Mark Steggall, Head of Product Management at Kerridge Commercial Systems, explains the benefits of using a modern ERP system to manage supplier rebates.
Supplier rebates can make an enormous difference to the profitability or otherwise of a business. It’s the most common method used by mer-chants’ suppliers to discount their commodity products, so it pays to be able to track what your suppliers owe you - and to be able to forecast the outcome at the end of any rebate period.
Anyone who has set up a rebate between themselves and a supplier will know that’s the easy part – however ‘non-standard’ each rebate agree-ment might be. The difficulty comes when you are tasked with tracking every agreement you have set up and calculating the money each supplier owes you. If your business software doesn’t do this automatically, then you’ll need to pull every purchase order transaction out of your system to check for qualifying purchases - a real headache! Alternatively you could wait until the end of the year and see what your suppliers offer you, with no way of checking if the amounts are correct.
Security is another issue surrounding rebates. Normally only the business owner or senior members of the purchasing team will know what has been agreed with each supplier, and this could lead to further complications when it’s time to track and calculate.
The only reliable solution that will exploit all opportunities to increase margin during the rebate period and enables you to make accurate claims - with limited access to the rebate schedule itself - is ERP, or business management software that:
- Works silently in the background recording what is due
- Manages the most multi-layered and complex schedules
- Manages ‘spot’ rebates based on specific orders or projects
- Alerts you when you are one purchase away from the next significant price break
- Calculates what is owed at any time during the schedule period
Our K8 software is a fully integrated trading and business management solution already used widely by merchants and wholesalers. It combines a suite of modules including sales order processing, purchasing, finance, stock control, CRM, E-Commerce and business intelligence plus an integrated rebate management module to ensure that rebates can be managed accurately and securely and the correct values claimed.