With all industries, there are key features to look for in a piece of software; ones that are crucial to how your company operates. For cleaning and hygiene businesses, rebate pricing models, margin management and accurate accruals are vital.
One of our clients does enough business with its suppliers to earn more than a million and a half pounds in rebates every year. That’s a substantial amount of their profit. It’s therefore imperative that they have accurate rebate management within their financial systems.
There are two types of rebates that suppliers to cleaning and hygiene businesses offer. One is an annual rebate, where a certain amount of money is repaid to the company based on its annual sales.
The second is a sell-through rebate. This allows the cleaning and hygiene company to achieve a rebate upfront for certain customers and to give them special pricing based on that.
Due to rebates, cleaning and hygiene businesses don’t always know what their cost of sale will be. Apart from at the end of the year, they do not know which rebate threshold they will reach. Where the precise margin is unknown, they cannot establish what commissions and bonuses to pay to their salespeople.
This uncertainty at the point of sale means that there is no way of determining the margin made on the product, the amount of commission payable to the salesperson – and in turn, the overall company profit contribution for that sale.
With cleaning and hygiene businesses, the salary payments and rebates need to be accrued for, so that they can be paid once the rebate levels have been verified.
Accrual accounting is a standard feature within ERP systems. But without automatically knowing what precise sums they should be accruing for, many companies resort to spreadsheet accounting to calculate the rebates due and the commission payments on complex vendor agreements. And reverting to spreadsheets is counter-intuitive to having a sophisticated ERP system in the first place.
The software solution for cleaning and hygiene businesses
Rebate management is not accommodated within standard ERP software. Typical ERP software cannot calculate rebate levels based on complex trading agreements, cannot determine the cost of sale for a product, and cannot gauge exact accrual amounts.
But, at Balloon One, we have a number of customers whose pricing models work on a rebate system, and with our know-how, we are able to extend and enhance the capabilities of both NetSuite and SAP Business One. This means that our customers can still use these systems, and their particular needs to do with complex pricing models are completely catered for.
They don’t miss out on rebates, and can accurately calculate accruals. And one of the very reasons they bought into an ERP system – to have accurate, real-time financial information – is still maintained.
If your business runs on complex pricing agreements and you would like to learn more about the ERP systems that we can extend to meet these needs, please call us for more information on 020 8819 9071 or contact us using the website form.