The role of procurement in business involves everything from identifying which goods and services the company needs. To assessing and selecting vendors, negotiating terms and prices, approving invoices, arranging payments and maintaining the right documentation and records.
It is a highly strategic role that directly impacts a company’s profit.
Procurement leaders have many responsibilities:
- They must ensure not only that their teams are acquiring goods and services at the best possible price at all times,
- And that all tasks are implemented efficiently, so as not to eat into the organisation’s profitability through slow processes, missed opportunities, and high staffing costs.
Unfortunately, procurement inefficiencies are not uncommon and are costing organisations around the globe millions. In the form of delayed purchases, missed discounts and rebate claims, transaction disputes and time wasted struggling with outdated tools like spreadsheets and emails.
A 2019 survey from Ivalua, a spend management company, found that UK procurement professionals spend 31%of their time dealing with inefficient paper-based or manual procurement processes.
These inefficiencies within the procurement cycle have cost businesses circa £1.94 million annually and limiting procurement teams’ ability to deliver more strategic value. Two-thirds of businesses admitted that they were still relying on such processes.
The survey also found that 71% of respondents believe the rate of digitisation in procurement is low. With 64% saying that the lack of efficient digital tools is holding them back from doing their jobs.
Overall, 85% of respondents view the process of procurement and supplier management function as less digitally mature compared to other departments, such as marketing and human resources.
“Procurement is perfectly placed to help manage the growing risk landscape, support innovation and create sustainable cost savings,” said Ivalua CMO, Alex Saric.
“However, the lack of digitisation is holding procurement teams back."
Whilst functions such as accounting and marketing have embraced digitisation and made great strides over time. Procurement at most organisations has remained a digital laggard, leaving many businesses unprepared to face today’s rapidly shifting business landscape.”
Problems in Procurement
One area of procurement in particular, where technology is often found to be lacking – and thereby costing organisations– is in rebate management.
We have worked with countless companies whose procurement teams have negotiated rebate deals that are so complex that their existing systems – usually based around spreadsheets – simply cannot cope with them. As a result, the financial benefits of the rebate agreements that have often been painstakingly negotiated are missed, affecting profit margins and company performance.
When it comes to procurement in business, if the organisation doesn’t support rebate management and does not have adequate technology to monitor and analyse trading agreements in real-time.
This can lead to problems like unclaimed and inaccurate rebates which then impacts revenue.
Add to this the fact that poor rebate management can easily lead to inaccurate budgeting and forecasting.
In turn leading to a misreporting of profits which can result in auditing and compliance problems from regulators and it becomes clear that relying on outdated systems is a recipe for disaster.
Many procurement teams still use spreadsheets to monitor purchasing activity, conduct calculations and make rebate claims. However, relying on spreadsheets is notoriously error prone, involving many hours of manual processing that is as costly as it is time-consuming.
Problems arise from:
- Data entry errors and omissions
- Spreadsheet version control (resulting in multiple versions of the truth)
- Time delays in reporting, inaccurate purchase history analysis and an inability to effectively mine data to model the impact of proposed changes to deal terms.
This information is crucial as it provides a strong foundation for better negotiations and ultimately better margins.
Collaboration between purchasing and finance teams is also impacted.
For each rebate deal negotiated, the details need to be efficiently communicated between all parties. This is to ensure the accuracy of all calculations, and the right actions are taken by the right people at the right time. So that all rebate revenues are claimed and accounted for.
This is crucial for everything from reporting and forecasting to predicting cash flow and audit compliance.
Old-fashioned spreadsheets are not ideally suited to be shared between multiple people. Duplicate data entries, information overlaps, confusion over which version of the spreadsheet is the latest – all leads to errors and inefficiencies.
What’s more, when data pertaining to multiple deals is contained within almost inscrutable spreadsheets, not only does the complexity become overwhelming.
But procurement cannot gain a good hold on all the information needed to negotiate the best possible deal.
Why Utilising Rebate Management Software Is a Best Practice for Procurement
When it comes to rebates, the best practice for procurement in business is to eliminate the age-old reliance on spreadsheets. And adopt a powerful technology solution that can streamline processes, close communication gaps, and improve speed, efficiency and accuracy.
That solution is rebate management software.
One of the key roles of procurement is to negotiate terms that provide the best pricing for more profitable purchasing decisions. A reliable system is required where all the details of rebate calculations and agreements are made transparent.
Only by having a full understanding of the impact that rebate payment terms and volumes can have on the business can procurement start to negotiate more effectively.
This can be accomplished by having a single view shared by both finance and procurement of all rebate deals and communication of bottom-line impact.
This is precisely what rebate management software gives buying organisations – and much more besides.
Rebate management software provides one single access point where purchasing teams can input information on any deals that are made - and where finance teams can easily review and sign them off.
Closing the gaps in communication and realising greater efficiencies.
With a rebate management solution, all data is tracked and automatically calculated against agreements in real time, giving all stakeholders maximum visibility, complete predictability, and total reliability.
What’s more, a rebate management system will allow you to create systematic workflows.
Any changes to a rebate agreement of course need to be audited, with approvals granted at the appropriate level. Often, when organisations are relying on outdated systems, there is no clear process or authorisation workflow in place that defines roles and responsibilities for each stage of the process.
However, with rebate management software, organisations can take advantage of configurable workflow engines. With systematic workflows, the segregation of duties is ensured, meaning key actions taken within the system are authorised at the right level, improving accountability, mitigating business risk and ensuring compliance.
Systemising processes in this way ensures that all information is clear, visible and easily accessible to both internal and external auditors.
In addition, the best rebate management software solutions also come with powerful deal modelling tools. Which allows procurement teams to forecast and evaluate the potential impact of potential deals before committing to them commercially.
The software allows for “What if” analyses on individual agreements so teams can understand the impact should underlying rebate conditions change, such as an increase in rate or a change in supplier.
As such, procurement is empowered to make better commercial decisions that improve the bottom line.
Improve Your Processes and Increase Negotiating Power with e-bate – The Ultimate Rebate Management System
Having a firm handle on rebate management is crucial for procurement management teams that want to reduce costs of operations, improve accuracy, gain increased negotiating power and drive their organisation’s profitability. This can’t be done when relying on spreadsheets that result in missed claims, inaccessible data and broken communications with finance.
Instead, the system needs to be digitised for the modern era – and a powerful, feature-rich and built-for-purpose rebate management system is the only solution.
e-bate’s intuitive rebate management solution is a purpose-built platform delivered as SaaS, designed to help companies structure and optimise their rebate management processes.
Our rebate management software comes with a built-in calculation engine that will help you calculate all types of rebates. Whilst allowing you to track and analyse all data against your agreements in real time.
In addition, our robust deal modelling features allow you to make rapid assessments of the benefits of any deals you are negotiating.
The platform automates every element of the rebate process. From eliminating spreadsheet reliance, reducing overheads and helping companies manage pricing and increase revenues and profit while ensuring compliance through a full audit trail and comprehensive approval workflows.
e-bate is your single source of all rebate information, providing you with the insights you need to make proactive decisions that drive business value.