Why your ERP system doesn't do rebate accounting

Posted by Andrew Butt on November 1, 2017 08:31:00

Many ERP systems already have a way of recording contract information and a vendor rebate module or elements of purchasing software that allow for rudimentary recording of rebates owed. 

But, after extensive research, we have found no ERP system provides ALL of the functionality that is typically required by companies who trade with complex rebate deals.

4% - the rebates companies typically find have gone unclaimed when they first implement DealTrack

It’s interesting to examine the reasons our customers have given for choosing DealTrack as they can broadly be classified into one or more of the following:

  • Despite having systems already in place, they had a feeling that they were not claiming everything owed to them, but lacked the means to prove it.
  • They were resorting to spreadsheets to compensate for inadequacies in their current ERP system.
  • The business had grown through merger / acquisition and they had more than one ERP system containing the information needed to negotiate and report on rebate deals.
  • Accurate rebate claims processing relied on the knowledge of a few people and this was felt to be a risk to the business.

Why don’t ERP systems cope with rebate management?

Our research has shown that, at the time of writing, no ERP system copes with managing rebates to the same degree of both accuracy and simplicity as DealTrack.

The reason behind that is that rebate deals can be quite complex and fields prompting for rebate amount / percentage and rebate threshold are inadequate to say the least.

1. There are many different types of rebate calculation

Rebate agreements are created to drive growth, so suppliers will often change the agreement from year to year.  They might add other incentives like marketing support, and they may focus on a product line or category to provide exceptional rebate agreements.

We have seen over 300 different types of rebate agreement — all of which need to be recorded in order to make the right claim.

2. Not all aspects of the contract can be systemised

We’ve seen many examples where a contractual agreement is a document that sits outside the ERP system, and relies on manual interpretation to get the details replicated in the ERP system.  Many companies end up with some information automated in their ERP system, but having to refer to paperwork or other electronic documents for other information.

For some, that can be the start of their problems; the misinterpretation of contract documents and in ability to transcribe contract information into a system.

For that reason, spreadsheets are often the preferred route to getting more accuracy.  But spreadsheets rely on accurate information feeds, and are open to manual error and problems with version control.

To find a better way to deal with rebates, read our eBook DealTrack: an ERP-agnostic solution to centralised procurement and rebate management

ERP Agnostic solution to centralised procurement and rebate management click to download

Topics: ERP Vendor Rebate Modules