Rebate Management Platform Helps Hantover to Uncover $300k In Missing Rebates
Hantover, a prominent supplier of food processing and industrial supplies in the United States, has been serving the industry for over 80 years. As a comprehensive industrial distributor, Hantover offers a wide range of essential products including personal safety gear, material handling equipment, signage, food preparation tools, packaging materials, and much more. They boast an impressive inventory of over 23,000 SKUs, many of which are necessary to meet USDA standards and ensure smooth day-to-day operations.
Since September 2019, Wes Dittmer has held the position of Chief Financial Officer (CFO) at Hantover. In his role, he oversees all finance and accounting activities, including managing rebates, real estate banking, and handling certain legal aspects of the business. Additionally, he has a dedicated team member who leads the rebate management efforts.
Rebates Go Straight to the Bottom Line
Hantover operates in a unique manner compared to typical businesses when it comes to rebates. Instead of sending out money or rebates, they actually receive them from their customers through the buying and selling process. At the end of each month, Hantover submits the appropriate documentation to the vendors they purchased from in order to claim the rebates they are entitled to.
Hantover utilizes two distinct types of rebates to support the business strategy. Firstly, they utilize deviated cost rebates (known to many as special pricing agreements, or SPAs), which involve billing customers a specific amount and subsequently receiving a refund from the actual vendor. These rebates form a significant aspect of their overall strategy. Secondly, Hantover also secures rebates based on the volume of purchases made with particular vendors. These rebates are earned through various product categories such as packaging, gloves, masks, knives and more.
Dittmer tells us, "Rebates play a crucial role in our financial operations. We receive a significant number of rebates, and closely monitoring and submitting them accurately and promptly is vital to our business success. These rebates represent millions of dollars annually for Hantover, and they directly contribute to our bottom line. They provide us with cash savings and enhance our profitability. Without these rebates, we would face the challenge of potentially having to raise prices for our customers, which could be difficult for them to accept."
Collaboration With Vendors
In the realm of finance, collaboration with vendors at Hantover is relatively limited. If any collaboration occurs, it primarily takes place through email communication. Hantover sends the necessary information to the vendors' portals to file rebates. Subsequently, vendors may have inquiries or respond via email, confirming the rebate amount awarded. Hantover's team then logs into their system to verify and track the information. Overall, on a day-to-day, week-to-week, and monthly basis, this level of collaboration encompasses the extent of vendor interaction at Hantover in terms of rebates.
While the finance department at Hantover has limited interaction with vendors regarding rebates, the purchasing department plays a more active role in vendor relationships. They are involved in selecting vendors, negotiating contracts, and determining the quantity and terms of purchases. Their goal is to find opportunities that enhance product quality while also achieving cost savings, potentially through rebates.
Dittmer says, “The purchasing department works on programs and initiatives aimed at securing the best products for our customers at a lower cost, and rebates can contribute to these cost savings. They evaluate potential vendors, considering factors such as pricing, rebate structures and other terms. Through this evaluation process, the purchasing department makes decisions based on both quantitative (cost-related) and qualitative (product quality, vendor reputation) considerations.”
He continues, “Once a vendor is selected, the finance department comes into play by handling the filing and collection of rebates. They focus on the financial aspects, ensuring proper documentation and claiming of the rebates. The collaboration between the purchasing and finance departments enables Hantover to optimize product offerings, negotiate favorable terms, and maximize cost savings through rebates.”
Prior to the implementation of Enable, Hantover heavily relied on an outdated macro that was developed over a decade ago. This macro served as an Extract, Transform and Load (ETL) tool and was the main storage system for their data. The reliance on this antiquated system forced them into manual management of rebates, which inherently introduced the risk of errors due to manual data entry and spreadsheet tracking.
The limitations of the system were evident, as even a simple upgrade to Windows 10 on their laptop could potentially compromise the integrity of the entire platform. This setup posed a significant risk, as any mishap or failure with the macro could lead to the loss of crucial rebate information. Although there were backups in place, the potential consequences would have been catastrophic for the company.
Recognizing the importance of data security and the need to mitigate the risk of data loss, Hantover made a strategic decision to transition away from their previous system. This move was driven by their commitment to safeguarding valuable rebate information and ensuring a more robust and reliable solution for managing data.
Dittmer says, "When I joined in 2019, I already knew the significance of rebates for our business, considering the substantial revenue they contributed. However, we were relying on just one person and an outdated system, which posed a significant risk. Any disruption or issue with either component would have had a tremendous impact on our operations, we were living on borrowed time."
Becoming Partners with Enable
Hantover underwent a thorough selection process to choose a new rebate management partner, driven by the need to transition away from the outdated system. Dittmer explains, “The impressive aspect of Enable was their exceptional customer engagement approach. It wasn't a simple handover or ‘train the trainer’ scenario. Enable provided a dedicated team that demonstrated an in-depth understanding of our account and consistently offered valuable assistance. We have relied on Philip and the entire Enable organization numerous times, and they have consistently delivered exemplary support.”
During the collaboration, Hantover's IT teams worked closely with Enable's IT teams, and their rebate experts collaborated to find solutions to unforeseen challenges that arose beyond the scope of Enable's system. This dynamic allowed the true strength of the strategic partnership to shine through. While signing the initial agreement is straightforward, the strength of the relationship becomes evident when navigating and resolving complex issues together.
