The Ultimate Guide to Rebate Management Software
Many businesses (even large-scale enterprise companies) start out managing their customer rebates using a variety of simple, standalone tools such as financial spreadsheets. But from experience and hearing a host of horror stories about how some firms can take several months to calculate and finally pay out their customer rebates, we know that outdated rebate management processes can prevent companies from using rebates as one of their newest strategic sources of revenue. Do not allow obsolete rebate management software or processes hinder your organization’s evolution; join us in learning more about updating your customer rebate process in this article; ‘The Ultimate Guide to Rebate Management Software.’
At Pricefx, we have been providing rebate management software since 2011 to enterprise-level businesses like yours as a part of a total pricing solution. Consequently, with that level of expertise, we look forward to providing you with everything you’ve ever needed to know about rebate management software.
Let’s dive straight in and first analyze exactly what rebate management software is & does before we move on to discussing how it works and the considerable benefits possible for most types of business when using it. We will finish with who it is for and who it’s not for and look at the best rebate management software options in the marketplace today.
What Rebate Management Software Is & What it Does
In essence, rebate management software helps businesses in the process of recording rebate agreements, tracking purchases and sales against those agreements, and managing accruals and rebate claims in an efficient timely manner.
Many people (and maybe even some in your organization) may underestimate the strategic importance of rebate management in your company’s pricing process and the planning and successful execution of your pricing strategy.
Yes, it is true that rebates are one way to incentivize your customers to buy your products. For example, a rudimentary rebate could be something as simple as ‘purchase 5000 units of my product and you will receive back #% of the total purchase price back after they are sold’.
But rebates are so much more than that and you can use them as one method among several to seeing your pricing strategy through to its objective.
Quality rebate management can assist by decreasing your price dilution upfront and incentivizing buying behavior after the fact to improve your price realization and plug your margin gaps. In other words, efficient rebate management potentially makes you more money.
It does that primarily by avoiding discounting to close sales, as the rebates will be returned only after your customers have met the unique conditions of the deal that has been specifically created to meet your organization business objectives (for example: driving an inventory reduction initiative, increasing volume, margin, or profit) whatever you choose as your goal.
Driving or incentivizing certain defined customer behavior, quality rebate management software allows your business better incentive opportunities than promotions or discounts. By setting up a series of conditions that will entitle your customers to receive a benefit from you, it is a powerful and strategic selling tool.
Armed with a modern rebate management software system, you can forecast benefits, model proposals, determine net margins and influence trade activity to maximize your company’s returns.
All too often, companies dedicate entire teams to the use of outdated legacy systems like Excel spreadsheets to continue following already broken processes, thereby reducing output and strategic effectiveness of their rebate agreements which commercial teams have spent hours of time and energy negotiating.
For any modern business organization that is involved in offering and accruing rebates that wants to regularly evaluate their existing rebate management process and identify areas for improvement, in our experience, that journey usually starts and ends with the adoption of rebate management software.
Learn More Here About How Bosch Thermotechnik Increased Rebate Efficiency with Pricefx
The Difference Between Rebate Management Software & Pricing Software
Enterprise businesses use rebate programs to incentivize sales and influence buying behavior, but few understand the real impact rebates have on their bottom line.
By combining rebate management software as just one part of a combined pricing software package, companies can match precisely, and in real-time the actual sales, purchases, and margins against customers’ orders and agreements, plus analyze and control business profitability.
While the two forms of business technology work slightly differently with different aims, when integrated together as part of a holistic pricing system, rebate management software and pricing software offer powerful strategic pricing insights.
Working together, rebate management software and pricing software allows organizations to track and maximize their sales earnings while simultaneously incentivizing and making the most from performance-related purchases.
How Rebate Management Software Works for Your Business
A quality rebate management software tool allows large-scale businesses just like yours the opportunity to realize rebate processing times that match their expectations.
Providing the payments of rebates accurately and on time is a crucial method for any business to remain engaged with their customers on a regular basis and by doing so, not erode their trust.
Let’s investigate the top business outcomes that rebate management software can deliver to your business.
1. Increase the Value of Your Deals
By removing the complexity behind manually entering, tracking, and calculating rebate agreements between you and your customers, as business partners you can focus on utilizing incentive rebate agreements to each other’s benefit.
The increased visibility of the performance of rebate programs with key customers provided for by the technology, will allow your sales team to direct those customers to make additional purchases that will entitle them to better returns. Setting up the ‘win-win’ will motivate both your customers and your salespeople to drive better value for both.
Enjoying the visibility to offer rebates for new products, your sales and marketing teams can identify certain products to leverage at specific seasons of the year, rewarding the performance of your best or most loyal customers. This should assist in forging better business partner relationships and becoming a known and trusted entity within your industry sector.
2. Improved Cash Forecasting for the Finance Team
By accurately calculating the monthly accruals with rebate management software, your Finance Team can ensure cashflow is more accurately forecast.
For example, imagine you give a 3% rebate to your customers. For every $500 million of revenue, this equals $15 million in rebates which needs to be accrued accurately. A potential 10% error in the accruals could mean a $1.5 million error in cashflow, a figure most companies of that size cannot afford to lose.
