Frictionless finance is a brilliant concept. But is it a reality or a pipe dream? In this article, we focus on one of the financial processes that are often overlooked – managing rebates – and discuss it in the context of efficiency. Read on to discover what factors often prevent efficient rebate management processes, why efficiency is important, and how to achieve efficiency and work towards the utopia of frictionless finance.

What prevents efficient processes

Ideally, every step of the financial journey should work smoothly: From when a customer makes a purchase to the accurate payment of rebates. A disconnected process is an inefficient one. Unfortunately, the real world is far from ideal though. Financial transactions rarely flow through a business seamlessly. We’ve said it before: “With large volumes of information, data is spread across an array of sources such as spreadsheets, emails, and paperwork; which only increases the likelihood of errors and inconsistencies in the financial process.”  

Two factors often prevent efficient financial processes: Having the wrong set of skills within your finance function or having inefficient, disconnected, or (quite frankly) the wrong systems.

To address the first of these issues, taking a long, hard look at the systems you’re using is essential. As SpendDesk reminds us, it’s helpful to ask, “Are these systems fit for purpose?” and “Are they holding us back?”

It’s also critical to enable team members to do their jobs as efficiently as possible and to make the most of their time. Rebate management may be an afterthought for many companies, but it is possible to move rebates from an afterthought to a strategic business tool. The secret lies in using the right tools for the job. (No, that’s not Excel.)  

The importance of having an efficient rebate process

An article in Spend Journal reminds us that, when it comes to most financial processes, “10 years ago, you needed someone sat at their desk processing payments and updating the general ledger. Today we can automate much of that. If the data flows are set up correctly, then there should be only minimal manual intervention needed.”

Sadly, this utopia has been far from the truth for many organizations when it comes to rebate management. For example, before they used Enable to manage their rebates effectively, Shaina Wan of United Aqua Group explained their inefficient process for managing rebates.

“[Before Enable] We’d sit a couple of people in a room with a big calculator and a lot of whiteboard space. We’d pull volume reports from our internal systems, and we’d take each individual vendor’s program agreement, and manually calculate how much rebate each of our buyers was owed. It took months.”  

- Shaina Wan, Strategic Vendor Partnerships Manager, United Aqua Group  

Today, life is significantly better. “Enable actually gave us more value than what we were planning on. It increased efficiency. We have saved time. It's really helped us set ourselves up for growth.”

It didn’t happen overnight, but a formalized rebate management process brought efficiency to their lives through automation that completely transformed their rebate experience.

What an efficient process looks like, generally

Efficient processes might, intuitively, feel like a beauty to behold. In reality, the opposite is true. No one notices them because they just work quietly in the background. In finance, generally, CFOs can start to make their finance processes more efficient by implementing any of the following seven steps that FinanSys suggests:

1. Identify and address productivity killers
2. Train your finance team
3. Automate manual processes
4. Communicate clearly
5. Integrate with other departments
6. Remove redundant processes and
7. Give your finance team the right tools to work with.

What an efficient rebate process looks like

But when it comes to rebates, an efficient rebate management process applies these principles precisely.

An efficient rebate management process begins with the commercial or sales team proposing rebates. These are then negotiated and agreed upon between both parties. Legal teams may be involved in reviewing contracts until they are signed and then stored. At some point, commercial, marketing, or sales teams should check the progress against deals. Finally, rebate agreements are reviewed and paid, depending on the targets met.

An efficient rebate process allows teams to work together effectively, review contracts regularly, keep track of deals, and make or collect accurate payments on time based on correct data. As a result, partners can collaborate more effectively, internal departments are more closely aligned, and it becomes easy to pursue new opportunities for mutually-beneficial growth.

Automation

According to research on digital finance transformation by Gartner, sixty-nine percent of business leaders say digitalization initiatives are accelerating, and most expect digital technologies to transform their industry dramatically by 2026. So, it’s hardly surprising that the crux of an efficient rebate process involves automation. When processes are automated efficiently, people can get excited.

Keep track of your deals

A rebate management system allows you to systemize and automate every element of a rebate deal accurately and automatically track purchases and sales against agreements.

Jerome Dziechiasz, Senior Category Manager at CarParts, says, “Before [Enable], it was almost nearly impossible to be able to track and reconcile those types of rebates. Having Enable and building it custom-tailored for our needs has really helped a lot.” Enable’s rebate management software provided a tracking system they could build from the ground up and then customize to fit their needs. He says, “It's been great. It's been accurately tracking all of our rebates and we couldn't be happier. It's not just a cookie cutter option like some of the other options that are out there. Enable fit the bill.”