Dittmer tells us, “The Enable team has consistently proven their competence in understanding Hantover's unique rebate structure. This knowledge instills confidence that even in extreme scenarios where the entire internal team might change, the rebate processing would still proceed seamlessly. Enable's customer focus and the remarkable talent exhibited by their integration teams surpass expectations. In fact, Enable stands out as one of the best integration partners we’ve experienced, surpassing many others in the industry.”
Dittmer continues, "If anyone were to inquire about our rebate management solution, the answer would be clear throughout Hantover. We proudly utilize Enable for our rebate needs. We wholeheartedly recommend that anyone considering a switch from their current provider should choose Enable. This recommendation extends to anyone at trade shows or similar events where the topic of rebates arises. Enable has proven to be an exceptional partner, and we confidently endorse their services."
The Onboarding Process
Hantover prioritized a thorough onboarding process and did not rush into going live prematurely. Despite initial hopes of an earlier implementation, a collective decision was made that it didn't make sense given the timing, such as being close to the end of the year and the commencement of the audit. They decided a better, steadier approach was needed and waited until the beginning of 2021 to fully embrace the new system, shutting off the old one.
Although this decision resulted in a three-month delay, it prevented potential frustration and complications that could have emerged from forcing an unprepared solution. Dittmer says, “The dedication and hard work put in by both the Enable and Hantover teams were remarkable. Everyone involved had a strong commitment to ensuring the success of the implementation, which contributed to a smoother transition and a positive outcome.”
Special Pricing Agreements (SPAs)
SPAs at Hantover are essentially similar to their deviated cost rebates. Initially, when Hantover began collaborating with Enable, deviated costs were not a primary focus for Enable's services. However, Enable made significant progress in enhancing their SPAs, assembling a skilled team that effectively supported Hantover in navigating through this aspect. Their efforts enabled a successful pivot and facilitated smooth collaboration between the two parties.
Dittmer says, "Special pricing agreements are of utmost importance to us. In our industry, we often encounter situations where our customers instruct us to collaborate with specific vendors, with arrangements involving us being charged a certain amount, charging our customers a different amount, and compensating us for the difference at the end of each month."
Dittmer continues, "I am enthusiastic about transitioning to the SPA platform as it promises to significantly streamline our manual workload. Although there is still some data uploading involved and areas such as dashboards that we aim to enhance further, we have made substantial progress from a previously challenging system to an improved one. Previously, it would typically take us around 14 days to calculate our rebates and close the month. Currently, we have reduced that timeline to under five days, and I anticipate further reduction once the SPA module is fully set up."
Improving the efficiency of the rebate management process is paramount for Hantover. Dittmer says, “By reducing the need for manual intervention, it allows employees to focus on strategic tasks and minimizes the risk of errors. The primary goal of Enable is to enhance the efficiency of the rebate process, ultimately leading to the generation of more timely and accurate information. This streamlined approach ensures that critical rebate-related tasks are handled efficiently, empowering the team to allocate their time and efforts to strategic initiatives that drive overall business growth.”
Analytics To Support the Purchasing Team
With Enable, Hantover can access analytics of their rebate performance. This plays a crucial role in supporting the purchasing department. By sharing relevant data or providing access to the dashboard, purchasing personnel can gain valuable insights while engaging with various vendors. They can quickly assess the vendor's performance by reviewing factors such as expenditure, rebates received, and pending rebate amounts.
Dittmer explains, “In the past, such comprehensive information was not readily available and required extensive manual spreadsheet work, which often resulted in outdated answers. The previous process of repetitive spreadsheet analysis was unsustainable, as it placed a significant burden on the team's workload. However, with the aid of analytics, this challenge is overcome, enabling informed decision-making without the time-consuming and error-prone manual work.”
Discovering $300k in Missing Rebate
During the integration process with Enable, Hantover uncovered instances where they had not received the full amount of rebates owed to them. This discovery came as a pleasant surprise, as it presented an opportunity to file for those missing rebates and secure additional funds for the company.
Dittmer tells us, "The transition to a cloud-based rebate management system in real time has brought about remarkable improvements. It has significantly minimized the need for manual work, leading to enhanced efficiency. Furthermore, the accuracy of our rebate management has significantly improved. During the process, we identified over $300,000 in rebates that were rightfully owed to us. By promptly reaching out to the respective vendors, we successfully claimed those rebates. This financial gain alone more than justified the investment made in implementing the new system, as it provided several times over in returns."
Reducing Key Person Dependency
Hantover’s focus moving forward is to continue cross-training individuals within the organization on various tasks related to the Enable platform. This includes training them on how to upload new programs, run reports, and input data for rebates. By doing so, they aim to have a team that is well-versed in managing rebate-related activities, allowing them to maintain a clear understanding of the rebates owed to them by each vendor at any given time.
Dittmer says, “We are determined not to be overly reliant on a single person, as we understand the potential risks associated with such dependencies. We want to avoid situations where we need to extract years' worth of information from someone's mind within short notice. This concern has been a significant focus for me.”
He continues, “We have made progress in training the team and are in the process of bringing other team members up to speed. Notably, during a recent six-week absence of one team member due to surgery, we conducted proactive training sessions in advance. Through recorded sessions and screen demonstrations on platforms like Microsoft Teams, we ensured that the necessary knowledge was shared, and we successfully managed to maintain operations seamlessly without missing a beat during her absence.”
We identified over $300,000 in rebates that were rightfully owed to us. By promptly reaching out to the respective vendors, we successfully claimed those rebates. This financial gain alone more than justified the investment made in implementing the new system, as it provided several times over in returns.