In our experience, many businesses that receive rebate revenue from suppliers, don’t have the means to be able to check that it is correct. They are completely reliant on suppliers to accurately calculate and make the payments.
Because they tend to record rebate agreements outside of their financial system, these businesses are unable to match the cash received against amounts owed from their rebate deals, and for that reason they don’t set up a debtor in the same way that customers are treated.
In fact the credit control or accounts receivable team that generally chases debt very often has nothing to do with chasing rebate debt.
More often, we find that a small team is tasked with calculating rebates owed and chasing debt. As well as being remote from the rest of the accounts receivable team, they are remote from the commercial team who set up the deals in the first place. And the knowledge of how to calculate rebates owed is retained only by that small team.
Money is received, but the agreement against which it has been received is buried in a filing cabinet or cloud drive, and the transactions against which the claims are made are in one or more systems, but are not necessarily recorded in a way that rebates can be calculated automatically.
It is no wonder that those recording the cash received may be forced to simply accept the suppliers calculations.
Of course, some have constructed elaborate spreadsheets to help, but with multiple cash receipts, purchase orders and goods receipt occurring every day, many have found that the volume of transactions is difficult to track in a spreadsheet. Things get missed.
Enable helps financial teams in several ways:
- Rebate agreements are completely systemised. Rebate claims are created automatically, and both commercial and financial teams have visibility of deal performance and claims made.
- Those responsible for matching cash can see online what is owed, by agreement by supplier, and drill down into each line of the agreement to enable accurate matching of cash to what is owed.
- Cash can be matched in whole or in part to several deals that have been struck with that supplier. So, for example, incoming cash may be applied to part of one deal, all of another and part of a third one.
- Alternatively, cash can be recorded as “unallocated” and dealt with later when the facts are known.
- Manual adjustments can be made (subject to user security settings) where needed.
- Enable provides an aged debtor report that helps the rebate cash collection team to proactively chase debt
- They can see all the detail of the agreement if there are any disputes.
- They can add internal notes to the agreement that can be seen by the commercial team when they renegotiate. If, for example, payments are always late, then this can be addressed during negotiations.
The Enable cash collection module helps commercial teams:
- See what has actually been a)earned and b)collected against an agreement
- See the notes made by the collections team about any disputes
- Gather information necessary for striking more profitable deals in the future
DCS Group – a large seller and distributor of health, beauty and household brands – gained more than £1million in accelerated cash flow and, as a result, saved tens of £1000’s in annual bank interest through more proactive management of their rebate debtors.
This is all part of our approach to integrating rebate management into the whole company. Just in the way most businesses have a clear order to cash process for dealing with customers, Enable provides that order to cash process for dealing with suppliers’ rebate agreements.
Find out more about Enable and the benefits of taking control of rebate debtors by downloading our guide here.