Extending that example one step further, if your business chooses to over accrue by $1.5 million “to be safe”, what else could you do with this cash?
On the other hand, if you under accrue, where else would your company find that $1.5 million?
3. Streamlining the Rebate Management Process Through Automation
By streamlining the rebate management process with task-specific automated software, the increased efficiencies can create added capacity for your teams to price at a more granular level and price in a more strategic fashion (see below in the next point for more information).
Streamlining rebates will allow your company to simplify the rebate management setup into an automated process rather than a manual one. Taking place throughout every step of the rebate management process, your team’s work will be transformed, not to mention the considerable improvements in the strategic outputs of your team.
4. Learn from Historical Data & Simulate Pricing Moves
As mentioned above, automating and streamlining rebate management with dedicated software will build your company’s strategic pricing capacity. Your organization will develop the ability to use the software to provide powerful pricing insights and in turn, to understand the potential impact of your rebates on your firm’s profitability before the fact with simulation.
Irrespective of your organization’s business goals, rebate management software combined as part of a larger pricing software system will help you realize the impacts that your company is seeking.
Once your Finance Team is tracking rebates using a quality rebate management software and that is technology is coordinated in combination with the pricing team’s pricing software incorporating price optimization and management, pricing analytics, sales compensation, and managing your agreements and promotions, the capacity to for your team to unearth more value points in your pricing strategy is compelling.
Pricing Lessons Unearthed with your Historical Data
Rebate management software can examine your company’s past selection of products, customers, and conditions. Based on that historical data in combination with the pricing criteria that you have set up, analyzing the benefits of the past can assist you in projecting if promising ideas or conditions are worthwhile for consideration in the future.
For example, you can use your rebate management software tool in combination with your complete pricing software system to check your sales figures over the past year and if your price elasticity might have a positive impact on your desired business objectives after invoicing.
If your business objectives have been to increase volume by 10% in the past year while increasing the margin from 20% to 30%, but you only have made an increase of 3% rather than the 10% you are looking for, as a result you may need to reconsider your current rebates.
Using Price Simulations in Your Rebates Set-up
Equally, when using rebates management software in combination with a complementary total pricing software solution, the technology can assist you by simulating the future outcomes of your rebate programs and also forecast your margins into the future, while allowing for seasonality and other one-off factors.
Rebate management software can help you by running multiple price simulations to track the effects of price and rebate rate adjustments.
Consequently, when it comes time to implement a set of new deals, apply the price simulation outcome that is most likely to help you close the sale consistent with your business objectives.
What’s more, you can track your progress as you work towards your business goals. For example, after the first full quarter of the fiscal year, with your rebate management software you can check how you are stacking up against your projected figures for the following 3 quarters.
If you are exceeding your projections, you could consider contacting your customer and offer them a further 1 or 2 per cent off in their rebate deal for a limited time to foster quality customer relationships.
5. Modernize Your Claims & Accruals Procedures
For example, if you are offering your B2B customers rebates on purchasing more than 10 000 units of your products, eventually your customers will get in contact and say, ‘I’ve met my side of the deal and purchased my 10 000 units within the time period of the rebate agreement – where is my rebate payment?’ With rebate management software you will be ready.
Managing the claims and accruals to pay your clients their rebate money owed on time/every time is arguably rebate management software’s greatest feature.
With your rebate management software, you can track in real-time how many sales have been accrued over the period, program eligibility, validity, exceptions, etc. to process rebate claims in the most transparent, error-free, and time efficient manner possible.
Quality rebate management software fulfills your finance department’s needs with timely, accurate rebate claims and accruals in addition to the capability to forecast accruals on orders or invoices and calculate payouts.
Who is Rebate Management Software For?
Rebate management software should be considered as a key focus of all companies and business organizations involved running a rebate program, irrespective of the industry that you operate in, and/or your role in the agreement.
Who is Rebate Management Software NOT For?
If your business does not offer or run a rebates program and does not have any intention of introducing one in the future, it will not be of any use to utilize rebate management software.
Which Rebate Management Software is Best for Me & What Are the Options?
Now you know how rebate management software works and how it defines, manages, simulates, and calculates rebates on time and accurately, plus providing your customers with special off-invoice conditions by determining which parameters you need to set to create new and current rebate programs.
You may already know if cutting-edge rebate management software like that offered by the award-winning Pricefx solution or similar is something that can help your organization achieve its business objectives, and you may be considering which one is right for you.
Check out the list below of 6 of the best rebate management software tools (outside of Pricefx) and how they compare:
However, for in-depth into reviews of these 6 best rebate management software options available in the marketplace today (plus information on how Pricefx stacks up against them all), check out the handy article below:
On other hand, if you made all your comparisons and you have decided that Pricefx has all the features you are looking for in your rebate management software, click below to talk to one of our pricing experts now:
About the Author
Iain Lewis has worked in pricing as a practitioner for 27 years working at Automotive, industrial goods, business services and Distribution companies. Iain brings his unique perspective to each engagement to guide companies through complex buying decisions and has helped companies throughout Europe and South-East Asia continue to improve their pricing approach.