Commission Management (ICM)?

SAP Term: cancellation reserves

• Component: ICM

• Component Name: Incentive and Commission Management (ICM)

• Description: Incentive and Commission Management The monetary or non-monetary portion of commission that is subject to liability for a certain period of time. The cancellation reserve is not disbursed to the commission recipient but is withheld as collateral for the purposes of recalls throughout the liability period. The cancellation reserve is a special type of retention that is used for the security of financial service providers in order to retain commission that is still subject to cancellation liability. At the end of the cancellation liability, the cancellation reserve can be released and disbursed to the commission recipient. Cancellation reserves are mapped with different retention rules. The cancellation reserve is either created by the retention mass process or it is created manually. In the case of recalls, the cancellation reserve can be used by the retention mass process to clear any recalls. The cancellation reserve can also be decreased manually.

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• Key Concepts: 
  Cancellation reserves are a feature of SAP ICM Incentive and Commission Management (ICM) that allows companies to set aside a portion of their commission payments for potential cancellations. This reserve is used to cover any losses incurred due to cancellations or other unforeseen circumstances. The reserve is typically set up as a percentage of the total commission payments, and can be adjusted as needed. 
  
  How to use it: 
  To set up cancellation reserves in SAP ICM, first navigate to the “Cancellation Reserves” tab in the ICM configuration. Here, you can specify the percentage of commission payments that should be set aside for cancellation reserves. You can also specify the duration of the reserve, such as whether it should be applied to all commissions or just those within a certain time period. Once you have configured the cancellation reserves, they will be automatically applied to all commission payments. 
  
  Tips & Tricks: 
  When setting up cancellation reserves in SAP ICM, it is important to consider the potential impact on your company’s finances. Setting aside too much money for cancellation reserves could mean that your company is not able to take advantage of other opportunities, such as investing in new products or services. It is also important to consider how long the reserve should last, as this will affect how much money is available for other uses. 
  
  Related Information: 
  For more information on setting up cancellation reserves in SAP ICM, please refer to the official SAP documentation here: https://help.sap.com/viewer/product/SAP_ICM/7.0/en-US/f3d8f9a2b6c14e8a9f3d7c2b5f9e4d1a.html