The Deal Economy

New year’s resolution for finance: say goodbye to manual rebate management

Today, in an era that’s meant to be about finance transformation, much of the finance function still relies heavily on manual processes including spreadsheets for rebate management, you’ll find plenty of them buried in emails and on desktops. Instead of those in finance focusing on giving high-level insight, they find themselves stuck chasing down errors, reconciling data, and trying to make important decisions based on an assortment of often incomplete or inaccurate rebate data.

As a result, many organisations end up with disputes with trading partners and around 4% of potential rebate revenue typically goes unclaimed. But could 2021 be the year all this changes for finance and they finally embrace automation.

Disadvantages of manual processes

Manual processes lack version control, audit trails, consistency and scalability. Ongoing reliance on tedious, manual processes in the finance function has many disadvantages, including:

Increased risk: Manual processes increase the risk of inaccurate or incomplete data on which significant decisions are made. Compliance risks are also introduced that can have a significant impact across the organisation.

Human errors: When it comes to the complexities of rebate management, human errors can creep in and seriously compromise the value of trading agreements. Especially if using a manual process, it can take a lot longer to track and correct common mistakes. Research conducted by Censuswide found that over half of the finance leaders surveyed aren’t entirely confident they can identify financial errors before reporting results, with less than 40% saying they trusted the numbers.

Time consuming: Widespread usage and reliance on spreadsheets and manual data reconciliation processes take up a significant amount of time. The results are also more prone to error and often need to be reviewed multiple times. According to CFO Dive, a company with a 20-person finance team typically loses the equivalent of 1,920 hours annually or an estimated $124,800 in costs to these manual tasks, Auditoria estimates. A big company with a 100-person finance team might lose 9,600 hours, at an estimated $624,000 a year.

Restricted scale: Manual processes inhibit a team’s ability to grow or cope with rapid change. This can restrict an organisation’s expansion plans such as taking on more suppliers or expanding their reach overseas, meaning opportunities could be missed.

Lack of audit trails: Spreadsheets should never be used as a system of record. Even one small error can produce the wrong result and affect an entire deal. A user may disagree with the values on a spreadsheet, set up their own controls and link the results from the first document to the second with no oversight or testing for accuracy.

No advanced capabilities: Manual processes including spreadsheets are not equipped with advanced capabilities or reporting, let alone security. This has a significant impact on the ease with which the finance function can grow over time.

Lack of version control: Companies that rely on manual processes may find they have multiple versions of the same document in use, which increases the risk of errors. Using a spreadsheet for rebate management, for example, can be dangerous if a user pulls up a spreadsheet from the network with outdated or incorrect data.

Lower morale: Finance professionals want to have a positive impact on their organisation and not be bogged down in data entry and complicated workflows. Employee retention goes up when staff are empowered to make a strategic impact.

Adoption of automation

Automation is not about replacing real workers with robots and computer software but rather making it easier for the team to work in a more efficient manner. By automating routine tasks, you can increase workflow efficiencies – freeing up your finance team for higher value tasks, driving down costs, and boosting your revenue.

Businesses expect finance functions to maximise the efficiency of their operations and minimize the time they spend on non-value activities. Automation is a key tool in delivering this goal and, therefore, a high priority for many finance functions today.

Many organizations are still in very early stages of process automation and still rely heavily on manual processes. On average, only about half (51%) of business processes are automated. However, according to an EY study, 65% believe that automating finance processes will be a significant priority in the future. The most successful organizations will be those who embrace automation in order to better equip their human talent.

SaaS rebate management is driving change in finance

These days, companies are under tremendous pressure to go digital in order to survive and stay competitive. As CFO, you’re largely responsible for the strategic direction that your company takes. Does your business have the right infrastructure, processes, and technology to support your rebate management strategy? If the answer is no, then this is where SaaS comes in.

All the advantages of SaaS have been magnified by COVID-19. Companies need digital solutions that allow finance to communicate and collaborate on their deals in a consistent way while minimizing upfront and ongoing costs. However, just because financial professionals want to have better technology and tools, that doesn’t make them IT experts. SaaS solutions bring finance an easy-to-use service where the only things to manage are an internet connection and a web browser.