Rebates are a huge part of any merchant or wholesale business and managing them has always been a challenge. Often complicated, many merchants return to what they know or how they have always dealt with them. This can lead to missed opportunities to achieve better margins and grappling with the administrative burden involved. The establishment of a thorough rebate structure and management system could mean the difference between a profit or loss.
Rebate Management: The Difference Between Profit & Loss
As rebates are such a huge part of any merchant or electrical wholesale business, effective rebate management is crucial. Rebates create a clear incentive to drive sales growth and if managed correctly they can be mutually beneficial. However, complexities surrounding rebate structures can make them difficult to manage, especially if you are using outdated technology or software that isn’t aligned to your industry.
For small to medium businesses, rebate can make up the majority of their profit and for large businesses even a small improvement in process can lead to the discovery of millions of pounds, therefore it’s essential for any company dealing with rebates to scrutinise their current rebate management process and consistently strive to improve it.
Did you know?
4% of potential rebate revenue typically goes unclaimed.
Rebate Management & Your ERP System
We would strongly advise articulating your rebate process and automating the management of your rebates in your merchant or wholesale-focused ERP software solution. Managing rebates in Excel can lead to an increase in human error, lack of transparency, and double data entry; it’s a slippery slope. Modern business software designed for the merchant and wholesale industry has been developed to handle the intricate world of rebate management. They come with pre-built functionality and flexibility to support complex rebate rules or even bring in group results to give a more realistic rebate value. It will also make it easier for you to capture and represent the different rebates that span the industry, from guaranteed percentage/amount to flat, tiered, or incremental.
Your ERP software should enable you to;
• Define what, how much and when you can claim and pay your rebates,
• Easily track and claim money due from suppliers and money out to customers in a timely manner,
• Ensure product costings and any related reports reflect rebate discounts.
At your trade counter you can even ensure potential rebates are calculated on every purchase order and delivery line if you wish. Audit trail functionality in your software will also give you full historical traceability of every rebate due from every transaction line. In addition, rebates due can be automatically accrued in your integrated General Ledger as well as giving you the option to recalculate rebates due when thresholds are crossed. Given the right permission, you can also view the potential true margin based on ‘net net cost’ as part of your sales transactions, helping you make the right decisions when discounting. This level of visibility and control ensures rebate terms are fully adhered to minimising profit leakage or rebate disputes.
Your ERP software also helps you proactively manage your rebates. Rebate Management involves easy tracking of progress, pro-active notification of rebates due and where threshold boundaries are close. The administrative savings here are huge if effective rebate management is alive and well in your business.
If your ERP system lacks this level of rebate functionality it may be a generic software solution that caters for multiple industries failing to recognise the requirements you need to effectively manage your rebates. You can always look at investing in a dedicated rebate management system or look to industry-driven ERP solutions, like Intact iQ, developed to accommodate and optimise industry specific ways of working.
We hope you’ve enjoyed this short overview of effective rebate management. If you need help refining and optimising how you manage your rebates, we can help. Our future-ready business management solutions are tailored to your industry, so you can get more from your processes, systems and software no matter what your goals and objectives. Our Outdated Software Holding You Back? whitepaper could help you identify where your systems could be working hard for you.
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