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Contract management software for builders merchants: cash flow

Posted by Andrew Butt on March 10, 2016 15:29:00

Cash flow is a big issue for most businesses in the building industry — from builders to building material suppliers — everyone in the supply chain is purchasing materials in advance of actually being paid by their customers.  So anything that improves cash flow is usually welcomed.

But margin is important too, and the two can be used as a trade-off — cash payments for a lower price or credit terms for a slightly higher price, in its simplest form.

Of course, anyone in the industry knows that it’s more complicated than that.  Suppliers often use a system of rebates to control the price, foster loyalty and improve sales.  At the same time, they impact the cash flow of the purchaser by holding back discounts until claims are processed.

What if you could reduce the time it takes to make a claim?  What impact would that have on your cash flow?

If you could get together the information in support of a rebate claim within hours of the deadline (instead of days or weeks), then your cash flow is instantly improved.

That speed simply isn’t possible for many companies who rely on spreadsheets to consolidate information:

  • Typically each spreadsheet is from a different source, so you are relying on multiple people in multiple locations to perform their part in the process in a timely, accurate manner.

  • Secondly, spreadsheets are by their very nature prone to error — a missed purchase here or an inaccurate record there could mean the difference between achieving a higher level rebate…or not.

  • Thirdly, it’s typical in the building materials industry to work in multiple units of measure – receiving sand by the pallet, selling by the bag and having a rebate based on tonnage would not be uncommon. Reconciling the different units of measure is possible, of course, but it simply adds to the complication.

On top of all that is the very important issue that whilst spreadsheets can report on history, unless consolidation takes place regularly there is no check and balance against agreed discount tiers which means discounts and rebates can easily be missed.

So, it’s clear.  In a situation where complex rebate agreements are common, cash flow (and profitability) can be adversely affected if you rely on spreadsheets.

So what’s the alternative?

There is contract management software, and many ERP systems have contract management modules.   The issue that we have found when talking to companies in the building materials sector is that the “out-of-the-box” contract management system typically cannot be used to model all of the complexities of their rebate agreements.  As a result, spreadsheets are still being used for some aspects and this means that cash flow, rebate claims and profitability are all adversely impacted.

Grafton Merchanting and Wolseley, have found that the DealTrack Rebate Management System provides the right solution for efficiently managing contracts and improving cash flow. DealTrack rebate management software improves cash flow for builders’ merchants by:

  • Providing the ability to record for all variations of rebate process, whether brand specific, customer specific, supplier specific or a combination of all
  • Collating and consolidating live purchase and sales data to instantly calculate each rebate claim with guaranteed accuracy
  • In built alerts to reduce the incidence of missed discounts and rebates
  • Creating timely, professional invoices ready to send to suppliers to improve cash flow.

So final question: is DealTrack rebate management software the right solution for your building materials company?

Discover more by taking a look at this recorded webinar.  Learn how existing users of DealTrack Rebate Management System have benefited and the ROI they have achieved.

DealTrack Video How to increase profit and cash flow with automated rebate management

 

Topics: Rebate Management, Contract Management