Organizations can no longer afford to poorly manage the rebates process without putting themselves at dire financial risk. To accurately calculate rebate payments, organizations need transparency into the details of complex agreements.
Fortunately, many organizations are discovering the value of migrating from age-old spreadsheets and restrictive ERP systems to cloud-based rebate management technology. The system automatically calculate rebate payments and accruals from a wide array of agreements and integrate with financial systems to ensure the correct amount of rebate is claimed. Users can update agreements directly in the system for greater accuracy and enhanced collaboration among manufacturers, distributors, and retailers.
By centrally recording contracts and providing greater accessibility to complex rebate agreements, cloud-based rebate management technology can provide organizations with a wide range of competitive advantages. Chief among these benefits is enhanced visibility. Providing easy access to real-time data on everything from contract terms to program targets can drive partner behavior, incentivizing distributors and retailers alike to purchase larger volumes of product, thereby maximizing their return on rebates.
According to a February 2020 Harvard Business Review Analytic Services survey of 484 senior technology executives, 55% of respondents say the most significant driver for cloud adoption is increased business agility. Below are some more benefits our customers found by implementing a cloud-based rebate management platform.
Bob Gay, Manager of Customer Profitability and Rebates, Advance Auto Parts
For years, AAP struggled to manage anywhere from 18 to 22 separate spreadsheets, “many with nearly 100,000 lines and 50 columns” of data detailing the terms and conditions of varying agreements. “The more rebate programs we had, the more complex and unwieldly they became,” says Gay, making it difficult to reimburse partners “in a timely and accurate manner.”
Advance Auto Parts, have now found that a cloud-based rebate management system provides clear visibility of its rebate agreements says, “Local coffee shops do a great job of showing how many points we’ve accumulated and when our next cup of coffee is free, but when you’re talking about millions and millions of dollars in purchases, and millions of product stock keeping units, customers can become easily overwhelmed with data.” By centralizing this information and making it available to partners in easy-to-digest reports, Gay says the organization can “drive decisions where customers obtain products, how quickly they obtain them, and the assurance they are paid both timely and accurately.”
Mark Gilham, Finance Director of Strategic Projects, Grafton Group
Since deploying its cloud-based rebate management system, Gilham says Grafton has realized an increase on the return rate of its rebate earnings, “a phenomenal amount of income” amounting to more than a million dollars in the first year of adoption. As a result, Grafton has realized a return on its investment in rebate management technology in less than a year.
Improved contract lifecycle management is another upside of migrating from spreadsheets to a cloud-based rebate management solution. Supplier ecosystems are broadening, making it more difficult for organizations to keep close tabs on contracts as they pass through the hands of disparate parties. “The biggest benefit of automating rebates management came from discovering how many procurement contracts existed that we actually weren’t aware of,” says Gilham. “Our procurement colleagues were doing a fantastic job of securing contracts, but some never made it to our finance department.”
In addition to locating missing contracts, Gilham says automating rebate management has produced organizational gains, such as “bringing procurement and finance teams closer together, enabling them to work from the same system with one master list of contracts.”
For instance, by gathering and analyzing the data produced by an automated rebate management system, organizations can more easily detect developing trends and share these findings with a company’s business line leaders. With spreadsheets, Gilham says, “we would spend days preparing calculations and integrating them into reports whereas now, with an integrated system, we can use automated calculations, review the figures, interpret them, and provide a narrative to the business on both past and future potential earnings. That is what a modern finance function should be doing—supporting leadership with forward-looking intelligence to facilitate improved decision making.”
Better yet, by providing a single source of truth, from a program’s agreed-upon conditions to its financial outcomes, Gilham says “a cloud-based rebate management solution can significantly reduce the risk of both internal finger-pointing and external disputes over contract terms and conditions, so that parties spend less time arguing with partners and more time improving the business”.
Scott Ferguson, Vice President at United Aqua Group
Scott describes the process of migrating from spreadsheets to an automated rebate management system as “almost like having a built-in mediator where you don’t have to worry about parties arguing over who said what in an email. Now the details are just there for anyone to log in and see.”
Employees can now process rebates 90% faster than when they relied on traditional spreadsheets. “If the vendor remembered, they’d send a spreadsheet with their version of the calculations,” says Ferguson. “Then we would have our spreadsheet with our version of the calculations. There would be a reconciliation attempt with plenty of back and forth and time delays before working matters out.”
However, with an automated system, Ferguson says there’s been “a dramatic simplification in the entire process of managing and tracking rebates, a huge gain in efficiencies, and a massive reduction in email messages. I’m also certain we’ve eliminated a multitude of errors and misunderstandings between our data and the vendors’ data.”
To discover more findings from Harvard Business Review, download “The Evolution of Rebate Management” white paper today.