This business had used a bespoke system to manage rebate earnings for some time, but rebates were calculated at a very high level and were based on data provided by suppliers rather than their own data.
They reviewed the situation and estimated that by making calculations at a more granular level of detail, they could significantly increase the level of rebate claims within the existing deal structures.
If you manage procurement contracts with complex supplier rebates, then you may have reached the point where your current contract management system or ERP system doesn’t provide the functionality you need. That’s where a rebate management system comes in.
This building supplies company has over 50 branches and is growing. They recognised that having smooth business processes would be an essential foundation for their growth plans, and whilst most parts of the business had been systemised, the area of rebate management remained an anomaly.
With over a thousand branches and hundreds of thousands of stock items, this business had a huge issue with managing rebates. Everything was being managed on spreadsheets, and they experienced many of the usual issues such as version control and human error.
They commissioned a firm of consultants to review their options and invited several software companies to tender for a solution.
This business manages over 1m stocked items, the majority of which have some kind of associated rebate deal. Within the first 12 months of operation they recognised a 200% return on their investment in DealTrack software.
They had previously built a rebates module as part of their bespoke financial system. However, whilst this had been built to specification, over time it lacked the flexibility to manage every type of deal.
Buying Groups, as the name suggests, are formed to give buying power to smaller independent companies through purchase consolidation.
Whilst buying groups don’t typically have control over the systems implemented by members, they do need information from members in order to negotiate the best possible deals on their behalf.
Rebate Management refers to the management of discount claims that are based on volumes of purchases over time.
To some companies, that rebate is treated as a bonus. But to others, rebates form a significant proportion of their revenue and for these companies accurate management is absolutely essential.
The management and processing of rebates is challenging, with significant financial risks if something goes wrong due to loss of data or human error.
Many rebate arrangements lack support in financial accounting systems, such as targeted incentives and multistrand rebates. Keeping a track of rebates when purchasing is decentralised or where the trading agreement is made by a buying group creates further challenges.
So what can purchasers do about these challenges in order to maintain an effective management process?
Topics: Rebate Management
Today's IT landscape in most large corporates consists of disparate systems:
- Cloud apps
- On premise ERP systems
- Cloud-based ERP
- Local systems and spreadsheets
As a result, the world has moved from ERP being at the hub to integration services being the key.
2015 saw the highest level of merger and acquisition activity in the UK since 2007 according to research by Experian. In fact, over 6500 mergers and acquisitions were completed in the UK in 2015 with a total value of £433bn. This was the highest value of deals since 2000.
Topics: Mergers & Aquisitions