Choosing a Rebate Management System: A Guide

Trading agreements involving rebates are prevalent in many industries such as building materials, lumber, HVAC, electrical distributors, buying groups of all types and other wholesale distribution businesses. Rebates are used by suppliers to these industries to influence purchase decisions and drive profitable growth for both the supplier and the wholesaler. Rebates were “invented” as a way of driving sales growth without simply reducing the contract price. By agreeing to 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 are finding that “standard” business systems don’t facilitate this creativity. This need for an auditable process and the desire to use very creative deal mechanisms as a vehicle for growth has resulted in a new paradigm of business system — the rebate management system. Let's take a quick look at the issues and the benefits of choosing a rebate management system.

Rebate accounting problems caused by Excel spreadsheets

We have seen many cases where what has been agreed cannot be accurately modelled in the purchasing/financial systems that are used to record transactions under that agreement. As a result, many businesses resort to using spreadsheets to monitor purchasing activity, make rebate claims and apply for retrospective discounts. Any multi-site business — a buying group or a national wholesaler, for example — may be operating multiple financial or ERP systems. Consolidating information can be time-consuming and tricky. Again, we have seen many cases where spreadsheets are the considered solution. But relying on spreadsheets is notoriously prone to error, and manually processing data in this way is incredibly time consuming.

‍Spreadsheets issues that can occur when managing rebates include:

• multiple versions of the truth — problems with spreadsheet version control
• human errors and omissions in gathering data
• time delays in reporting on consolidated information
• difficulties in dealing with multiple units of measure
• inability to provide evidence to justify rebate claims
• missed claims or a "feeling" that not everything has been captured
• reliance on suppliers to inform you what claim you should be making

Rebate accounting issues faced by procurement

Typically, procurement will negotiate discount schemes and rebates, and those agreements are devolved to others to manage on a day to day basis. With information contained in disparate systems and spreadsheets, procurement cannot have a good hold on all the information needed to negotiate the best possible deal. This can stifle creativity and impede potential business growth. If a system does handle rebates, but not every type of rebate can be modelled, some businesses try to restrict the types of rebate that can be negotiated to the ones their core systems can handle. This is clearly not helpful to driving the best margins and collaborating with suppliers to get the best deal. We have modelled over 300 different types of rebates and retrospective discounts in our rebate management software— many more (we believe) than any other type of contract management software on the market. We have yet to find a deal that cannot be modelled in our software — no matter how creative the terms!

The need for a rebate management system

Many core business systems have some functionality to help monitor these trading agreements that involve vendor rebates, most have neither the flexibility nor the extensive range of functionality that is needed to support the increasingly complex world of rebate management. For many, that lack of functionality has resulted in missed rebates and poor accrual accounting. But worse than that, if your business systems don’t support rebate management fully, then the whole purpose behind creating deals involving rebates – a means to influence business growth – is missed. Added to that, financial policies are moving auditors to verify that companies who make trading agreements involving rebates have a robust process in place for determining appropriate accounting measures.

Benefits of a rebate management system

Our rebate management systems offer core benefits to a company in terms of revenue optimization, cost reduction, risk management and cash release.

• Optimize revenue: Guarantee that the maximum possible income is generated from each supplier deal. All too often deals which were skilfully negotiated are filed away and the true value is never realized.
• Reduce cost: Save considerable time on entering deals/contracts, calculating rebate due, and preparation of reports. These typically manual steps can be partially or fully automated and integrated with your ERP system to eliminate re-keying of data.
• Manage risk better: Provide a central system and set of structured processes around Rebates rather than risking each buyer having their own ways of working.
• Release cash: Gain new levels of reporting insight through comprehensive forecasting tools to allow future deals to be structured for optimum cashflow

How to choose the right rebate management system

Selecting the ideal rebate management platform is crucial for businesses aiming to streamline their rebate processes, improve accuracy, and maximize profitability. To find the right platform, consider the following key factors:

• Identify your business needs: Evaluate your current rebate processes and pinpoint pain points, such as manual errors, lack of visibility, or difficulties in tracking rebate performance. Understanding your needs will help you prioritize features like automation, real-time reporting, and scalability.
• Integration capabilities: Check if the platform integrates with your existing ERP, CRM, and accounting systems. Seamless integration eliminates data silos and enables better collaboration across departments.
• Analytics and reporting features: Advanced analytics can help you track rebate performance, forecast earnings, and uncover trends. Ensure the platform provides customizable reporting tools to suit your business's unique needs.
• Compliance and security: A robust rebate management platform should adhere to industry standards and ensure data security. Confirm that the platform complies with relevant regulations and has strong encryption protocols.
• Scalability: As your business grows, your rebate management needs may evolve. Opt for a solution that can scale with your operations and accommodate future complexities.

By carefully assessing these factors and comparing platforms, you can select a rebate management solution that aligns with your business goals and sets you up for long-term success.

Why choose Enable’s rebate management system?

Managing rebates can become a serious problem, especially for clients in the building materials sector and large buying groups. Enter Enable's rebate management system—the solution for your rebate accounting issues. Say goodbye to cumbersome spreadsheets and hello to accurate, up-to-date information that strengthens your negotiation power.

But Enable goes beyond solving rebate accounting challenges. Our platform drives mutually profitable growth with suppliers by centralizing all relevant information in one place. Here are the key benefits our customers enjoy:

• No More Missed Claims: Ensure every rebate opportunity is captured.
• Complete Information for Negotiations: Have all the details you need at your fingertips for more effective deal-making.
• Better Collaboration with Suppliers: Foster stronger partnerships and achieve mutually profitable growth.

If you’re searching for a robust rebate management system, you'll want more than just a tool to model trading agreements. You need a workflow solution that ensures smooth information flow around trading agreements.

Ready to revolutionize your rebate management? Request a Demo