How to improve cash flow with a rebate management system

How to improve cash flow with a rebate management system

Cash flow refers to the amount of cash coming in and flowing out of a business. Having a positive cash flow means that more money is coming into the business than going out.

Without positive cash flow, you won’t have the capital available to make purchases and keep your business running - even if you’re profitable on paper. 

The recent global pandemic has made it incredibly challenging for businesses to maintain their cash flow, especially when wholesalers delayed their payments to their suppliers, having a knock-on effect throughout the supply chain. Manufacturers, for example need positive cash flow to purchase more raw materials or components to keep the production line moving. Unfortunately, when both are reliant on manual processes this can really slow down cash collection and visibility into their financial data.

We’re here to discuss why using a rebate management system gives you the capability to streamline processes, increase visibility and ultimately improve cash flow.

Common cash flow issues in rebate management:

  • Lost invoices
    The larger the organization, the more likely this will happen because they’re dealing with so many invoices. Losing invoices could also come down to poor rebate accounting practices in your client’s business. If they don’t have the right people and processes in place then their account payables will be a mess too.
  • Late payments
    It’s a sad fact that some industries are notorious for late payments. Some individual suppliers may also think it’s fine to just pay late and try to string it out for as long as possible. Establishing clear payment terms from the outset is crucial. If payment terms are not agreed, you do not know when you are going to be paid, it will be difficult to improve cash flow and you may face difficulties pursuing a debt.
  • Disputes with suppliers
    If there is dispute over the quality of the product provided or the rebate agreement terms, this can lead to frustration and mean payments can be held back until it has been resolved. Many problems and errors can be due to complex calculations. It is therefore important to get to the bottom of the issue as quickly as possible because the longer the dispute goes on the longer it will take to be paid.
  • Excess inventory
    Excess inventory ties up working capital. Products which sit in a warehouse are not getting sold, which means no money is coming in, effecting cash flow. This could happen because of a change in buying patterns due to the pandemic. For example, you might be seeing increased demand if you manufacture ‘essential’ items, or a decline in demand for non-essential products.

A rebate management system can help you improve your cash flow in the following ways:

  • Real time reporting

Many companies now struggle to understand their cash flow simply because they lack the data. Rebate management systems provide you with accurate, real-time reports. These easy-to-run reports can help you keep a close eye on your cash flow and will help you make informed decisions surrounding your deals. More importantly, you can see how your cash flow fluctuates on a daily, weekly, or quarterly basis.

For example, in Enable we have built a debtors report which allows you to browse and filter a list of trading programs in order to provide a summary of the due and overdue rebate, grouped into aged time periods per trading partner per trading program. Additionally there is also our payment allocation report inside our finance app, where payments can be recorded, allocated and adjusted.

  • Automation

Think about all the times you have had to manually key in financial data into a spreadsheet that could be bursting with errors. Now that financial data can be easily automated in a rebate management system saving your team considerable time, thus freeing up personnel for other tasks. A rebate management system allows you to manage more deals without having to hire more people and you can reduce the chances of having inaccurate data which means better cash flow.

  • Clearer visibility into your rebate deals

A rebate management system will provide each user, across every function, access to real-time information that's automatically updated. This means you can stop using spreadsheets, which lead to errors and delayed information. With a rebate management system, everyone is on the same page and everyone has access to all vital information required to keep cash flow on track with seamless collaboration. 

  • More accurate data

Your business relies on historical financial data to make critical decisions. When your data is wrong, you base your decisions on bad data. Improving cash flow starts with the accuracy of your financial data. Get your data right and you can make better deals with greater confidence. 

With Enable, you have the option to use the Snapshots application which aims to seamlessly bridge the interface between Trading Programs and your in-house accounting solution. Finance snapshots facilitate the export of data to feed your ledgers and records and produce snapshots of your data at the exact date and time it was taken. 

  • Get paid faster

When it comes to improving cash flow one of the biggest issues is late payments from suppliers, so a proactive approach is needed to resolve this problem. The best way to do this is to implement a tool that lets you upload all your deals into one system, you can then keep track of your deal performance and get automated alerts when the rebate is ready to be paid / claimed.

  • Never miss a rebate claim again

Missed rebate claims directly impact the bottom line. Even rebates that are not missed take significant man hours and elapsed time to calculate and claim, leading to cash flow being damaged and unnecessary bank interest being incurred.

If you could get your finance team to put together the information in support of a rebate claim within hours of the submission (instead of days or weeks), then your cash flow is instantly improved. But we know this isn't the case for those who use manual rebate processes like spreadsheets and therefore 4% of rebate goes unclaimed for many organizations.

Are you ready to improve your cash flow?

Growing organizations like distributors, manufacturers and retailers need to keep the cash flowing to take advantage of opportunities and overcome challenges. Outdated rebate accounting systems and spreadsheets force your finance teams to spend time on manual processes that slow cash down as well as limiting your view into your cash flow. A rebate management system like Enable gives you real time transparency into your sales made and rebates owed, so you can see how much money you are really making.

Elizabeth Lavelle

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