Rebate management software vs Excel

In the realm of rebate management, the choice between traditional Excel spreadsheets and a modern automated rebate management process can significantly impact a business's efficiency and profitability. Excel, a long-time staple for financial tasks, offers familiarity and initial ease of use, but its limitations are increasingly apparent as businesses grow and rebate programs become more complex. This overview explores why transitioning to automated rebate management software is beneficial, comparing the pros and cons of Excel-based versus software-based rebate management.

What is rebate management?

Rebate management is the process of administering and overseeing rebate programs. Many businesses manage multiple rebates programs simultaneously, from simple to complex. This involves:

• Creating and editing payable and receivable programs
• Accurate tracking and recording of transactions
• Accurate rebate calculations
• Validations and approvals
• Analyzing and reporting on rebate performance
• Optimizing rebate agreements between businesses and their partners or customers.

When managed efficiently and effectively, rebate programs can be instrumental in driving sales, maintaining customer loyalty, and achieving financial goals. Therefore, successful rebate management must ensure that data and calculations are accurate, payments are timely, and relevant stakeholders can easily track and analyze rebate performance to maximize profitability.

Excel-Based Rebate Management

Managing rebates using Excel spreadsheets is an option still used by many businesses. A number of factors contribute to this, including:

Cost & time investment

Excel is widely accessible as an existing part of most business software packages. Rebate data entry and calculations are done manually which involves a significant ongoing time investment. Depending on the quantity and complexity of rebate programs, this can often require a dedicated in-house resource.

Data integration & accuracy

Data accuracy highly depends on the regularity and thoroughness of rebate data entry and calculations. When done manually, the risk of human error is high, compromising the integrity of your data. Integration with other data sources like sales, inventory or accounts receivable is limited because data is manually extracted and manipulated in Excel. Multiple contributors working on spreadsheets downloaded across different desktops and laptops, can lead to version sprawl. This makes it difficult to obtain a reliable up-to-date overview of rebate performance and limits audit trail capability.

User-friendliness

Most employees have some form of basic Excel knowledge, so minimal training is required. However, as businesses scale, the volume and complexity of rebate programs can grow, especially due to acquisitions, mergers, varied product mixes, tier volumes, and variances in product lines. This increase in volume and complexity will demand greater skill level and time commitment to manage rebates effectively.

Tracking rebates and analysis

Although basic what-if analysis is possible using Excel, salespeople find it challenging to quickly and easily access and track up-to-date customer accruals. It is also difficult (if even possible) to drill into underlaying rebate data. When done manually, data integration is slow and prone to errors, preventing a clear, up-to-date view of overall rebate performance and your ability to be proactive in uncovering risks and identifying upsell opportunities.

Self-serve reporting and dashboarding

Rebate reports must be manually updated when using Excel. Businesses with an in-house rebate resource and straightforward programs may find this process manageable initially. Without a dedicated resource, there is a high dependency on IT for reporting which can create a backlog due to IT prioritization. However, in both instances, as businesses scale, they will inevitably outgrow this approach.

Manual data entry and consolidation are very time-consuming, delaying reports and hindering fast decision-making in response to unforeseen price increases or supply chain disruptions. Rebate data is only as current as the latest manual entries and calculations, so by the time reports are distributed, data is already out of date. Customizing reports to accommodate complex rebates is challenging, especially when managing multiple rebate programs.

Scalability

As a business scales, many factors can contribute to its growth: expanding customer base, broader/increased product ranges, regional expansion, business acquisitions and mergers. The complexity of rebate programs inevitably increases, and the volume of transactions requires intricate calculations and tracking, which Excel struggles to handle efficiently. There is even more demand for manual data entry and large data volumes can cause lag times, affecting performance. Integrating with new ERPs, data sources or business systems is limited due to a lack of automation and increased risk of human error.

Security

As excel files are often shared via email or stored on local drives, this makes your rebate programs vulnerable to unauthorized access and data breaches. Your data is not protected by advanced software features such as encryption, security access control or partnerships with technology companies. Tracking changes and maintaining audit trails are difficult, and as data volumes grow, ensuring the integrity and confidentiality of your data becomes increasingly complex.

The Excel bottom line

While Excel remains a useful tool for entry-level rebate management, businesses aiming for scalability, accurate real-time rebate tracking and in-depth analysis of large-scale payable and receivable programs will quickly reach its limitations.

Automated rebate management software

Cost & time investment

While there is an initial investment in cost and time to set up automated rebate software, unlike manual rebate management, you can set rebate rules and calculations up once, then clone them for the following year. It’s also faster and easier to make adjustments along the way.

Data integration & accuracy

Any automated rebate management system worth its salt will provide a robust BI foundation. This enables the integration of multiple data sources into one centralized platform, including ERP, CRM, sales, inventory and purchasing data as well as data compiled in various Excel spreadsheets. Data is continuously updated automatically and rebate calculations are automated, removing the need for manual work and ensuring that your rebate data is always accurate and up to date.

