Rebate Calculations

Fu

Rebates are undoubtedly the most important part of a buying group; they are the number one draw for most members in joining.

The complexity of some agreements means that working out who is owed what, especially when a single agreement can have a wide range of rebates, can prove difficult and incredibly time consuming. And as a buying group, it would not be prudent to leave this outsourced with the suppliers/vendors(!).

Therefore, a computer system of some sort is a necessity in order to get accurate rebate calculations, with minimal time input.

Our system has been constantly developed over a fifteen year period to accurately calculate and report on rebate earnings - regardless of how complex the agreement is and how many members/partners/stakeholders there are (and who can participate).

In addition to simply calculating the rebate due, our system provides tools for chasing suppliers for outstanding money, sending them requests for payment, and then distributing the incoming funds to the members/partners.

eBiz can handle literally hundreds of rebate combinations for a single agreement - but a short overview of just a few rebates type are highlighted below:

  1. Guaranteed Rebate
    Probably the simplest of all, a guaranteed rebate provides a set return on spend - i.e 10%.
  2. Stepped/Targetted Rebate
    Available as group or individual, a stepped rebate pays out different amounts based on the spend (either group spend as a whole, or individual members spend).
  3. Growth Rebate
    Pays out based on growth of either the group or individuals members based on previous years spend. For example, grow between 1-5% and get 2% rebate (either on all spend, or just the growth portion). eBiz can handle growth rebates within an agreement (i.e year 2 vs year 1 of the same multi-year agreement), or span agreements (current agreement vs previous agreement).
  4. Non retrospective
    With a stepped rebate (or stepped growth), our system can pay either the full amount (retrospective to zero), or pay each rebate amount at each step. For instance, if you have a stepped rebate with two steps (a. 0-1m @ 1% and b. 1-2m @ 2%) and the group spends 1.5m, a fully retrospective rebate will pay 2% for all 1.5m of spend. A non-retrospective rebate would pay 1m @ 1%, and 500k @ 2%
  5. String rebate
    A strung rebate is one that factors in previous rebates payments to future spend. A common example is when an agreement may have a monthly/quarterly rebate and an annual rebate. When an annual rebate is strung against a monthly rebate, the monthly rebate earnings are agregated and reduce that amount is deducted from the annual spend.
  6. Different input & output types
    Different input/output types enable targets to be met with one type of unit, and rebate paid on another. A good example might be a stepped rebate such as: 1-100 tonnes @ 1%. Clearly, when rebate is due at the end of the year, a member might be surprised to receive 1 tonne of material back from the supplier instead of a rebate cheque!

In addition to the rebate types we offer, we also offer other features to ensure system and agreement compatibility:

  1. Member participation
    Enables certain rebates to be restricted to certain members. A good example might be east/west members who receive slightly different rebate levels.
  2. Date restriction
    Sometimes an agreement may need to be changed part way through the term. Suppliers may choose to increase a monthly rebate, for example, in June. In this scenario, it's important that Jan-June earnings are calculated as per the original terms, and July-Dec earnings are calculated with the new terms. This can be achieved by cloning a rebate, and date restricting each so they do not overlap. This ensures consistency of calculations throughout the year.

In addition to automatic calculation of rebates, we have features and functionality around the management and distribution of rebates.