rebate calculator

ROI calculator for rebate management systems

Posted by Andrew Butt on August 23, 2016 08:00:00

Our rebate management system: DealTrack is aimed at those businesses for whom a significant portion of their margin results from vendor rebates, retrospective discounts, tiered discounts and the like. Businesses in the building materials, wholesale distribution and those who are part of buying groups frequently trade on these deal types.

Since we first released DealTrack we have monitored the return on investment that has been enjoyed by users of this rebate management system and I wanted to share some of the facts and figures with you.

The ROI typically falls into four main areas:

  • identifying lost rebate earnings
  • avoiding missed opportunities to earn rebates 
  • improved cash flow
  • reduced bank interest

Identifying lost rebate earnings

Most companies turn to DealTrack because their current systems and processes for rebate management are not doing the job.  Symptoms of this include:

  • Not being able to map every aspect of a deal into the current system
  • Difficult to collate actual purchase information against deals
  • No alerts against performance to influence purchasing activity
  • No visibility of net margin
  • Lack of automation for claiming rebates and discounts

With all, or some, of these problems, it is not surprising that businesses miss claiming for the rebates that they have earned. In fact, having installed DealTrack, one company realised that they had missed £15m in rebate claims in the previous year! (Click here to find more examples).

More typically, however, we see an average of between 2% and 5% of rebates that have been negotiated but are simply not being claimed due to poor systems and processes.

Avoid missing opportunities to earn rebates

Imagine the situation: you’ve agreed a 3% retrospective discount if, across your group of companies, you order 100 units a month, but your current systems can’t tell each individual company / purchaser how many have been purchased at the point of raising a PO. 

If you ordered 70 units in January and 130 units in February you would only earn the discount in one month.  If you’d had better visibility, you could have earned it in both!

By way of example, if each unit costs £1,000 then you would be losing 3% margin on £70,000.

By automating the alerts and making the whole process easier to manage, those responsible for negotiating deals can spend more time doing just that.  DealTrack provides all the information needed for fact based negotiations  and this in turn leads to better negotiations and even more rebate income.

Typically, DealTrack customers tell us that they are managing to identify between 1% and 4% MORE rebate income than they had before.

Improved cash flow and reduced bank interest

With a rebate management system that alerts you to make claims, you are bound to improve cash flow. This in turn has an impact on the amount of banking interest paid. Typically the improved cash flow that is created through the use of DealTrack results in a saving of between 4% and 15% of bank interest charges over a year.

In conclusion, those who have a vendor rebate earning level of over $16m or £12.5m per year will see a significant ROI by implementing DealTrack.

If you're curious to find out just how much ROI you could make, simply click the button below and request access to our ROI calculator.  It takes a few figures from you, applies metrics based on real customer data and provides a good indication of the financial benefits that a rebate management system would bring to your company.

ROI Calculator

Topics: ROI calculator