According to KPMG, less than half (46%) of finance leaders are very satisfied with their ability to make informed decisions based on data. That’s not good enough. If finance leaders don’t know how much they should be getting, the chances are that their organizations may be leaving money on the table.

In this article, we discuss the importance of collecting revenue in a timely way, share why finance leaders are still leaving money on the table in a digital age and reveal how they can put a stop to it. As you might suspect, the answer lies in the art of managing rebates effectively…

Knowledge Is Power – But Are You Using it?

In 1597, Francis Bacon said, “Knowledge is Power.” More than half a millennium later, the statement still holds. Finance leaders have the power and the responsibility to keep their fingers on the pulse of an organization’s success. The finance leader is in charge of analyzing, predicting, interpreting, and managing money. None of this is a surprise. However, it is surprising how few organizations are leveraging the power of visibility to maximize their rebate income or reduce their rebate spending.

Research by Industrial Supply Magazine states that “57% of distributors don’t maximize funds, leaving a significant amount of money on the table.” We have to wonder why. It’s not due to a lack of knowledge, experience, or interest in maximizing profits. So what could be causing this lack of income maximization?

From our observations over many years of helping customers improve the way they manage rebates, we note that it often occurs because rebates aren’t treated as a strategic source of revenue improvement. As the above research says, “funds generation is not funds maximization. Just because money is available does not predict its usage.” This applies to both sides of the rebate equation: rebate redemption and allocation.

The Importance of Collecting Money on Time

It has often been said that cash is king. But cash flow is critical. The longer a bill remains unpaid, the less money is available for other business-building or profit-making activities.

As we explain in this introductory blog post – rebate management explained – the main obstacles that lead to delayed payments and a slower cash flow for your business are disputes over what was agreed, challenges with calculating rebates, and the inefficiency of manual processes. This is often made worse by disparate systems and high levels of dependency on a single person.

Time can be wasted in the rebate claims process when parties lack visibility of the agreement and have to engage other team members to confirm what was agreed. And if calculation processes are manual and data is spread over many systems, time is also lost in simple administration. (Particularly if calculations are inaccurate.)

Why Finance Leaders are Leaving Money on the Table

Before John Janis, the Director of Supply Chain Management at Chadwell Supply, started using Enable; they lived in a world of spreadsheets. They had no forecast capability or the ability to track the pace of spin. John explains that once they had a system in place to account for their rebates accurately, “I quickly recognized that Chadwell Supply was missing out on deal earnings, [which] potentially strained supply relationships based on rebates and rebate tracking. And maybe a supplier owing us some rebate money that we weren’t aware of.”    

It doesn’t have to be this way, however. Customer rebate programs can actually be an incredibly rich source of income, not to mention insight, for finance leaders.

However, to fix the underlying issues, something has to change. In a paper on Trust in Digital Supply Chain Management, the author reminds us that the prioritization of technology that allows visibility of the whole supply chain should be done first. Then companies should invest in the technologies that enable future agility, flexibility, and responsiveness to customer demand... At least, that’s what The Center for Global Enterprise recommended in 2016. Since then, in our forever-changed, post-pandemic world, the need for visibility, agility, and responsiveness have assumed almost equal importance.

Fortunately, many intelligence systems, including rebate management software, allow all these needs to be met: preventing money from being left on the table. When data flows seamlessly from one system to another, errors are massively reduced. When it’s possible to view rebates at a glance rather than relying on one person to dig out critical information, key person dependency can be eliminated. Even more beautifully, when relevant rebate information is shared between parties, collaboration becomes far more possible and effective.

How you can Avoid Leaving Money on the Table

Improved rebate visibility, trackability, clarity, and focus help all parties negotiate better deals, keep track of rebate income, or, on the other side, ensure that rebate is paid out correctly.

Then there’s the critical data safety issue. Being able to trust that the data in systems is correct and, more importantly, that all parties agree it’s correct reduces tension and improves relationships.

There’s also a compliance-related benefit to investing in rebate management software. It ensures your company can comply with relevant legislation (you can even build in extra levels of validation if you work in a highly regulated industry).

Lastly, having secure access to rebate data restricts the risk of data leakage.

It’s also important to remember that the knock-on effect of inscrutable rebates flows downstream, for example, to accounts payable (AP) teams. As Bob Monio explains in PaymentsJournal, “money is being left on the table when AP visibility is lacking: 24 percent of the average AP staff’s time is spent working directly with suppliers to fix invoice, processing and payment errors.” In this one example alone, lack of visibility creates uncertainty over how many invoices are paid on time, where the bottlenecks are in the process, which processes are causing the most significant delays, and, of course, how much time teams are spending on low-value tasks when they could be doing more value-added tasks.

Become a First-Class Rebate Accounting Team with Enable

The alternative to leaving money on the table is embracing rebate management automation. By choosing the right software, finance leaders won’t just improve their bottom line; they will also gain all-important visibility and control.

In summary, we’ll end with a quote from the KPMG report quoted at the beginning of this article:

“Partly in response to recent pressures, a host of data and analytics technologies are emerging that can provide greater supply chain visibility and control. Companies that accelerate the deployment of these technologies not only enhance supply chain resilience but also unlock long-term advantages in speed, cost reduction, and sustainability.”

Get in touch if you’re ready to unlock long-term advantages by leveraging the power of rebate management software. Or, if you want to know how the software trusted by industry leaders to do far more than just make rebates easy works, schedule a demo. With an average ROI of 400% over three years, we think you’ll find it’s well worth the investment.

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