Pay and collect accurately and on time

For all partners involved in rebate management: suppliers, manufacturers, distributors, retailers, and buying groups, one of the greatest frustrations is payment inaccuracy and delay. After retailers have implemented an efficient rebate process, they often discover that they were missing out on deal earnings to which they were entitled. Parties who pay out rather than receive rebates have also discovered overpayments they were unaware of before they used software to make their rebate process more efficient.  

Inaccurate payments and delayed payments sour relationships between trading partners, but they also create problems for accruals, which can impact financial reporting and, potentially, even make the difference between a company’s profit and loss if rebates make up a significant element of their earnings.

That’s why Bob Gay, Manager of Customer Profitability and Rebates at AAP, says automation was vital for them. “Rebate management software ultimately pays for itself in both customer satisfaction and in accurate, timely payments, as well as by allowing us to analyze which rebates programs work and which don’t work.”

Increased rebate visibility

At the height of the COVID crisis, Workday conducted a study on frictionless finance with 267 CFOs. According to their research, 49% of CFOs said their organizations’ biggest gap was the ability to execute with accurate, timely data to drive quick, informed decisions. COVID helped them realize that quick decision-making was severely hampered without access to information at their fingertips. In fact, 52% said the lack of necessary data to make critical decisions had resulted in delayed product launches and missed financial forecasts. But, with 49% saying data management and analysis are their top priorities over the next three years, we wondered: Are CFOs extending their full financial remit to cover rebates, too?

Correct data

An efficient rebate management process relies on connected data. Connected data supports correct data. Disconnected data prohibits it.  

To ensure your systems are helping, rather than hindering, your data flow, the first point to consider is whether they are integrated effectively. Spend Journal suggests asking, “Does information flow through them in an automated way, or does it require a manual download and then some kind of lengthy manipulation of the data to then upload it into a different system?”  

At Enable, we help organizations ensure their data flows smoothly, regardless of the source. Our data integration and cleansing service ensures that clean, accurate data can be imported from your ERP or other source systems from day one so you never end up with ‘garbage in, garbage out.’

Embracing partner collaboration

In their research on taking supplier collaboration to the next level, McKinsey & Company reports, “When buyers and suppliers are willing and able to cooperate, they can often find ways to unlock significant new sources of value that benefit them both.”

That’s what happens when an efficient rebate process is used as the bedrock of solid partnerships and all partners use the same efficient rebate process: Adversarial relationships become truly collaborative.

Stronger cross-departmental alignment

The complexity of many rebate deals means details can often get lost in translation. With efficient rebate management processes, however, finance, procurement, sales, purchasing, and commercial departments can determine the exact details to identify whether a deal is working and how and when partners should be reimbursed. Moving towards a more efficient rebate process helps bridge the gap between purchasing and finance teams.

Having access to all relevant rebate data doesn’t just improve data and rebate calculation accuracy; it also helps all parties communicate more clearly, based on the facts. As a result, every element: From growth incentives to margin maintenance and specific promotions, can be tracked, assessed, and rewarded appropriately. No mess, no fuss.

Pursue new opportunities

An efficient rebate management process can also help you turn rebates into an engine for growth. By removing the administrative burden associated with rebates, companies can harness their strategic potential to optimize rebate management, maximize revenue with data-driven insights and unite trading partners through seamless collaboration.

Matt Freedman, Director of Finance at GPS, says that rebates can play a very large role in the profitability of the business by helping identify opportunities to improve deals and rebates. Matt says, “If we’re able to align our rebate structures in a way that benefits both our vendors and ourselves, then it’s in our best interests to deliver for their needs in order to succeed for our business. Therefore, the ability to identify areas where there are opportunities to make purchases and push ourselves further into different buckets is a level of detail and visibility that is extremely powerful.”

GPS has actively pursued new opportunities while improving vendor relationships thanks to their new, more efficient rebate process.

How you can improve on yours – implement a rebate tool

This blog post has provided many examples of how Enable's customers have benefited from implementing a more efficient rebate process using the right software.

If you think rebate management software might benefit your organization, get in touch. You can also sign up for a free trial. We'd love to answer any questions you might have.

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