Purchasing teams today are faced with multiple pressures: Reducing and managing costs and negotiate the best pricing agreements with suppliers. Many suppliers now offer vendor rebates as sales incentives to encourage buyers to purchase more and cement long-term relationships.
A rebate is different from a discount, however. Whereas discounts are applied at the time of sale, a rebate is only paid after a sale is complete. Vendor rebates are offered to promote certain products and reward buyers who make larger volumes of purchases.
They are also a way for the organisation offering the rebate to protect itself against smaller order volumes – since they are only paid after all conditions, including purchase volumes, have been met, rebates ensure that discount claims are based on actual (rather than “promised”) behaviour.
Rebates have become essential to B2B operations in a wide variety of industries and now commonly seen in pharmaceuticals, automotive, construction and FMCG. They are offered on particular products, combinations of products and certain types of transaction.
As such, they can quickly become complex – especially if, as a purchasing organisation, you’ve got multiple rebates from multiple suppliers with different conditions and terms to keep track of. To ensure that your margins are not impacted by missing out on claims that are rightfully yours, vendor rebate management software must be deployed to keep a handle on all the figures and secure your success.
Controlling Contracts and Eradicating Errors
Many organisations leave it up to the supplier to conduct all the relevant calculations and inform them of what is owed. This is a risky strategy. By not keeping control of the figures themselves, costly mistakes and loss of money can occur.
Even if they do attempt to keep track of rebate claims, many organisations use outdated methods and spreadsheets are the biggest culprits. These are cumbersome and not up to the task of managing complex, modern-day vendor rebate claims and agreements. The trouble comes down to the many different types of rebates that a purchasing organisation will likely be contending with.
There are volume rebates, growth rebates, retention rebates, mix rebates, ship and debit rebates and many more besides. Some will be based on percentages, others on purchase volume, still more on repeat purchases over time. The amount of data that each rebate claim generates is simply too much to handle successfully using manual processes.
Still, many organisations attempt to do this and inevitably, errors are made, while the time and costs associated with constantly keeping the spreadsheet updated mount up with each passing day.
Vendor rebate management software offers the solution. Naturally, vendor rebate information is an extremely valuable asset – but only if purchasing organisations can obtain, access and use it properly. Without the means to reliably and consistently capture rebate data – and share it with all relevant stakeholders –mistakes are likely to occur, and many rebates may be left unclaimed.
With vendor rebate management software, all vendor rebate agreements reside in the cloud for anyone with the right permissions to access at all times. This gives real-time visibility into your data, allowing you to view all calculations and keep track of the vendor rebate throughout its entire lifecycle – including any changes that occur.
Having ready access to such vital information helps organisations improve their purchasing decisions, track key performance indicators, manage costs and maximise earnings for all products and services across multiple vendors.
Another huge benefit of vendor rebate management software is the ability to create an audit log for every transaction undertaken in the system. Many contracts are often negotiated offline with only verbal agreements being made, leading to inconsistencies in documentation and what various parties believe to be the “live” contract.
Vendor rebate management software drives consistency by allowing you to store the contract against the agreement along with any other communication. All agreements are also digitally signed, which ensures they are legally binding.
Changes to contracts do occur, however and these all need to be audited with approvals granted at the appropriate level. With vendor rebate management software, audit logs are accessible throughout the system, providing users with the relevant information whenever it is required. Audit reports can also be generated at any time both internally and for external audit purposes, to demonstrate compliance.
Configurable workflow engines also enable organisations to define roles and responsibilities for each stage of an approval process. By creating systematic workflows that align with business rules and corporate governance, organisations ensure that key actions that need to be taken within the system are never missed, all sign-offs take place in a timely fashion and business integrity is never compromised.
Vendor Rebate Management Software from e-bate – The Ultimate Rebate Management Solution
It no doubt goes without saying, but if you could find a better way to track and manage your B2B rebate programmes, you’d improve both efficiency and your profit margins. What is perhaps less clear is how to do it.
Rebate management is notoriously complex, especially for organisations that deal with large volumes of complex trade agreements across a vast range of suppliers and customers. So – what does your rebate management system look like?
For many organisations, the answer to this question leans towards the manual.
Spreadsheets and basic accounting software are still the go-to budgeting and planning tools for some 63% of companies. With large numbers of customers and deals to contend with, such solutions simply cannot support the complex rebate management needs of a growing company.
Maintaining hundreds if not thousands of prices – and manual price changes — are extremely time-consuming and open to human error. What’s more, relying on such a basic rebate management system usually means that there are no workflows, no approvals and no auditing of changes. Plus, with a lack of reporting capabilities and integration with other systems, data has to be manually imported into a user-maintained access database.
These processes are neither auditable nor transparent. They lead to errors and increased workloads piling onto many areas of the business.
What then, can organisations do to improve efficiency, accuracy and the overall proficiency of their rebate management system?
Minimise the Human Error Factor
The first area of improvement when it comes to your rebate management system is to remove the risks associated with manual processes.
