The true costs of not managing your rebates strategically​

The true costs of not managing your rebates strategically​

Despite the efficiency of many of today’s cloud-based tools, most organizations still have to deal with legacy systems – including rebate management ones. While it’s often easy to think, “If it’s not broke, don’t fix it”, the opposite applies when it comes to rebates. In this article, we discuss the true cost of not managing rebates strategically and share some success stories from customers who have fully embraced automation with Enable.

What are the true costs of not managing rebates strategically?

In the past, rebates have often been seen as an annoying ‘nice-to-have’ that may enhance supplier collaboration but, more often than not, lead to headaches when it comes to managing, predicting, and accruing for any costs or revenue associated with rebate programs. Previously relegated to an add-on to an ERP system or created as a well-intentioned but often clunky program or a series of Excel macros, rebates haven’t always received the love they’ve deserved.

More often than not, they’ve languished in a virtual corner, unloved and outdated. If your rebates are still sitting in spreadsheets or associated with an ERP that is too expensive or time-consuming to update, you’re not alone. According to Forrester, “approximately half of ERP customers are on releases that are two versions behind the current release, which may be four years old or more.”

Too often the thought, “If it’s not broken don’t fix it” has been applied to rebate management. But companies are losing millions each year because of outdated business management solutions that no longer serve their needs, so says a recent Forrester report.  

The challenge arises when systems are disconnected from their source data, too clunky for users to engage with, and not fit for purpose in the first place. As a result, many rebate management tools are actually siloed solutions that are frustrating to use, can create poor customer experiences, may harm sales growth are massively time-consuming to use. For example, the previously-quoted Forrester research found that APAC-based businesses were losing 12.5 hours per employee per week on manual and repetitive tasks because of legacy solutions and practices!

It’s time to give rebate management more thought and the investment that they deserve.

Why you need to manage your rebates more strategically

Managing rebates more strategically solves a raft of issues, as we explain below.

Avoid the physical costs of maintaining outdated legacy systems

First, let’s consider the cost of not moving away from legacy systems that are out of date, clunky, difficult to use, and not at all user friendly. They’re not just a drain on employees’ time, a study by Avanade found that modernizing your legacy software could lead to a 14% increase in revenue.

Legacy systems require maintenance investment, they may be prone to security risks, and if they’re run, maintained, or understood by only one or two critical resources in your business, the risk of relying on legacy systems (including complex spreadsheets) soon adds up. Strategic rebate management means moving to systems that support both current and future best practices such as centralizing your agreements, streamlining your approvals, transparency and collaboration.

Forget about having to deal with bad data

When thinking about rebate management, the cost of bad data isn’t an immediately obvious factor. After all, it’s not on the profile & loss statement. But, research by IBM has estimated that bad data costs the U.S. economy around $3.1 trillion each year. Additional research from Experian also found that bad data has a direct impact on the bottom line of 88% of US companies, with the average company losing around 12% of its total revenue.  

Once companies have decided to automate their rebate management processes with someone like Enable, the risk associated with bad data reduces significantly – but only if it’s easy to connect and analyze that data. Sadly, if there is any manual element within the process, it’s not always possible to upload data as frequently as you might like, even with the best intentions. That’s why it’s helpful to have someone like Enable’s data integration & cleansing team step in. This makes it possible to access your data more easily, makes you less reliant on IT teams, and can save a huge amount of time by reducing the need for manual data gathering and analysis.  

Claim more of the rebates you’re entitled to

Did you know that, typically, 4% of rebate revenue goes unclaimed? The complexity inherent in most rebate programs makes it difficult, if not impossible, to accurately reconcile 100% of claims. It’s easy to miss information amidst hundreds or even thousands of rows of data. Then a simple finger slip or mouse click can mess up even the best spreadsheet and cause far-reaching consequences. Sadly, despite our best intentions, humans make mistakes.  

Fortunately, it’s possible to rectify this – both for short-term and long-term gains.

For example, one of our customers, Eriks tells us that Enable’s rebate management software has already paid for itself. During rebate settlements at the end of 2021, they disputed a rebate which landed them at a higher band and netted them an additional 200k.

Another customer, GPS, was introduced to Enable shortly after realizing they were owed $500k in rebates that hadn’t been received. Now they are using Enable to align rebate structures to benefit both their vendors and themselves, and gain an extremely powerful level of detail and visibility. As a result, they have increased confidence in their finances, how to use their cash, and what investments to make. Read more about what this 100-year-old business can teach us about risk, rebates, and cash confidence in the GPS case study.

Avoid overpaying rebate

Enable’s collaborative tool also helped Stemco discover several duplicate items submitted over the past year. The system helped her locate $35k in overpayments which had previously been buried in over 5,000 lines of information! You can read the Stemco case study to find out more about why they moved to Enable and the benefits they’ve seen since then.

Get more time back and improve efficiency

Another Enable customer, Stuart Turner, have saved time and cut back on the number of staff needed. Previously, this took five full days. They can also report on the data available to them and accrue for rebates more accurately. They tell us that accruals are done straight away, and reports are available on the fly. Previously, it would take them at least two to three days to do accruals and reports using 3 people they now use 2 from finance and sales. In total, it now takes them less than 75% of the time it used to take them to manage rebate agreements, accruals, and reporting.  

We’ve heard about even better results from our customers’ customers. When a supplier collaborates with Caterforce via Enable, it saves the admin team 50% of their initial processing time for this specific supplier.

Avoid employee burnout

While the time savings associated with using the right software are clear, there is a less obvious benefit of managing rebates more strategically: helping avoid employee burnout.

If you find that your employees are spending more time to accomplish less, are less motivated, more tired, irritable, suspicious, or frustrated, and are making more mistakes than usual, it might be because they’re suffering from burnout. Over time, burnout doesn’t just reduce job satisfaction and increase absenteeism, it can also decrease productivity, result in worsening health and increased absenteeism, increase the risk of accidents, and can even lead to clinical depression, according to CanadaLife’s workplace strategies for mental health.  

One helpful way to reduce employee frustration is to make them feel supported. Some companies are investing in increased time off or employee benefits including telephone counseling. Others know that making people’s jobs easier to do and more enjoyable pays dividends in improved productivity and efficiency, as well as increased company loyalty over time.  

Strategic rebate management just makes sense

That’s why we’re not surprised that so many more partners in the B2B supply chain are turning to rebate management software. It doesn’t just simplify all aspects of rebate management, it gives people visibility, control – and a sense of comfort and accomplishment. When they know that deals aren’t just managed efficiently, they’re actually helping the business make more money and build more effective, successful, and mutually-beneficial partnerships, employee satisfaction improves.

If you’re ready to look at the benefits of rebate management, get in touch. Enable’s customers achieve 300% ROI, on average, in year three – so the benefits of automating your rebate management are soon felt. But, more importantly, the true costs of not managing rebates strategically fall away even more quickly.

Elizabeth Lavelle

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