DealTrack Blog

Vendor monies that support reseller sales are big business. US-based research conducted in October 2018 estimates that, at top performance levels, distributors, dealers, and retailers use $600+ Billion (USD) in vendor funds. Projections from the EU find that approximately €500 Billion (EU) in vendor funds are similarly spent.

SIG is a leading European provider of specialist building materials, with close to £3bn of annual revenues and around 9,000 employees across the UK, Ireland and Mainland Europe. As a specialist distributor, SIG plays a critical role in the construction supply chain, bringing value to its customer base across major European markets.

Rebates, SPAs, claim-backs, contract support are all very similar and at the same time quite different to each other. In essence they are all terms for the money that wholesalers claim from suppliers and manufacturers for selling their products. Some of the key differences lie in how the agreements are formed, whether goods are actually ever handled by the wholesaler, and how the claims are made.

Collectively, they are sometimes referred to as “vendor monies”. It is estimated that, annually, these amount to $600bn in North America and perhaps as much as $500bn in Europe.

In a world where margins are tight, wholesale distributors across nearly 50 sectors rely so much on vendor monies that their absence would be a serious dent in their profit margin.

Whilst many core business systems have some functionality to help monitor trading agreements that involve vendor rebates, most have neither the flexibility nor the extensive range of functionality that is needed to support the increasingly complex world of rebate management.

For many, that lack of functionality has resulted in missed rebates and poor accrual accounting.

But worse than that, if your business systems don’t support rebate management fully, then the whole purpose behind creating deals involving rebates – a means to influence business growth – is missed.

In this blog, we are going to focus on the system requirements for configuring, storing, monitoring, reviewing and operating rebate deals or special pricing agreements. 

For the sake of efficiency and audit tracking, and to avoid unnecessary disputes, all elements of pricing agreements should be stored in one place.  A cloud based solution is ideal for multi-centred operations.

Companies tend to look for specialist rebate management software when they reach a point where their core business systems are proven to be inadequate.

This particularly affects builders' merchants, plumbing distributors, electrical distributors, HVAC distributors and others who operate in the building materials industry.  These businesses usually have to deal with a large number of complex trading agreements involving rebates, special pricing agreements, retrospective discounts, over-riders and more across many thousands of stock items.

We have a buyers' guide that outlines everything you should look for in a Rebate Management System, but I wanted to outline my top 12 features in this blog.

A ship and debit agreement enables suppliers to sell their goods at a uniform price, while distributors can react to local market conditions and lower the price they use to sell to customers without losing all of their margin.

Whilst working with a number of organisations across industry sectors such as building materials, buying groups and wholesale and distribution, we have seen a large variety of very complex supplier rebates and trading agreements.  These very often involve incredibly complicated performance-based calculations with seemingly endless permutations, and on top of that agreements are subject to periodic review and change.

If you’re a builders merchant in 2018 you’ll know how essential it is to ensure every penny counts in terms of your bottom line. So, it’s even more crucial than ever that you don’t miss out on any of the, often significant, sums due to you through rebates.

Indeed, profitability for suppliers to the building industry is often very closely dependent on the amount of rebate they can negotiate and claim and many businesses across this sector tell us that the sheer volume of categories and the complexity of rebate deals means that administering rebate claims is a mission critical element of their business which can be the difference between a decent year and a great one.

100% of our customers have identified previously missed rebate claims after implementing our Dealtrack system and we have even seen cases of missed rebate claims amounting to 7 or even 8 figure sums.