Rebate programs were “invented” as a way of driving sales growth without simply reducing the contract price. By agreeing retrospective financial incentives based on actual sales, both the supplier and the distributor are working together to drive market share and growth. Effective rebate management refers to the management of discount claims that are based on volumes of purchases over time. To some companies, that rebate is treated as a bonus. But to others, rebate programs form a significant proportion of their revenue and for these companies accurate rebate management is absolutely essential.
Rebate programs are a way of giving individual customers the ‘right price’ without driving the price downwards and they also create loyalty. Rebate programs are essential to operations in various industries including building supplies, electronics, retail, and wholesale distribution and can be offered to certain locations, on certain products or product groups and on certain types of transaction. This means that they can get rather complex and many are finding that “standard” business systems or manual processes such as spreadsheets don’t facilitate this complexity.
There are many types of rebate programs and our rebate management software supports over 300 of them. Here are just a few rebate examples:
To view more rebate program examples click here.
The management and processing of rebate programs is challenging, with significant financial risks if something goes wrong due to loss of data or human error. Many rebate arrangements lack support in financial accounting systems, such as targeted incentives and multistrand rebates. Keeping a track of rebate programs when purchasing is decentralised or where the trading agreement is made by a buying group creates further challenges. Many companies work their rebate programs out in spreadsheets, relying on individuals to collate and input data manually. This rebate management process works in theory but it's easy to see how it could be subject to errors or omissions. Alternatively, some companies rely on their suppliers to perform all the relevant rebate calculations for them, without ensuring it all checks out. Neither rebate management method is optimal, as they both create a wealth of issues if things go wrong — slow cashflow, loss of income, disagreements with suppliers, incorrect margin calculations — the list goes on! In order to manage rebate programs successfully, and reap the financial rewards they can bring to your organisation, there are certain practices you must take towards implementing an efficient and effective rebate management process.
A dedicated rebate management system like Enable will make it easy to track complex rebates and ensure that all of the rebates negotiated in the terms of your agreement are captured and claimed.