Manufacturers: Automated Accrual & Payout Process in Pricefx

In the dynamic landscape of manufacturing and its accompanying rebate management, crisp procedures and efficiency is paramount in order to maintain healthy business relationships, organizational integrity, and profitability. However, with many manufacturing companies still using traditional (or as we say, ‘outdated’) manual rebate methods including the calculation of accruals and payouts, these metrics and procedures are often unfortunately fraught with errors and lack a rigorous audit trail, leaving business procedures vulnerable to needless inaccuracies and inefficiencies at best, or at worst, a deep cut into the organization’s bottom line. Remember, rebates are the best tool for providing pricing concessions to your customers while still protecting your own strategic initiatives; but are often avoided or limited due to the difficulty in managing rebates specifically due to the challenges with accruals and payouts.

With more than a decade of collaboration with our clients in the manufacturing sector, Pricefx plays a pivotal role in developing automated, real-time pricing processes. As a leading provider of pricing automation solutions, we assist manufacturers in revolutionizing their financial operations with automated accrual and payout processes configured for the specific needs of the sector.

So, let’s dive into an examination of the current state of the calculation of accruals and payments for many manufacturing companies and how Pricefx can assist you to improve the process with automation ensuring accuracy, efficiency, and compliance with audit requirements.

Streamlining Rebate Management for Manufacturers

For those in finance and controlling and rebate management roles within manufacturing organizations, the task at hand is to automate the calculation of accruals and payouts while maintaining processes that are proven to withstand audits.

The current state of accrual and payout processes in many manufacturing organizations is characterized by manual and error-prone calculations, with limited audit trails. This outdated approach hinders efficiency and poses risks to financial accuracy and compliance. However, Pricefx presents a future opportunity for manufacturers to transition to fully automated accrual and payout processes that can be fully integrated into financial systems, providing end-to-end management of the rebate, payout, and accrual lifecycle.

Pricefx’s eliminates those types of manual errors that can easily damage your customer relationships and drives them to ask for up-front discounts without specific targets. Our automated solutions empower these teams to streamline these processes, transforming their black-boxed procedures into transparent functionality and ensures compliance with audit standards.

When a company struggles to track the rebate performance of its customers, this lack of transparency diminishes the rebate’s potential to incentivize desired behaviors, leading to inaccurate payouts, and obscures the company’s overall financial health.

Pricefx’s Rebates offers automated tracking and payout calculation based on historical performance that allows companies to track their customers performance in real time and understand how they arrived at a given remuneration. In doing so, this enables timely, accurate payouts and prevents misalignments in expectations.

Gone are the days where a sizeable portion of the work day can be dedicated to simply go back and forth with customers to justify payment logic. It has now evolved into a process when it can be performed automatically in minutes.

The Benefits of An Automated Accrual & Payout Process

The adoption of Pricefx’s automated accrual and payout process offers numerous benefits for manufacturers:

• Accuracy and Consistency: Automated calculation of accruals and payouts ensures accuracy and consistency, eliminating manual errors, reducing the risk of in financial reporting, and preventing costly and embarrassing true ups and quarter and year end.
• Audit-Proved Processes: Audit-proved accrual and payout processes, including approval workflows and comprehensive audit trails, ensure compliance with regulatory requirements and internal controls.
• Operational Efficiency: Reduced calculation errors and streamlined processes lead to fewer discussions with customers, enhancing operational efficiency and customer .
• Rebate Transformation: And finally, you can expand the use and complexity of the rebates you use to move more incentives to rebates which require customer action/achievement to earn as opposed to upfront pricing concessions.

Navigating Accrual & Payout Management in Pricefx: A Hypothetical Scenario in Building Materials Manufacturing

To illustrate the seamless integration of Pricefx’s automated accrual and payout processes into manufacturing operations, let’s explore managing accruals and payouts within the Pricefx platform, using a hypothetical scenario of a building materials manufacturing company.

1. Navigation and Overview

As a pricing manager of the company, you can see all the rebate programs that are currently approved or in process, and within each rebate you can see the rebate types and targets and potential payout amounts.

You can easily see all the records created, including accruals and payouts. Customer facing documents are easily generated to show performance against current achievements etc. What’s more, because Pricerfx is a seamlessly integrated solution, the impact of decisions like changing prices or quoting new business can transparently include the impact of the building material company’s rebate program.

2. Access Rebate Agreement Details

Within the Rebates module, you can select the desired rebate agreement associated with a key customer or distributor. Here, you access the rebate agreement details, including customer-specific rebate setups and calculation parameters.

3. Review Calculation Details

As you delve into the rebate agreement details, you review the calculation parameters, such as fixed percent rebates and rebate records. It is crucial to ensure accuracy and compliance with the terms of the agreement to avoid discrepancies in accruals and payouts.

4. Utilize Price List Impact Simulation

Before making any changes or updates to accruals and payouts, you leverage Pricefx’s Price List Impact Simulation feature. This allows you to simulate the impact of price changes on accruals and payouts before implementation, ensuring that adjustments align with pricing strategies and objectives.

5. Streamline Approval Process

Once you are satisfied with the simulation results and any necessary adjustments, you can then streamline the approval process for accrual and payout updates. Pricefx provides a user-friendly interface for reviewing and approving changes, facilitating thorough review   alignment with pricing objectives.

What’s more, because approvals can be automated, you can deal with the exceptions, not the rule. Don’t waste your time approving small changes, build rules that let the system handle the little changes and only engage you when significant impacts need to be reviewed.

In this hypothetical scenario of managing accruals and payouts within the Pricefx platform for a building materials manufacturing company, the streamlined process ensures efficiency, accuracy, and compliance with rebate agreements, ultimately supporting the company’s pricing strategies and financial objectives.

To learn more about rebate calculations, determining rebate accruals and how to run a rebate calculation in Pricefx (including in-platform screenshots), check out the Generative AI-powered Pricefx Knowledge Base for details and/or click on this direct link.

Accurate Calculation of Payouts Based on Actual Performance

Now you know that manual calculations of rebate performance (or how well a company adheres to the conditions of the rebate) are difficult to track, defend to customers, and replicate consistently over time; the consequence being frequent delays in payouts, errors in calculations, and frustration on both sides of the agreement.

Pricefx’s Rebates solution leverages historical performance data of customers to calculate payouts automatically, ensuring companies provide their customers with fair compensation for making good on their end of the deal – and on the agreed payout date.

With this feature, teams simply   the calculation logic and sit back and let the software solution run the calculations work for them. The system can automatically calculate the payouts, all you must do is review and approve or let the system process normal payouts automatically. And when entire teams often shoulder this responsibility, it can significantly transform their focus towards more strategic responsibilities.

However, it is worthwhile to note that in the light of our recent partnership with Enable, please note that the above article describes Pricefx’s rebate solution only.

For an overview of where Enable comes in to enhance our solution, please check out the article below to learn how to supercharge your company’s rebate program with our combined rebate management double threat:

Meanwhile, Happy Pricing!