Using the Right Tool for Your Rebate Program
Rebate programs are powerful incentives for businesses to improve sales, drive behaviours, build relationships with trading partners and boost revenue growth. However, managing rebate programs can be a complex and time-consuming task.
To streamline the process and maximize the benefits of rebate programs, it's crucial to use the right tools. In this blog post, we'll explore the pros and cons of three common options: spreadsheets, enterprise resource planning (ERPs) tools and rebate management platforms.
Using a spreadsheet for rebate management might appear convenient initially due to their accessibility and simplicity. However, this seemingly efficient solution can quickly become unwieldy and problematic. Spreadsheets lack the specialized features required to ensure accuracy and efficiency in rebate management.
Consider the daunting task of manually inputting rebate data for hundreds or even thousands of transactions. Not only is this incredibly time-consuming, but it also significantly increases the risk of errors and data inconsistencies creeping into your records. When multiple individuals are accessing the same rebate spreadsheet, version control becomes a nightmare. Imagine scenarios where your accounting team creates a copy for remote work, forwards a link to someone in procurement, and soon enough, you have no certainty about which spreadsheet holds the correct information.
In addition to version control challenges, spreadsheets are susceptible to errors and inconsistencies, especially when multiple collaborators are involved. With numerous numbers and intricate formulas to manage, even the smallest mistake can have far-reaching consequences. This can result in delays in processing rebates and, worse yet, incorrect rebate payments being disbursed to customers and missing out on collecting your owed rebates.
To back up our point, we discovered that businesses relying on spreadsheets for rebate management often miss out on at least 1% of the rebates they are owed, equating to a staggering $218,829 left unclaimed each year. In contrast, companies leveraging dedicated rebate management software typically enjoy a 1.82% increase in earned rebates, amounting to an extra $182,000 for every $10 million in rebate income.
While many ERP systems come with rebate management features for recording contract terms and calculating accrued rebates, a closer look reveals that standard ERP functionality might not always be flexible enough to deal with the complexities of intricate rebate programs. ERPs are primarily focused on current data and often aren’t lack capabilities that allow you to go back and adjust past transactions retroactively.
Rebates also involve intricate collaboration between different parties, where both the company and its suppliers or customers may have their own interpretations of the facts. Data inconsistencies or differing interpretations can result in discrepancies in the numbers. Given the significant financial stakes in rebate programs, these discrepancies can have substantial financial consequences. ERPs are not inherently designed to handle these collaborative and retrospective aspects, which further complicates their integration with rebate processes.
Additionally, implementing an ERP system can be a lengthy and intricate procedure. Configuring the system to effectively manage complex rebate structures often demands extensive customization, which extends the time and costs involved in the implementation process.
ERP systems have a clear role to play in helping businesses become more productive, which is why rebate management solutions can be directly integrated with them but it’s time to understand when to move outside your ERP.
Rebate Management Software
Rebate management software stands out as the optimal tool for handling your rebate programs due to its specialized functionality. In contrast to spreadsheets or ERPs, rebate management software is designed specifically to meet the complex needs of rebate tracking, validation, and processing.
Businesses contend with a diverse array of rebate types, making it imperative to have a platform that accommodates them all seamlessly. A comprehensive rebate management platform should possess the capability to capture various rebate deals, such as special pricing agreements (SPAs), volume rebates, commissions, promotions and more. This empowers businesses to create unique agreements tailored precisely to their specific requirements, enabling them to refine their rebate strategies effectively.
In addition, rebate management software provides you with control by delivering real-time data and analytics. This instant access to the performance of your rebate programs empowers businesses to make informed, data-driven decisions and swiftly adapt to shifts in market dynamics, thus elevating the quality of decision-making.
The days when rebate management rested solely within the purview of one individual or team are long gone. To fully unleash the potential of rebates, collaboration and contribution from all relevant departments—such as sales, purchasing, and finance—are essential. This necessitates a collaborative rebate management system that grants transparency to all stakeholders within your business. Furthermore, extending this transparency to external partners ensures that timely and accurate rebate payments are received. This fosters trust and satisfaction, thereby strengthening vital relationships with key stakeholders.
Enable's rebate management platform stands as a testament to the power of comprehensiveness, collaboration and control. These themes have guided the creation and evolution of the Enable platform, resulting in a robust and dynamic solution for all your rebate program needs.
What Tool Should You Choose?
Choosing the right tool for your rebate programs is a critical decision that can impact your business's success with rebates. Spreadsheets, ERPs, and rebate management platforms each have their own set of advantages and disadvantages.
Spreadsheets are a good starting point for smaller businesses with simple rebate programs, but they become less efficient as programs grow in complexity. ERPs offer integration and automation but can’t handle the volume and complexity of rebates. A rebate management platform strikes a balance between efficiency and complexity, making them an ideal choice for many businesses, especially those with medium to large-scale rebate programs.
Ultimately, the choice depends on your business's specific needs, budget, and growth plans. Carefully evaluate your options, considering the size and complexity of your rebate programs, and make an informed decision to optimize your rebate management processes.
If you’re in the process of evaluating a rebate management system, read about what to look for in a rebate management system.