Calculating rebates in spreadsheets is a woefully inefficient practice for large B2B organisations especially, though smaller enterprises will also struggle if they’re attempting to track and manage different combinations of complex rebate arrangements by hand.
Fluctuating market conditions mean that rates change frequently and maintaining price changes by hand across an entire system is inherently susceptible to omissions, duplications, miscalculations and oversights. Such inaccuracies lead to missed opportunities and impact everything from reporting and forecasting to cash flow and audit compliance.
Often, spreadsheets are built and maintained by one person, which – aside from the inherent high risk of failure – means that rebate validation turnaround is also painstakingly slow. As a consequence, the customer experience can be impacted and buyer/supplier relationships can start to break down.
Centralise Your Agreements in the Cloud
Effective rebate management for both buyers and sellers means access for all. All parties need access to the relevant data, agreement details and calculations. A clear and transparent audit trail is required to ensure easy monitoring and that evidence is easily accessible for all rebate claims.
The way to do this is with a rebate management system that centralises all contracts and agreements in the cloud. Such a system provides a single source of truth that can be accessed by anyone – at any time – with the right permissions, ensuring that everyone has access to the information they need.
This single source of data provides all parties – including purchasing and finance teams – with real-time visibility into all communications, negotiations and pre- and post-agreement decisions. This removes ambiguity and allows all stakeholders to accurately track and calculate rebates, earnings and forecasts and to make informed decisions in a timely manner.
Automate Your Pricing and Rebate Calculations
Clearly, spreadsheet replacement is the first imperative to improve efficiency and the reliability of your rebate management system. For the best possible outcome, implementing purpose-built rebate management software that automates your pricing and rebate calculations is the most effective solution.
The best rebate management software systems on the market today come with real-time calculation engines. These tools receive all of your transactional and master data via direct import, file transfer, or full integration with your existing systems, eliminating the need for manual data entry – and the associated risks of omissions and errors. The calculation engine then processes the data in real time, giving you immediate, accurate results. What’s more, the platform will recalculate the rebate if historical data is amended, ensuring accuracy at all times with little to no manual intervention required.
Is It A Great Deal?
B2B rebates have many advantages for both buyers and sellers.
Buyers get the best possible value, whilst sellers ensure that discount claims are based on actual rather than promised behaviour and both can enjoy a stronger, more trusting relationship. However, when commercial teams first negotiate initial rebate terms, both parties need to ensure that they are getting the best deal for their business.
As with any negotiation, the more information a team has, the better. In particular, what’s needed is data pertaining to how previous rebate deals have performed, as well as forecasts of how new deals currently being negotiated are likely to perform.
The former will inform the latter. Unfortunately, however, when historical data is locked away in almost inscrutable spreadsheets, or otherwise fragmented across multiple systems, paper documents and even emails, there is no reliable way to get the answers needed to secure a good deal and make accurate forecasts.
Provide the Ability to Model Future Agreements
In addition to automated pricing and rebate calculations, a sophisticated rebate management system provides robust deal modelling features that give both purchasing and sales teams greater insight into the rebate implications of a given deal.
Deal modelling tools are used to draft new deals and evaluate how they will likely perform. Figures from the previous year can be fed into the engine and data dimensions can be adjusted to provide a forecast of what would happen should the conditions of the deal be changed. As such, users are able to see if a proposed deal for a new contract will meet business objectives, giving the user greater power when heading into negotiations.
In addition, contracts coming up for renewal can be given the same treatment, so users will be able to see precisely, if any proposed changes to the existing deal will result in improvements compared to what is already in place.
Improve Visibility of the Agreement Calculations and Reduce Your Time-Sapping Queries
Another way to improve your rebate management system is to ensure that all stakeholders are given access to agreement calculations as and when they want or need them. This is important for cementing strong, trusting relationships between buyer and supplier, as well as internally between purchasing and finance teams.
With rebate management software, contract data is stored in a cloud-based centralised location which can be accessed at any time by anyone with the right permissions. This gives suppliers, buyers and finance teams full visibility into all calculations and agreement terms, eliminating the potential for dispute, whilst also enabling deals to be signed off quickly and efficiently by all relevant parties. Automated notifications, which alert relevant individuals whenever their actions or approvals are required, ensure that all rebates are being proactively managed and that the entire process is streamlined to improve efficiency, accuracy and accountability.
Improve Your Rebate Management System with e-bate – The Ultimate Rebate Management Solution
A rebate management system that relies on error-prone spreadsheets and outdated accounting software is no system at all. In order to manage rebates successfully, improve efficiency and eliminate the risk of human error, powerful, feature-rich and automated rebate management software is the only solution.
e-bate’s intuitive rebate management software comes with a built-in calculation engine allowing you to track and analyse all data against your agreements in real time, while our robust deal modelling features allow you to make rapid assessments of the benefits of any deals you are negotiating.
Our purpose-built platform automates every element of the rebate management process, eliminating your reliance on spreadsheets and giving you full visibility into all calculations at any time.
e-bate is your single source of all truth, providing you with the insights you need to make proactive decisions that drive business value.