There’s a reason rebates have become a core component of healthy relationships between suppliers and distributors: they’re good for everyone. When companies are developing trading programs and attempting to build efficient market expansion strategies, they have to maximize the incentives to do business with one another. This means ensuring that the right amount of product makes it to the right place at the right time, which helps to increase total sales and expand the market for everyone. In other words, companies should focus on sales chain efficiency.

When there are misalignments between the amount of products or materials distributors anticipate they’ll need and how much they actually need, this can create waste or prevent companies from meeting ever-shifting market demands. Rebates address these problems by bringing projections into alignment with reality – for example, when buyers purchase less than they need, sellers can provide rebates to make up for the lost sales volume. Despite the fact that rebates are the only way to account for changing conditions (such as unpredictable economic shifts), many companies haven’t implemented a rebate management system.

Even when companies take advantage of rebates, they often do so with time-consuming and anachronistic resources like Excel spreadsheets and physical documentation. Meanwhile, many of the companies that do use robust digital rebate solutions are disproportionately large and focused on the most complex scenarios. These are all reasons why the supply chain sector is long overdue for democratized solutions that increase adoption rates – and ultimately sales and market penetration – for companies of all sizes.

Companies can’t afford to overlook digital rebate solutions

Information is the key to effective sales chain management. When suppliers and distributors have visibility into their operations, they’re capable of anticipating problems and addressing them as they arise, quickly adapting to changing market conditions and new delivery requirements, and identifying areas where efficiency can be improved.

The prescriptive analytics software market is expected to reach $1.88 billion by 2022. The supply chain management sector is moving toward data analytics as well, but too many companies are still ignoring digital rebate solutions. According to a recent survey conducted by Enable, more than one-third of supply chain professionals say they still use cumbersome manual processes such as Excel spreadsheets to approve, share, and document rebate agreements. These processes are laborious, vulnerable to human error and tampering, and incapable of managing complex rebate agreements.

The belated process of digitization is finally taking place in the supply chain sector – as Gartner notes, the “vast majority of CSCOs [chief supply chain officers] intend to dramatically speed up their supply chain digital maturity progress over the next five years.” Considering the importance of rebates for minimizing channel inventory, bringing sales chain operations into alignment with market and logistical realities, and maintaining productive relationships between suppliers and distributors, it’s clear that digital rebate management should be an integral part of this transition.

The democratization of rebates can lead to better market performance

Many suppliers and distributors that could benefit from the adoption of digital rebate solutions are put off by the fact that these solutions often seem to be built for large companies (particularly suppliers) that need to manage elaborate rebate arrangements. It’s extremely difficult to negotiate and manage these rebates without digital tools that can process large amounts of information, provide accurate forecasting, and facilitate communication between trading partners. But digital rebate solutions aren’t just for large companies – in fact, they may be even more essential for smaller companies with more limited resources, especially as they try to increase sales market share in competitive industries.

While large companies are capable of devoting significant time and personnel to trading agreement management, many small and medium-sized suppliers and distributors can’t afford to stick with inefficient legacy processes. Rebates digitization increases revenue and decreases costs – top concerns for any company, but existential concerns for companies operating on narrow margins. Digital rebate solutions also help companies with limited budgets develop and implement more complicated agreements.

There are many different types of rebate agreements – some are just volume corrections or bonuses for meeting certain sales targets, but others are based on certain types of transactions, specific locations, incentives for specific product sales, shifting annual turnover rates, and a wide range of other variables. These special agreements help suppliers and distributors make the most of their relationships depending on their own unique circumstances – instead of simply renewing last year’s agreements, trading partners should experiment with new ones or try different combinations of incentives with different subsets of partners.

Rebate democratization in practice

It’s impossible to have rebate democratization without simplification. The mechanics of rebate agreements aren’t simplified by digital tools, but the presentation, negotiation, and management of those agreements can be made far more intelligible with the right platform. For example, when a supplier or distributor is trying to decide whether to accept a deal, they shouldn’t have to wade through piles of superfluous headers, line items, conditions, dimensions, and other proprietary information in their partner’s internal systems and documents.

The process of identifying the parameters of a deal can be a nightmare if the relevant information is stored in a litany of Excel sheets and other documents with inconsistent formatting and the ever-present possibility of inaccurate information (due to the increased risk of human error). Digital rebate solutions don’t just make the negotiation of deals more streamlined and transparent – they also give trading partners the latitude to develop customized agreements that serve both parties well. This allows companies to build effective sales chains that meet ever-fluctuating consumer demand and maximize their available resources.

Rebates are among the most valuable instruments suppliers and distributors have to increase the efficiency of their sales chains and build stronger long-term relationships with one another. This is why companies of all sizes and in many industries should make rebate management a top priority – particularly now that it has been democratized like never before.

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 Cesare Rotundo is the VP of Product at Enable, a cloud-based SaaS solution for B2B rebate management.