As a buyer, accurate management of your supplier rebates can be an exceedingly complex affair. In the B2B world, your suppliers will offer rebates as a means of incentivising you to purchase more volume and lock you in for the long term. The rebate offered is essentially a discount – though one that is only paid once you as a buyer, meets a set of previously agreed conditions.
So, rebates serve to ensure the lower price is only given after you have made the full purchase volume, rather than shouldering the risk of providing the discount upfront as a reduced purchase price.
Rebate programmes are now common in most B2B industries – including pharmaceuticals, automotive, construction and fast-moving consumer goods (FMCG). They may be offered as growth incentives (where your supplier rebate applies based on incremental growth in orders), product mix incentives (to encourage buyers to make purchases across a range of products) or as various other conditional discounts. As a buyer dealing with multiple rebates from multiple suppliers – each with varying terms and conditions – managing supplier rebates is inevitably complex.Nonetheless, the effort is worth as once the process is conducted accurately, you can ensure that you’re not missing out on claims that are rightfully yours.
In addition to the rebate itself, buyers must be sure that they really are negotiating the fairest price. It pays to do your research to check that the price offered by one supplier, when factoring in the rebate, better than a competitor’s upfront purchase price?If you have reliable quantity forecasts, this should be relatively simple and will enable you to negotiate the best rebate deal possible. However, it’s also important to remember that the market may change during the course of the agreement with one supplier and that opportunities to make savings by switching to another may emerge. Be aware that should you switch before you’ve met the terms of the agreement, you will lose the rebate. On the other hand, you could end up paying more for your volumes by not switching to a competing supplier just so you meet the required volume to qualify for the rebate from your existing one.
What’s more, you must be sure that you are managing rebates in such a way that you are not losing time and money chasing up claims, effectively negating the intended financial benefits of the agreement.
With so many intricate considerations and moving parts across multiple deals to contend with, it’s essential that your supplier rebates are set up, tracked and managed in an efficient and reliable way. To do so,rebate management software is required to ensure that you keep a firm handle on all the figures and that the complexities involved with managing supplier rebates do not outweigh the commercial benefits they are supposed to realise.
Who’s Really Managing Supplier Rebates?
One of the biggest mistakes buyers can make is to leave it up to the supplier to conduct all the relevant rebate calculations, trusting that the sums all add up with no way of validating the figures themselves. This is, of course, a high-risk strategy, as calculations may be inaccurate, leading to erroneous settling of payments owed or the rebates being forgotten altogether. What’s more, when only one party has access to the figures, disputes over claims can erupt, damaging relationships and leading to time-consuming exchanges between parties.
Further problems can occur even when the buyer keeps track of rebate claims using outdated methods for the task, such as spreadsheets. Spreadsheets are no longer up to the task of managing the multitude of complex, modern-day rebate claims and agreements that today’s buyers have on their plates. There is just too much data involved with a rebate programme for a spreadsheet to handle. Some supplier rebates will be based on purchase volume, others on percentages and still more on product mix or repeat purchases over time. Many changes may also occur during the lifecycle of an agreement – yet many organisations still attempt to maintain all the information by hand. Inevitably, errors are made, leading to companies missing out on claims and therefore margin erosion.
Take Back Control
Rebate management software provides the solution. With such a system in place, all contracts, agreements, data and calculations are centralised in the cloud, providing a single source of truth that anyone with the right permissions can access at any time, eliminating all ambiguity and potential for dispute.
Today’s most powerful systems come with built-in real-time calculation engines which quickly and accurately calculate all prices and discounts that have been agreed upon and even recalculate rebates when things change. The software also allows you to set up automated alerts and notifications, ensuring that important dates are never missed and that you are collecting all payments owed on time, every time.
A sophisticated Rebate Management system will also come with robust forecasting and deal-modelling features, allowing you to plan different rebate scenarios. The software allows you undertake “what if” analyses on individual agreements to understand the impact of changing factors such as your suppliers or a rate increase.
This means that you can determine which rebates and pricing incentives offer the best return before agreeing them commercially, supporting better decision-making and ensuring that you do not agree to rebate deals that are loss-making.
Manage Supplier Rebates the Right Way with e-bate – The Ultimate Rebate Management Solution
In order to manage supplier rebates successfully and reap the financial rewards they can bring to your organisation, a powerful, feature-rich rebate management system is the only solution.
e-bate’s intuitive rebate management software comes with a built-in calculation engine allowing you to track and analyse all data against your agreements in real time, while our robust deal modelling features allow you to make rapid assessments of any deals you are negotiating. Our purpose-built platform automates every element of the rebate management process, eliminating your reliance on spreadsheets while giving you full visibility into all calculations at any time. 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.