A rebate is a trade discount that suppliers use primarily as incentives to encourage an increase in sales. They are sometimes referred to as supplier incentives, vendor incentives, channel incentives, special pricing agreements, bonuses, and retroactive discounts. Here are a few key terms and their definitions that will help your understanding of everything related to rebates.
Back-end rebates – Rebates that are earned on the purchasing side of the agreed contract.
Bonus – Additional one-time rebate used as an incentive.
Customer rebate – A rebate viewed from the position of the supplier, where the rebate is paid to the customer.
Growth rebate – rebate agreements that are based on past trading periods based on percentage, number of units, or value of growth, normally from the previous year.
Price rebate – A rebate based on a product’s price.
Procurement contract – A procurement contract is a document that details the legally binding agreement between a buyer and seller.
Rebate accruals – The process of calculating the amount that will be earned on each product by the completion of the trading period and recording it in the company’s accounts.
Rebate management system – Specialised software created exclusively for creating, calculating, and administering rebate agreements.
Rebate visibility – How transparent deals and information is between firms, departments and suppliers. Complete transparency means there can be no disputes with suppliers and the best decisions can always be mutually taken.
Supplier rebates – distinct from upfront discounts in that they are paid retrospectively.
Tiered pricing – Customers pay a different upfront price per unit within a certain volume range or tier.
Vendor rebate – A rebate offered to promote certain products and reward buyers who make larger volumes of purchases.
Volume rebate – A rebate offered to buyers as an incentive to purchase higher volumes of goods.
If you manage or handle part of the rebate process in your business and would like to learn more about how implementing automation software could help you streamline, save time and increase profitability, get in touch with our rebate specialists here at e-bate.