As we turn our heads to planning and budgeting for 2024, I was reminded of finalising a budget a few years ago. We’d smashed our numbers the previous year but, not discounting a huge amount of great work by the team, everything had gone our way and everything that had to go right, did. We decided we’d push the boundaries again but not be flattered by the last set of numbers.
But despite attempting to be a little cautious, somehow a significant revenue line appeared entitled ‘SWATU’, a revenue line for ‘the unexpected opportunity’ or, to expand on the acronym,“ Something Will Always Turn Up.”
Now, in a fast growing business it’s reasonable to assume when setting a budget one can’t 100% predict what opportunities might come along 8 or 9 months down the line.
Of course, there’s no point setting a budget unless it’s realistic and achievable. We added a ‘SWATU’ revenue line into an already challenging – but achievable – budget as an upside or stretch. Something to challenge our team and keep us alert to new opportunities.
However, beyond the focus on top line growth was our efficiencies category. Or our ‘marginal gains’ (inspired by Mr Brailsford of course). We would look at every area of the business to see where we could improve processes, digitise tasks and systems, and use analytics to squeeze more from what we had without sacrificing our ability to grow.
Since joining e-bate I’ve talked to quite a few companies about their vendor rebates. In many businesses – some very big – they’re passively managed and exist below the radar of the commercial leadership. Why’s that? Because they’re often managed through complex spreadsheets making them inaccessible and difficult to analyse and work with.
But they’re big. And they’re Important. In some sectors, vendor rebates can represent over 60% of net company profits and ten years ago it was reported that Carrefour, one of the top three grocery chains worldwide had over 1bn Euros in outstanding rebate receivables at any single point in the year.
So how do rebates fit into the budget?
Maintaining and reporting on complex data spreadsheets takes time and effort. Rebates have to be managed and accrued throughout the year so it’s a constant time-consuming task. A rebate platform like e-bate removes over 60% of that cost immediately. That’s a budget win.
Big spreadsheets and manual processes are prone to human error. I’ve been there too many times. We have reports of companies missing big rebate payments due from suppliers and even accepting what their supplier says they owe them. That’s potentially lost revenue in the budget. Rookie error.
‘Rollover’ is a common word in rebates. Allowing agreements to carry on into next year where they left off this year without a full review could mean the company is missing out on revenue opportunities that arise from incentivising product range, volume or new product sales, or in the case of procurement teams, supplier selection and preferences.
Finally, there’s a strong strategic element. In business travel we were able to forge collaborative, transparent relationships with airlines through joint strategic planning for the budget year, optimising their share, increasing our revenue and improving the customer experience. That’s the win-win we’re all striving for.
So in my book, rebates represent a combination of an efficiency and cost saving opportunity, something that could easily fit into the SWATU camp, offering commercial leadership a tool to drive greater stakeholder relationships.
I’d love for you to talk to me about e-bate. But I’d ask those working in any company that buys or sells volume product to ask ‘Who manages rebates and how well do they work?’