A rebate where crossing a threshold applies the higher rate to all qualifying volume from the start of the period, not just the volume above the threshold.

Retroactivity makes the accrual mathematically awkward: until the threshold is crossed, the correct accrual depends on the probability of crossing it. Most businesses accrue at the currently-achieved tier and take a catch-up adjustment on crossing, which is defensible but makes the liability lumpy.

It also makes purchasing behaviour discontinuous near the threshold — which is precisely the behaviour the supplier intended to create, and precisely the behaviour you can only exploit if you know where you stand before the period closes.

Related terms

Tiered rebate

A rebate whose rate increases as cumulative volume crosses defined thresholds.

Accrual

The liability or receivable recognised as a rebate is being earned, before it is actually settled.

Growth rebate

A rebate paid on the increase in volume over a prior-period baseline, rather than on total volume.

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