Author: Steve Peppler
Rebates and incentives have evolved to improve sales and profitability, not to put a leaky bucket in the system or strain relationships. By embracing intelligent automated rebate management, businesses can unlock their true value. No discrepancies or disputes and no revenue leakage, as the author explains. Steve Peppler, a founder of Flintfox, has extensive pricing experience honed from senior finance and sales management roles at Kraft, Pepsi, Western Digital and Hewlett Packard. During his 20 years at Flintfox, Steve has worked closely with distributors from all sectors and all regions, developing pricing solutions at companies including US Foods, WESCO/Anixter, SiteOne Landscape Supply, PartsTown, Opici Distribution, Sonepar Norway, PJP, Sarnova, Horizon Beverage, Dagrofa FoodService, L&F Distributors, and CERTCO.
Right now, consumer goods businesses are turning over every stone to seek out ways to improve profitability - from cost savings to price rises. So, for any business operating an incentives and rebates program, this should be the first place to look.
As an essential part of the retail-manufacturer model, incentives and rebates have the power to boost sales and strengthen relationships, but they can also be a cause of added friction and lost income. As rebate programs have become ever more complex with various tiers, thresholds, and terms and conditions, it’s become almost impossible to manually manage them efficiently and effectively, leading to issues.
This complexity in rebates regularly results in errors which are estimated to cost businesses $3.07m on average every year. No business can afford this kind of revenue leakage, but for manufacturers operating on lower margins where rebates are a large contributor of profit, this can be catastrophic.
Another common rebates pain point is the struggle to manage the added complexity that arises when brands sell through various alternative channels. New channels create additional layers and processes for rebates, and without having all data in one central location, tension can arise from inconsistent execution.
Rebate processing errors inevitably lead to disputes, which are time consuming to resolve and create cashflow headaches. With inflation causing mounting tension in manufacturer-retailer relations, rebate discrepancies can damage relationships even further.
The solution so far has been to throw more bodies at the problem, manually spotting and rectifying these errors, but this is another money drain. One consumer goods manufacturer was experiencing disputes on 90% of its rebate claims, which required a team of six people dedicated to unpicking the issues. Unlike other areas of finance or operations, rebate management has been slow to embrace change. But, by transitioning to intelligent automation, businesses can eliminate errors without additional resources.
Pricing automation and rebate management systems can handle the entire process from start to finish - rebate creation, submission, validation, and payment. Everything is managed in one easy-to-use place, and fully automated.
Sell-side, automated intelligent rebate management automatically accrues the expense, verifies the eligibility of the rebate claim from customers, and ensures that all required documentation has been submitted.
Buy-side automatically generates accurate and timely claims to land swift payment while providing clear and auditable backup details to speed up vendor approval.
By using these types of systems, businesses can gain real-time visibility into how their sell-side rebate programmes are performing and where changes to terms might be needed to improve margins. With buy-side rebate management, you have an accurate and up-to-date rebate balance sheet to ensure you’re not leaving money on the table, and can ensure prompt payment by suppliers.
If errors are made during contract setup, automated systems can automatically generate adjustment accruals to ensure accrued amounts are correct. You can also track progress against rebate tiers and then adjust purchases to achieve a higher tier and maximize margins.
Rebates and incentives have evolved to improve sales and profitability, not to put a leaky bucket in the system or strain relationships. By embracing intelligent automated rebate management, businesses can unlock their true value. No discrepancies or disputes and no revenue leakage.
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