Due to the intricacies of most supplier trade agreements, rebate accounting is a notoriously complex operation. Many organisations still manage their rebates with spreadsheets or rely on their suppliers to make the calculations, despite this leaving them at high risk of errors and omissions that could lack audit compliance and lead to significant revenue loss.
To improve upon your current rebate management system, it’s necessary to take full control of the rebate process and the difficulties that arise from trade agreements.
1. Spreadsheet replacement
Manual processes, such as calculating rebates in spreadsheets, can’t successfully do the job alone in large companies, or in fact even in small companies if they’re managing complex trade agreements with various combinations of rebate arrangements.
Wherever possible it’s advisable to avoid using Microsoft Excel® as a stand-alone rebate management system. Not only is a spreadsheet environment limiting in its inability to handle volume-based complex trading agreements, it’s also open to risk.
Calculating retrospective income manually leaves organisations open to error and inaccuracy, which in turn impacts reporting, forecasting, profit margins, cash flow and audit compliance.
It’s essential to implement a process that supports what your spreadsheets might be missing.
When implementing DealTrack, many companies choose to set up existing deals first to find out what is missing, and are surprised that despite good controls, and comprehensive spreadsheets a substantial amount of rebate income has been missed - around 4% on average.
2. Bridge the gap between purchasing and finance teams
The inconsistencies that surface from managing rebates and retrospective income with spreadsheets are often due to miscommunication between purchasing and finance departments. Whilst blame shouldn’t be attributed to either party, after purchasing close a deal, clarification of the intricate details that make up each agreement type is often "lost in translation".
Improved communication and collaboration between finance, procurement and commercial departments is key to determining the exact details of each contract. These may have a number of rebate elements such as product-specific incentives, overall growth incentives, margin maintenance, specific promotions, and so on.
Allowing time for contract handover and alignment or installing a program that provides a systemised approach, ensuring that both teams have access to this information will provide greater accuracy of data and rebate calculations.
3. Access for all
Multiple people manage supplier contracts across various teams within organisations - from both the finance and purchasing teams. Implementing a single access point for purchasing teams to input their deal information and ensure internal management sign-off, as well as external supplier sign-off brings numerous benefits.
This helps with the gap not only between finance and purchasing, but also between your organisation and your suppliers.
The transparency that is available when deals can be signed off and sent back electronically improves relations with suppliers, whilst also avoiding any potential for dispute. And by ensuring accurate data is available to negotiate with and that deals can be quickly signed off, the entire process is streamlined for ultimate speed, efficiency and accuracy.
4. Implement new solutions
The best way to improve your rebate management process? For absolute precision, consider implementing rebate management software that automates both reporting and alert processes to ensure that no opportunities for discounts and rebates are missed. These solutions are specifically designed to meet the needs of organisations with high numbers of supplier agreements containing complex deals elements.
DealTrack systemises the entire process from negotiation to claim and ensures accurate, timely, efficient operation for all trading partners. By storing, processing and analysing every tiny detail about deals, DealTrack acts as a platform for mutually profitable growth.
5. Integrate with your ERP system
When considering a rebate management system it’s important to look for a package that enhances the processes you already have in place. If your ERP system doesn’t handle all the complexities of your rebate agreements, select a specialist rebate management system that can take data feeds from your ERP systems and deliver a complete solution.
Rebate management systems can significantly improve your processes by providing a fully visible audit trail and ensuring the mistakes that are often made in manual rebate management systems are entirely avoided. For additional information on effective rebate accounting and the solutions available to you download our eBook Key drivers for effective rebate management.