In today’s dynamic business environment, effective cash flow management is critical for merchants of all sizes. One of the key challenges merchants face is predicting when and how much rebate income they will receive.

Our new financial projection system was developed specifically to address this need. By providing accurate forecasts of future spend and earnings, we enable merchants to:

• Improve cash flow planning and financial forecasting
• Make more informed purchasing decisions
• Better understand the financial impact of different buying strategies
• Reduce uncertainty around future income streams
• Support budgeting and financial goal setting

Many of our customers have told us that having visibility into future spend and rebate earnings helps them make strategic decisions about when to accelerate purchases, which suppliers to prioritize, and how to optimize their overall rebate performance.

In order to meet this need, version 3.6 of the eBiz platform delivers the following new fuctionality, improvements and updates:

1. Generates accurate time-series projections for spend and rebate
2. Shows these projections in the spend and rebate tabs of agreements, with a simple switch to enable/disable projections
3. Shows turnover projections in the report builder, with a switch to enable/disable projected numbers
4. Adds a new “Rebate Report Builder”, which copies all the functionality from our Report Builder, but now for Rebate calculations
5. Adds a new Rebate Calendar/Schedule, showing members a forward schedule of rebates with a calendar style projection around the months and values of future rebate earnings, helping them manage their cash-flow effectively

Calculation Methodology

1. Historical Data Analysis

The system begins by analyzing your historical turnover data, identifying:

• Spending patterns unique to your business
• Month-to-month variations
• Year-over-year growth rates

2. Seasonal Pattern Recognition

We employ a seasonal decomposition technique to identify cyclical patterns in spending:

• Seasonal Index Calculation: For each month, we calculate a seasonal index that represents how that month typically performs relative to the annual average.

  Formula: Seasonal Index(month) = Average Turnover(month) / Overall Monthly Average

• Seasonality Adjustment: These indexes allow us to anticipate predictable fluctuations throughout the year (e.g., higher spending during holiday seasons or fiscal year-end).

3. Growth Trend Analysis

The system calculates your growth trajectory using a compound annual growth rate (CAGR) approach:

Formula: Annual Growth Rate = (Current Year Turnover / Previous Year Turnover) - 1

This growth rate is applied forward with appropriate damping to avoid overestimation.

4. Time Series Projection

For future months, we employ a multiplicative model that combines:

• Your recent average monthly turnover
• The seasonal index for each projected month
• The calculated growth rate

Formula: Projected Turnover(month) = Recent Average Turnover × Seasonal Index(month) × (1 + Growth Rate)^(months ahead/12)

5. Rebate Calculation

Projected turnover values are then processed through agreements exactly like submitted turnover to estimate future rebate amounts:

• Applicable rebate tiers are considered
• Compound, String and non-retrospective rebates are all processed as usual
• Year-to-date progress toward thresholds is accounted for
• Pro-rata calculations are applied where relevant

Update Frequency

Projections are automatically recalculated when:

• New turnover data is entered
• Rebate terms change
• Monthly/quarterly reviews occur

This comprehensive approach provides you with a data-driven view of future rebates, allowing for more informed financial planning and cash flow management.

Visualising the data

The simulated data is available all across the ebiz platform, in all the same places you would find existing turnover and rebate calcualtions.

1. On the agreements themselves, in both the spend and rebate tabs
2. In the report builder(s)
3. On a new rebate calendar