Buying Groups and “The Trust Model”: How to Bring Multi-dimensional Intelligence to the Traditional Rebate Structure

Manufacturers’ reliance on rebates has grown leaps and bounds in recent years. It is an untapped driving force to boost their revenue with more profits. They are always eyeing to forge a strong business relationship with buying groups, a close-knit network of small independent firms with direct access to customers, to transport their products to the market. They count on the distributors and their transactional volume to negotiate the best possible deals.

The traditional rebate management process is built on trust. It’s the foundation upon which buying groups ensure that transactions are valid, and that adequate reconciliation is performed. It’s why every manufacturer and distributor interact with one another. The three fundamental pillars of trust that drive the business are transparent deals, financial reconciliation, and mutually beneficial participation.

Though a step up from individual deals, the trust model has put manufacturers and distributors in a complicated rebate structure.

Traditional rebate structures are frequently mismanaged and poorly implemented as most deals are verbally agreed upon in the trust model. If such agreements are not captured and visible to everyone, the entire rebate structure may fall apart.

It is up to buying groups to ensure that all manufacturer deals are standard, that all distributors are aware of and have equal visibility, and that there are no hidden clauses. To assure this, they often do background checks on contracts on a regular basis.

Even when the deals are transparent and visible to both parties, a clash can happen because many reasons. A few of them are:

• When product prices are updated and the manufacturer takes too long to upload the data, the distributor may continue with the expired deal, incurring a significant loss.
• A simple payment delay will result in incorrect invoice generation.
• Overstated rebates, because of manual errors, will lead to erroneous revenue projections.

The buying groups must investigate and act on such possibilities. They must reconcile the data the manufacturer is uploading and match it with the purchase orders and invoice numbers to avoid conflicts between the two parties. It is up to them to arbitrate the settlement. Therefore, coherent rebate auditing is indispensable to calculate rebate payments, accruals and reconcile any disputes. And to do that, having complete visibility of the data is paramount.

Automating the rebate management process, in addition to making deals transparent and having a comprehensive auditing mechanism, is critical for bringing the distributors closer by allowing them to have a single master list of contracts. As a result, they can more readily spot emerging patterns by gathering and analyzing data generated by an automated rebate management system. On the other hand, manual calculations take days to prepare and integrate into reports, while now, it takes minutes.

An automated system can quickly calculate, review, and interpret rebate contracts and provide exact insights into the past and future prospects. For example, if manufacturers get a hunting list of the top purchasing distributors, it will enable them to see which items or product categories are moving quickly within the buying group. This will further allow them to update their catalog in response to demand. On the other side, distributors, will gain insights on how to maximize their rebates by optimizing their spending.

The need for intelligent rebate management that provides end-to-end visibility has never been greater. While most buying groups are embracing some kind of rebate platform, they need an end-to-end solution that can address all three.

The buying groups depend on the preferred manufacturers to supply all the purchasing and rebate data in the trust model,. While the manufacturers’ intentions are often genuine, their execution may have gaps like timely updates to their product catalog, adding new distributors into their reporting, and manually updating rebate calculations. Relying on a single data source is no longer a practical option, especially when other data sources, such as data from the distributors, are readily available.

With Rebate.ai, our E2E rebate management and analytics platform, we solve these issues in six unique ways.

1. By “Verifying” and “Comparing” the transaction data from multiple sources.
2. By setting up standardized processes for the preferred manufacturers to ensure that all their products and distributors are updated with every data upload.
3. By providing end-to-end rebate control and auditing via electronic deal approval.
4. By offering automated rebates to improve purchase decisions in real-time.
5. By establishing a single source of truth for market trend monitoring, pricing, and rebate optimization.
6. By delivering distributor performance view to monitoring individual distributor performance and purchase behavior.

Thus, buying groups can strengthen their manufacturer contracts and empower their distributors to make informed purchases by enabling quick access to real-time data. Therefore, for all sides, it’s a win-win situation.

We provide a side-by-side comparison by the preferred manufacturer and distributor on every dashboard to identify any discrepancies immediately. In the “Trust model” without the “verify” component, only the obvious discrepancies get showed, usually by the distributor and after the rebate period has ended, months after the end of the year.

The single-pane visibility further helps the buying groups to manage group rebates with confidence, visualize all product catalogs, monitor their performance, find new sales opportunities, and more.

• A visible, composite picture of group sales, with granularity ranging from summary to PO level.
• A perspective of sales data from both within and outside the organization to aid in onboarding high-potential manufacturers.
• Real-time actionable rebate management insights to help wholesale buying groups in making a real impact based on data.
• Data ingestion and refreshes are automated, and SMTP integration allows for fast warnings in case of a major event.

It’s now time to update your rebate management system and have an electronic rebate program creation, automatic purchase transaction acquisition, and multiple sources of transaction data to audit for compliance. Ensure you are not leaving rebate dollars on the table due to manual or outdated processes, and schedule an introduction to rebate.ai today!