Many distribution companies, especially those selling industrial products, resell product from manufacturers and are granted rebates from the manufacturers for selling the product. Manufacturers typically offer this kind of rebate when they have trouble selling product that they have produced but is now taking up shelf space at the factory. Inventory holding costs can be very costly, and manufacturers need to move the product to make shelf space for new product. An incentive that they provide their distributors is a rebate for selling the product. This rebate can be for a fixed percentage or dollar amount of the purchase price or the sales price. It can even be a guaranteed gross margin amount that the manufacturer is granting on the sale by the distributor. These rebates, although typically a great business opportunity, can get very complicated to manage within ERP systems.
Distributors need to track the rebate agreements that they have with manufacturers and make sure that they track the sales that have had rebates applied. They need to calculate the various rebate amounts on sales, and be able to retract these rebates in cases where customers return the product. Ultimately, manufacturers issue credits to the distributors for the rebate amounts, but without being able to track rebate amounts accurately, it is never known for sure if the manufacturers are correct in issuing their rebates. It can also be very challenging for accounting departments to generate accruals for these rebates from vendors.
With the new Rebates Management SuiteApp from NetSuite, these common business practices are easily configurable and tracked within the system. Sales order entry personnel can immediately see the gross margin on the sale after a vendor rebate, which historically has slowed down order entry and processing. Sales reps can see their gross margin on sales after rebates, which historically has complicated commission plans. Accounting can see the amount due back from a vendor due to the prior month’s sales, which historically has caused accrual entry frustration during month end close. All of this is available without any customization with the new Rebates Management SuiteApp.
Ability to track multiple customers, items, rebate calculation methods, and percentages/amounts:
Ability to calculate gross margin after rebates in dollars and percent on sales transactions, real-time:
RSM has helped thousands of ERP customers successfully optimize and fine tune their business application systems. For more information about this topic or others related to NetSuite, please contact us at firstname.lastname@example.org or by phone at 855.437.7202 .
By: Bharat Chandu – Virginia NetSuite Solution Provider