In a typical trading relationship, we have three main parties: the manufacturer, distributor and the end user who is the customer. The relationship we are focusing on today is the manufacturer and the distributor.
DealTrack Blog — Customer Rebate Management
Rebates: the way that product-based businesses incentivize their customers to buy more of their goods, are complicated. While much information is available about supplier rebates and the ways in which suppliers can claim as much of their rebates as they are entitled to, less has been written about customer rebates: the other side of the story.
If you’ve ever been confused about terminology relating to rebate management, you’re not alone! The world of rebates is a complicated place at the best of times, especially when there can be multiple different names for the same thing.
When it comes to rebates there are two sides of the story: customer rebates and supplier rebates. How to differentiate the two can cause confusion. So, to explain the difference between customer rebates and supplier rebates we will take a different approach and think of them like a tango, rather than a war.
There are two sides to the customer rebate story: the customers’ side where, historically, retailers and distributors have not always been paid the full value of the rebates they should have received; and the manufacturers’ side (those who offer the incentives in the first place).
When it is done well, customer rebate management improves partner relationships, provides financial compliance and reduces audit risk, eases cash flow for customers, improves rebate accuracy and predictability and helps grow business through true partnerships between manufacturers and their customers.
It may seem overly simplistic to associate the complex nature of financial accounting with a cup of coffee, but when it comes to customer rebate management this analogy makes intuitive sense for anyone who has ever tried to get a free cup of the caffeine-laced beverage.
When it comes to modernizing business practices, technology in general and software in particular is essential for business growth. How are manufacturers and suppliers who deal with millions of dollars’ worth of customer rebates each month adapting to the challenges faced by a historic lack of suitable software? Andy James, Chief Product Officer at Enable, shared a few stories about how their clients have changed for the better and what drove their decisions.
Customer rebate programs are great in that they drive the selling behavior of resellers and distributors on more than ten trillion dollars in North America and Europe alone. The large volume of money attributed to customer rebate programs is hardly surprising since they include everything from simple rebates to marketing development funds (MDFs), co-op funds and special pricing agreements (SPAs).
Topics: Customer Rebate Management