Do you believe in the power of supplier-distributor-manufacturer relationships? Are you convinced that building a foundation based on trust, mutually-beneficial deals, accurate forecasting, and prompt rebate reimbursement is critical to breaking down the walls that have existed between these trading partners in the past? If so, these six tips to help you incentivize these long-term business relationships will merely enhance that collaboration.
But, if this isn’t already self-evident to you, read on anyway. You’ll learn about the value of paying promptly, improved visibility, contract efficiency, communication, advanced analytics, and trust and discover one way to solve the age-old dispute between trading partners while improving profitability.
Why trading partner relationships are important when managing rebates
Our COO, David Hunt, says that “accurate rebate management must be a priority because it fosters better relationships between trading partners and can be the difference between profit and loss for some companies. This statement is backed up by evidence.
Successful trading partner relationships aren’t just nice to have. They are a competitive differentiator. Research by McKinsey has shown that companies with advanced supplier-collaboration capacities tend to outperform their peers. Their survey also showed that companies that regularly collaborated with suppliers demonstrated higher growth, lower operating costs, and greater profitability than others in their industry.
These are the 6 ways rebates can incentivize long-term relationships with your trading partners
In the past, we’ve shared articles about 10 ways to improve your supplier relationships which include being fair, understanding and honoring contractual obligations, identifying and monitoring risks, and so on, and how customers benefit from collaborative partnerships. But in this article, we’ll focus specifically on six ways rebates can incentivize long-term relationships with your trading partners.
1. Better financial rewards through prompt payment
Did you know that electrical distributors say that up to 60% of their bottom line relates to rebate? The bigger an organization is, the more meaningful even a tiny percentage of lost rebate can be. They don’t just add up – they amplify. Unfortunately, managing complex rebates in an ERP that’s not designed for your specific rebate needs or, worse, relying on risk-prone spreadsheets subject to human error and potential data loss increases the chance of lost rebates. The alternative is using an automated system to ensure payments are made and received on time. When rebates are paid regularly it can incentivize buying behavior because partners know and trust that their effort will be rewarded promptly.
It may seem counter-intuitive, but prompt, accurate payments can even help improve your team’s morale and trading partner relationships. Suppliers may be more willing to go the extra mile to deliver better service and the finance team can switch from being reactive and defensive to proactive.
2. Better relationships through greater trust
It’s easy to imagine that the biggest benefit of improving relationships with your trading partners would be purely financial. Certainly, the financial benefits are indisputable. However, it’s actually collaboration on mutually-beneficial agreements that brings the most value in the long run. The ability to focus on win-win solutions changes a partnership from an uneasy, but necessary interaction, to a consensus- and trust-based collaboration.
A system that provides a solid foundation for trust between multiple parties also gives the commercial team valuable time to build relationships, rather than having to focus on fixing them. Solving problems before they arrive reduces disputes and can even reduce stress as a result. So, automation isn’t just good for trading partner relationships, it can even be beneficial for your employees’ mental health.
3. Improved accuracy through visibility
Automating rebate management doesn’t just save time, it helps remove uncertainty. Our COO, David explains, “With a single version of the truth stored in an independent system, trading partners have a frictionless route to the rebate they have earned.” Better visibility improves rebate accuracy and reduces disputes. By providing a single view of the truth to all parties, friction and frustration disappear. Rather than using mismatching data as a basis for disputes, parties can finally start to see opportunities for mutual benefit and growth: Arguably the real reason for having rebates in the first place!
4. Faster agreements thanks to improved contract efficiency
It’s rarely easy to handle contract negotiations with your trading partners. With two different systems keeping track of information, different product codes, and a large number of people involved, the room for delay is significant. However, with tools like Enable’s Collaborator, accurate contracts can be agreed upon promptly and kept on record as long as required.
5. Better deals through better communication
When rebate management is automated, calculations become more accurate and more reliable. The result? Accurate, no-mess, no-fuss calculations are calculated automatically based on agreements that can easily trigger payments when thresholds are met. As our COO, David, says, “Modelling future proposals can help both trading partners to identify what is most beneficial for themselves, allowing them to enter negotiations and model agreements that work from both sides.”
Having access to trustworthy data will improve supplier interactions and give you the ability to monitor performance instantly. It cuts down the need for separate emails and other documentation. If a supplier requests information from you, you are in a more capable position to provide a quicker response.
6. Greater knowledge through advanced analytics
Rebates try to predict and influence buyer behavior. But their power doesn’t lie in what happens before people buy: It’s about what happens next. The post-fact assessment of buying behavior is an incredibly valuable tool when used appropriately.
In the past, the sheer time required to analyze rebate results was overwhelming. The more trading partners involved, the more complicated this became. Instead, with rebate management software like Enable, the data flowing through the system becomes its own source of value. It can show trends and patterns and allow any of the multiple partners engaged in the rebate deal to make decisions based on real data.
How Enable helps you build trading partner relationships that last
In essence, the key to incentivizing long-term relationships with your trading partners lies in better communication, smoother (more trackable) workflow, streamlined and automatic calculations, shareable and auditable data, and timely payments.
This leads to:
- Joint business plans,
- The chance to seek opportunities, together, and
- A future of mutually-beneficial relationships.
When true collaboration is enabled by tools that make it easy to work together, disputes reduce – if not disappear entirely. But, more importantly, commercial teams have the information they need to negotiate properly. Everyone can work towards building rebates – from the most basic to special pricing agreements and even ship and debit agreements – that works best for them, their customers, and their bottom line.
Then, something almost magical happens. Instead of rebates making strange bedfellows, rebates become a foundation for stronger trading partnerships and better, long-term business relationships.
If any of the points in this article resonated with you, it might be time to automate rebate management for your company. More than 5,000 companies around the world already use Enable and we’re on the Inc. 5000 list of the fasting growing companies in the US.
But if you’re not yet convinced, take a look at our customer stories to see how some of the world’s leading brands are streamlining trading partner collaboration with Enable.