The Deal Economy - Page 1 - Enable

Market development funds (MDFs) — sometimes referred to as ‘marketing development funds’ — are funds made available by the manufacturer to pay for marketing activities carried out by the vendor. Typically, this is to support the promotion of a new product or brand.

The basics

The timing of payments

Claims against MDFs usually come in the form of volume incentive rebates or retrospective fixed amount payments so should be included in your rebate management process. However, it is not uncommon for some MDFs to be paid at the beginning of the agreement due to the cash flow considerations from the vendors perspective.

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Enable’s DealTrack platform will allow the global leader in flex duct systems to generate more business through effective execution and tracking of promotional and support deals. San Francisco, CA — Aug 30, 2019: Enable International Inc., the leader in cloud-based B2B deal management software, today announced that Forth Worth, TX-based ATCO Rubber Products Inc. has chosen Enable’s DealTrack software platform to better manage its marketing agreements and rebates. The global leader in flex duct...Continue reading

When things are done well, no-one questions what happens behind the scenes. Tailored simplicity — that’s how we work, at Enable. However, the problem with simplicity is that when it’s done well, like a magic trick, people want to know how it was done. So we thought we’d raise the curtain to show you what’s really going on behind the scenes and why it’s so easy to import your rebate data with DealTrack. 1. Tailored simplicityYour business operations are structured uniquely; to support your strat...Continue reading

Many industries around the world have complex pricing practices. These tend to become more and more complex as the industry becomes more and more competitive. Many creative programs have been created by businesses and their trading partners in order to provide maximum benefit to both parties involved and improve their competitiveness in the market place.

One solution to allow for trading partners to become more competitive and gain market share is back-end rebate or BECs. There are many examples of variables in these agreements, with some based on growth over a certain specified period, volume of product, value of product, certain locations or even a specific SKUs!

Sadly, we don’t have time to cover them all here, but examples of rebate agreements have been covered in detail in another of our blog articles.

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How distributors manage ‘ship and debit’ rebate agreements

What are ‘ship and debit’ agreements?

Ship and debit is the term for an agreement between suppliers and distributors where specific products are distributed (shipped) to customers at a lower price than usual. The difference in price is then claimed (debited) from the supplier to protect distributor margins.

A ship and debit agreement enables suppliers to sell their goods at a uniform price, while distributors can react to local market conditions and lower the price they use to sell to customers without the risk of losing their profit margin. Once the sale is made, distributors can debit the supplier who usually credit the amount back as a rebate.

An example

Ship and debit is widely used in the technology and electrical supplies sector. If an OEM sells laptops at $1000 and has agreed a $100 rebate for every unit sold, the distributor will pay $1000 per laptop to bring them into stock, and for every unit shipped, they will debit the OEM $100. In other words, they will claim $100 back from their supplier.

7 min read

In our experience with businesses managing complex rebate agreements, we have come across multiple different styles of rebate deals. Some of these deals are rather self-explanatory, such as a fixed monetary amount or a fixed percentage of total turnover over the term of the deal.

However, as the area of rebate grew, rebate agreements became more complex and specific in order to provide maximum benefit for everyone involved. Why get a low rebate rate on all products (some of which you may never stock!) when you can negotiate a higher rebate rate on one of your most traded products?

Incentive rebates explained

What are they?

Incentive rebates are used to encourage purchases across a specified group of products. The incentive offered by the manufacturer or supplier means that the more you trade with this partner over the course of the deal, the better the rebate rates you receive. This helps to promote loyalty with certain trading partners and protects the supplier from the risk of their trading partners engaging with the competitors about similar products.

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There are two sides to the customer rebate story: the customers’ side where, historically, retailers and distributors have not always been paid the full value of the rebates they should have received; and the manufacturers’ side (those who offer the incentives in the first place). When the old enmities are laid to rest, though, customer rebates can be the best thing since sliced bread for customer success. Customer rebates have a bad reputation In the past, those giving away rebates were accus...Continue reading

Most businesses have a process in place for forecasting for the future. Forecasting, commonly defined as “the process of making predictions of the future based on past and present data and most commonly by analysis of trends”, is about being able to account correctly for earnings throughout the year. This may be an informal process — such as when an individual estimates the future using their experience or gut instinct, or a more formal process using tools such as Excel / other systems. Either...Continue reading

Strategic collaboration with manufacturers could be a huge driver of revenue and profit for construction-industry distributors. So why have so many given up on trying to make it work? The supplier-distributor relationship in building and construction is at a tipping point. The rise of Amazon has meant customers can buy building materials and fittings direct from the manufacturer, freezing out the middleman. That’s led to quite a bit of bad blood, with distributors feeling betrayed by suppliers...Continue reading

Supplier rebate deals should be a win-win, benefiting manufacturers and distributors alike. But too often they lead to distributors losing revenue, and suppliers losing trust… Supplier rebates make great business sense. They build on the common goals of manufacturers and distributors, to provide mutual benefits — manufacturers gain extra sales and customer loyalty, while distributors enjoy lower costs. At least, that’s how it should work. In practice, things rarely run so smoothly. Most distri...Continue reading

While spreadsheets are undeniably easy to use, widely available and highly adaptable much has been written about the danger of using them in contexts where there is just too much information, or where that information is too important to risk to human error. A prime candidate is the case of rebates: both customer rebates and supplier rebates, where even the smallest error can result in losses of tens or hundreds of thousands of dollars. Since spreadsheets are so easy to use it is also easy to ma...Continue reading

In our dealings with businesses who have to manage complex rebate deals we have come across over 300 different types of deal… and we’ve mapped all of those options into our DealTrack software.

Whilst it is important to have all those deal types to give ultimate flexibility, we thought it would be fun to share our round-up of the top 7 most popular types of rebate deals. Ready?

Types of rebate deals

1 — Product launches

When introducing new products, it is common to link spend on the new range to discounts on regular purchases.

7 min read

When it is done well, customer rebate management improves partner relationships, provides financial compliance and reduces audit risk, eases cash flow for customers, improves rebate accuracy and predictability and helps grow business through true partnerships between manufacturers and their customers. In the past: managing customer rebates was like playing telephone Unfortunately, in the past, managing customer rebates internally — never mind with external partners — was more like a game of t...Continue reading

It may seem overly simplistic to associate the complex nature of financial accounting with a cup of coffee, but when it comes to customer rebate management this analogy makes intuitive sense for anyone who has ever tried to get a free cup of the caffeine-laced beverage. Rebates vs. discounts Rebates are similar to a discount. So what’s the difference between them? Discounts are typically applied at the point of purchase to reduce the buying price: when you get a bill you pay the discounted valu...Continue reading

When it comes to modernizing business practices, technology in general and software in particular is essential for business growth. How are manufacturers and suppliers who deal with millions of dollars’ worth of customer rebates each month adapting to the challenges faced by a historic lack of suitable software? Andy James, Chief Product Officer at Enable, shared a few stories about how their clients have changed for the better and what drove their decisions. Essentially, for two of our largest...Continue reading