User-friendliness

New rebate software may require initial training. The return on this time investment is quickly recouped by time saved through the automation of data entry and rebate calculations. A significant advantage however, is that rebate management software is designed to make it easy for multiple stakeholders to use, reducing the dependency on IT and Finance. Sales, purchasing and inventory teams have fast, easy access to rebate data. With an interface that typically mimics that of an excel spreadsheet, it’s easy for users to independently navigate the software. With all data flowing into a centralized source, it’s also easy to connect rebate data with other sources like stock or accounts receivable data to show correlations with other parts of the business.

Tracking rebates and analysis

One of the most significant advantages of using rebate management software is the transition from time-consuming manual processes to the ability to conduct in-depth analysis. This shift allows sales teams to leverage rebate analysis as a powerful tool to maximize profitability. By easily accessing and tracking rebate programs and their structures, salespeople can determine if these programs are effectively driving sales. With data readily available, they can adopt more strategic approaches to product offerings and pricing strategies, providing valuable insights to customers on optimal purchase timings to maximize earnings, explore 'what-if' scenarios for non-rebate customers or use pro-rata analysis to forecast sales. Additionally, sales teams can drill into the underlying rebate data to identify risks, such as products with eroded margins.

In terms of purchasing, automated rebate software aids in developing strong trade partnerships by helping you select suppliers that maximize profitability and using data to negotiate better deals. It ensures that no opportunities for savings are overlooked. By maintaining an up-to-date view of rebate performance, businesses can make the most profitable purchasing decisions, thereby enhancing overall efficiency and profitability.

Self-serve reporting and dashboarding

Automation, accuracy and ease of use are once again the heroes when it comes to reports and dashboards. As data is consolidated and updated automatically you can trust that reports contain real-time, accurate data. The software should also empower all users to create and customize their own reports and dashboards without having to request them from their internal IT department, or even outsource to consultants at an extra cost. Everything is streamlined, faster and reliable. You can schedule automated reports, set up alerts, securely share rebate insights externally, or tag relevant stakeholders directly within the rebate software.

Scalability

As a business grows, a number of effects can impact rebate programs;

Data integration: expansion through acquisitions and mergers requires integration with additional business systems for seamless data flow.

Increased volume: Including rebate transactions, the number of rebate agreements, rebate claims and payouts to process.

Increased complexity: Additional products/services, multiple rebate tiers/conditions, varying customer segments and sales volumes.

Administrative overload: Increase data volume to manage, greater potential for human error in manual data entry and processing.

Compliance: Increased scrutiny necessitates improved transparency, up-to-date record-keeping and regular audits.

Analysis and reporting: Greater demand for detailed reporting and in-depth analysis to track rebate performance and customer behaviour

Rebate management software addresses these challenges, enabling businesses to scale effectively while maintaining efficient and accurate rebate management.

Data security

An automated rebate management solution will allow for precise security permissions that can be defined at a user level. This granular control ensures sensitive data is restricted to autorized people only, preventing unauthorized access and data breaches that are common with Excel spreadsheets. The software is also designed to meet stringent compliance requirements and as data entry and processing are automated and individual rebate changes can be tracked via cell history, it’s much easier to conduct regular audits. Additionally, encryption mechanisms are employed, as is compliance with global data privacy laws and regulations. Plus you have peace of mind that internal teams are dedicated to regularly reviewing applications, platforms, procedures and processes.

Switching to rebate management software

If you’ve recognised that it’s time for your business to make the switch to automated rebate management, Phocas Rebates is a purpose-built product that enables you to stay ahead of payable and receivable rebate programs to deliver efficient and profitable rebates. It allows you to set up a number of rebate types, such as volume, growth, mix, retention, percentage, and multi-bracket rebates.

The Phocas platform is unique in that it offers a BI Analytics foundation alongside FP&A products, including Financial Statements, Budgets & Forecasts and of course Rebates. Its BI core is the automated grounding force behind Phocas Rebates. It integrates with over 200 data sources like your ERP, sales, inventory and purchasing databases, as well as all your previously saved spreadsheets. This allows all your data to be consolidated into one central, secure platform that is much faster and easier for access for everyone.

Finance, sales, inventory, purchasing teams can view up-to-date rebates statuses on the fly. They can also perform their own in-depth rebate analysis with near-miss analysis, what-if scenarios and the ability to drill into underlaying data down to transaction level. Data entry, calculations and data refreshes are all automated, so you can rely on accessing up-to-date rebate performance any time. Additionally, Phocas’ ability to handle vast amounts of data makes it’s an excellent fit for high-transaction businesses such as distributors, manufacturers and retailers.

Excel spreadsheets will always play a valuable role, but automated software like Phocas Rebates will accelerate your ability to boost your rebates bottom line and develop win-win trade partnerships. Find out more about Phocas Rebates.