The Surprising, and Unfortunate Truth About Spreadsheets.
You depend on your channel incentive and special pricing agreements to help drive revenue, as well as improve the performance of products and channel partners. However, the administrative ‘status-quo’ of these programs pose significant financial challenges to channel and finance teams. Relying on different technologies, inputs, and processes for managing channel incentives and backend rebates all but assure miscalculations—causing thousands (and potentially millions) of dollars to be erroneously credited.
The negative consequences of manually managing channel incentives extends far and wide within the infrastructure of an organization–hurting productivity and the reconciliation of information that impact periodic forecasting, allocation of resources, budgeting, and overhead/operational expenses.
Full-time employees sit in front of spreadsheets trying to manage channel incentives, disparate partner data feeds, determine approvals and authorize payments for hundreds or even thousands of pricing programs yearly–with many overlapping (or duplicating) each other.
This level of adoption simply falls short, unable to sufficiently rein in processing costs while increasing issues with budgeting, resource allocation, and cash flow.
As with all manual processes, there are inevitable breakdowns and/or missing elements in critical areas that directly impact the financial status of your company, for example:
Accuracy and Consistency
— resulting in the erroneous validation of claims, leading to overpayments/duplicate payments
Valid Audit Trail
— electronic process storage and retrieval of data
— net revenue and sales reports (ROI) with quantifiable metrics
Approaches that heavily rely on spreadsheets, such as managing channel incentives, use manual review processes, or attempt to stretch the functionality of related systems are both labor-intensive and completely inadequate when it comes to managing the high volumes of incentive claims.
As a result, businesses are left with many uncertainties regarding the large volume of dollars surrounding their trade agreements and promotions, such as:
-Who gets paid what?
-Are partners receiving the correct rebate credits?
-Do partners receive timely credits or are credits being received at all?
-Are there rebates overlapping?
-What source of data should be used to analyze claims?
-Which sales and marketing programs are successful?
Automating the Process of Managing Channel Incentive
Ultimately, the indirect sales funnel is far too complex to handle backend rebates without a robust, fully responsive price management system in place. Without the technical capacity to accurately approve and validate partner claims, while effortlessly refer back to each transaction, understanding the true financial status of your business—as well as stating your liability with channel partners—is flawed.
Here are some of the areas manufacturers leave themselves most vulnerable in without an automated partner claims management process:
1 – Claim overpayments
Keeping track of partner incentive programs and submitted claims manually all but guarantees inaccurate accounts payable. Without an adequate support system in place for managing channel incentives, channel teams quickly become overwhelmed trying to keep up processing the never-ending stream of claims for payments requiring validation.
2 – Unreliable Reporting
— Manually collecting data and managing channel incentives greatly increases erroneous calculations of net revenue; furthermore, the inability to track each transaction of current and historical POS data deteriorates demand forecasting and overall business productivity. All it takes is one small, incorrect keystroke or mental lapse, and the entire claims document is defective.
3 – Inaccurate Program Reconciliation
— Without a system for managing channel incentives that auto-matches volume commitment thresholds or incentive rebate requirements, you have little to no validation of best-performing partners, most profitable programs or accuracy into estimations of monthly/annually payments to partners.
4 – Operational inefficiency
— Manual processing of claim form data means your team is allocating an unnecessary amount of resources and overhead into claim management. With price management automation, your workforce can allocate their labor to other (more important) revenue generating activities. However, auditing backend rebates with traditional methods put an unneeded strain on labor workload. Overworked channel teams do not properly validate claims, instead, they validate pricing discounts without realizing they’re significantly overpaying; inadequate tools for managing complex, high-volume sales channels also lead to delays in processing—resulting in frustrated, unsatisfied partners.
5 – Unnecessary waste of financial resources
– Over time, chronic overpayments take a significant toll on internal revenue. This means you are taking away financial resources from areas of your business that might need them most.
6 – The risk of Partners to ‘Game the System’
– Sooner than later, your channel partners will catch on to the fact that you don’t have a competent system for managing channel incentives in place. Your inability to accurately calculate claims against special pricing parameters means partners can take advantage of the ‘grey areas’ of your process, knowing that you don’t have the resources/technical capacity to identify invalid discounts.