As a buyer, accessing supplier rebate programmes can have a significant impact on your business’s bottom line. In fact, many organisations do not make a profit on certain goods or services until they have received their rebates.
As supplier incentive programmes become more complex, so too does the rebate management process. It is only with a powerful and purpose-built rebate management solution that you can successfully manage multiple rebate agreements with multiple suppliers, to ensure you’re generating – and claiming – your rebate revenue.
Why Do Suppliers Offer Rebate Programmes?
Businesses offer rebates to drive sales without reducing the upfront price with a discount. The problem with offering upfront discounts is that they can lead to buyers making promises they don’t end up keeping. For example, a buyer may promise to purchase 1,000 units over a 12-month period at a discounted price. In the end, however, the buyer only purchases 500 units – so they get the discount, but don’t buy the volume.
Rebates solve this problem. With a rebate programme in place, buyers pay the full price per unit upfront and then receive the discount retroactively – as a rebate – only if they do indeed purchase 1,000 units or more.
As such, supplier sales teams offer rebates to buyers as a means to incentivise greater volume purchases or to reward customer loyalty.
Indeed, such volume incentive rebate programmes are usually tiered to encourage larger purchases across specified product lines – so the more volume the buyer purchases over the course of the deal, the better price per unit they receive.
For example, a supplier might design a volume rebate programme that has incentive targets of 100 units, 500 units and 1,000 units:
So, if, as the buyer, you were to purchase 490 units, you would qualify for a rebate of £2.00 per unit – or 490 x £2.00 = £980.
However, if you were to purchase just 10 more units, you would reach the next tier and double your rebate revenue – 500 x £4.00 = £2,000.
As you can see, to miss such an opportunity would have a significant bottom-line impact – which is precisely why effective rebate management is essential.
The Complex World of Supplier Rebates
Of course, this is just one simple example of an incentive scheme. In reality, there are many other ways that supplier rebate programmes are structured. Some are based on the value of orders (as opposed to volume) and calculated as a percentage (as opposed to per unit) – purchases between £1,000 and £4,999 receive a 2% rebate, for example, while purchases between £5,000 and £9,999 receive a 4% rebate.
Then there are product mix incentives – where you receive a rebate on Product X when you purchase Product Y (designed to encourage buyers to make purchases across a wider range of products). There are also growth incentive rebates (issued when buyers meet certain growth targets, such as when they increase their spend by a certain percentage over the previous year).
There are indeed many opportunities to improve revenue and margins by accessing supplier rebate programmes. However, as these rebate programmes become more and more creative and complex, managing rebates becomes more and more difficult.
Many businesses still try to manage rebates using spreadsheets – or otherwise simply leave it up to their suppliers to tell them what is owed. Neither option is optimal. All rebates have their own rules and conditions attached to them. Some are based on volume, others on value, still more on repeat purchases over time. The same supplier may offer different rebates on different products or create a custom rebate to incentivise certain spending patterns.
All these deals create data – vast amounts of data. The fact is that when you’ve got multiple agreements in place with multiple suppliers – all with differing terms and conditions – manually tracking every single agreement and every single purchase made against those agreements using spreadsheets is a recipe for disaster. Spreadsheets are cumbersome and prone to errors and omissions – not to mention the time and costs associated with constantly updating them. This is where rebate management software solutions come in.
Manage Your Rebate Processes the Right Way with e-bate – The Ultimate Rebate Management Solution
Dedicated rebate management software streamlines your rebate processes from beginning to end, ensuring important opportunities are never missed, rebate calculations are accurate and you never miss out on claims that are rightfully yours.
Rather than relying on inefficient manual processes, a powerful solution like e-bate automates the tracking of all purchases made against your rebate agreements in real-time and automatically calculates what is owed. What’s more, it automatically sends notifications to your team members to alert them when rebate thresholds are approaching and when authorisations are required to approve key actions.
In addition, our rebate management solution records all rebate information and centralises it in the cloud, making it easily accessible to anyone with the right permissions. This provides a transparent audit trail that minimises time and costs when compiling evidence for rebate claims.
e-bate is your single source of all rebate information. Maximise your rebate earnings potential with our powerful rebate management solution, providing you with the insights you need to make proactive decisions that drive business value and improve your bottom line.