The Deal Economy - Page 5 - Enable

How do you achieve a single ERP system across all businesses in a newly merged organisation? Is a single ERP even necessary? In a newly merged organisation where Oracle, JDE, SAP, Infor and other ERP systems co-exist, consolidation of up-to-the-minute, accurate information for purchasing poses a huge challenge. In a Bain report, they said that one of the reasons mergers and aquisitions fail is poorly managed systems integrations. Where the potential commercial benefit runs into millions, many c...Continue reading

Merger and Acquisition (M&A) activity often starts well before the actual merger with a period of due diligence where the value of the acquisition is assessed. For businesses in the building materials, food, pharmaceuticals and other sectors who buy and sell finished goods, the driver is often increased buying power, and the imperative for due diligence is to clearly understand the value that new buying power could achieve. Carrying out that due diligence work demands extracts of purchase v...Continue reading

We are witnessing a huge volume of Merger and Aquisition activity. A great deal is written about the operational, organisational and process challenges post merger or acquisition by Bain, McKinsey, PWC, KPMG, Ernst Young and other M&A consultancies who assist businesses with best practice for Integration Management Offices (IMOs). This blog introduces a paper we have written that is focused on just one of the issues that IMOs have to deal with: ERP integration post-merger. In the document,...Continue reading

Growth in many businesses is about smart purchasing and profitable selling and that is so true in the building materials sector. Of course, on the face of it, this should be relatively easy — were it not for the way that deals are struck with suppliers in this sector. Manufacturers of building materials supplies often use rebates as a mechanism for maintaining their stated price. It is very common to see a trading deal struck with a standard price and negotiated rebates and retrospective disco...Continue reading

The worldwide building materials sector is buoyant at the moment. According to StrategyR the global construction materials market is expected to grow to $US1.1 trillion by 2020. The biggest growth area is expected to be AsiaPac, closely followed by the US. This should be music to the ears of those in the building materials distribution industry as the demand for construction materials will ripple through to increased demand for industrial, plumbing, HVAC, electrical and other building supplies....Continue reading

Today it was announced that Tesco has agreed to a £129m fine to avoid prosecution by the FCA for overstating its profits in 2014. The root of the problem is believed to be premature recognition of rebate income from suppliers. For organisations that benefit from supplier or vendor rebates, the spectre of incorrectly reported rebate income and any resulting audit investigation should weigh heavily on the minds of finance teams and at board level. There have been calls from the Financial Reportin...Continue reading

The complexities involved in managing complex trade agreements and accounting for rebates and retrospective discount payments are often difficult to model in manual systems such as spreadsheets and basic accounting software. Organisations opting to calculate, forecast and accrue rebate income in this way leave themselves at risk of inaccuracies, missed opportunities and supplier disputes. Here are 6 ways to improve rebate accounting processes in order to: remove the risks associated with manual...Continue reading

Businesses managing complex trading agreements face several hurdles that are difficult to overcome entirely when using manual processes and spreadsheets. Lack of transparency, inaccuracy and limited control of rebate accounting processes is common and the ramifications of these can have a damaging effect on profit, compliance, cash flow and business growth. For retailers, wholesalers and large buying groups, solving these issues to ensure receipt of the correct amount of rebate income and achiev...Continue reading

In our online guide “IFRS 15 — 7 steps to prepare for January 2018” one of our suggestions is to review every deal in every contract and make it SMART. We think that whilst it’s a good idea as part of financial compliance, SMART deals are good for anyone who manages a contract with complex rebate deals, so we thought we would share it with you. A SMART deal is like a SMART objective in project management terms, namely: Specific Be VERY specific. If a deal refers to “across all product lines”, i...Continue reading

Missing out on claiming manufacturer’s rebates is like negotiating a higher price with your suppliers. It simply shouldn’t happen! That's why we created {{cta('a2f66229-8bba-41bc-b443-cb17df844880')}} — THE rebate management system chosen by several building materials wholesale distributors and buying groups. There are many examples in the building materials business where, instead of agreeing an up-front discount, discounts are given in the form of rebates based on actual volumes purchased. Fo...Continue reading

IFRS 15 ‘Revenue from Contracts with Customers’ comes into force on 1st January 2018. The new financial reporting standards (IFRS 15) have a particular impact for businesses who regularly have contracts that contain “elements of variable consideration”. IFRS 15:51 provides us with examples of “variable consideration” which include rebates, incentives, refunds, performance bonuses, credits, price concessions, penalties or other similar items — items that impact the real net-net price and ultima...Continue reading

It isn’t unusual to find that rebate agreements cannot be fully represented within ERP systems and spreadsheets, resulting in disparate sources of information being stored within ERP systems, spreadsheets and even people’s heads! This management headache is multiplied when you consider these 3 major risks: lack of control over profitability, with poor understanding of true margin at point of sale, and roughly estimated true product costs feeding into profit calculations missed revenue opportun...Continue reading

Most businesses have a choice of 4 types of system to manage trading agreements: 1 — Your core ERP system Basic ERP systems do not cope with vendor rebates very well at all. Some ERP systems do have bolt-on vendor rebate modules. They tend to provide some flexibility but in a very complex environment the standard module is often not up to the job and incapable of modelling all the product / price / branch / margin combinations that might be required. As a result, many companies still need to res...Continue reading

Rebates were “invented” as a way of driving sales growth without simply reducing the contract price. By agreeing these retrospective financial incentives based on actual sales, both the supplier and the distributor are working together to drive market share and growth. Rebate agreements are becoming increasingly more creative and many companies are finding that “standard” business systems don’t facilitate this creativity. Whilst many core business systems have some functionality to help monito...Continue reading

If you’re responsible for procurement in a buying group, wholesale distributor, multi-site or large business (such as building materials, HVAC, plumbing and electrical supplies businesses or buying groups of all types) then it’s likely you have a need for a contract management system that can accurately deal with supplier rebates. Rebates were originally designed to aid both the manufacturer and the distributor to grow product sales without resorting to a price war. By maintaining a set price th...Continue reading