Rebate Management as a Driver of Business Performance

A transformative shift is underway in the world of rebate management and CFOs are taking more notice, says Mark Gilham, Vice President & Head of Advisory Services at rebate management leader Enable.​ 

CFO Magazine’s Emma Foster sat down with Mark during his recent visit to Australia for Enable’s annual rebate strategy conference, Elevate, and discussed the role of rebate management as a driver of business performance.

EF – After two decades in finance roles at the likes of UK-based construction supplier Grafton and financial services firm Barclays, you joined Enable in 2022. What was the attraction?

MG – When I joined Grafton in 2014, I became one of Enable’s first clients. I got to know Andrew Butt, the CEO, and as he explained his vision for the evolution of rebate management, that really interested me and the rest of the team.

As one of Enable’s earliest clients, we had the ability to help shape what the product could look like and, bit by bit, we were able to leave our rebate spreadsheets behind in favour of the software. So, I’ve seen firsthand the benefits of the platform, and how having the right rebate management platform can dramatically improve how a company manages and optimises their rebates.

Eight years on, I attended Enable’s conference in 2022 as a customer as I was transitioning out of my role – and the stars aligned. Andrew and the team had already closed two rounds of funding, a great signal to me that the team had the backing to deliver on the vision. I was excited to be part of propelling the company forward to its next phase.

EF – You spend a lot of your time educating finance professionals that there is a better way when it comes to rebates. How so?  

MG – Rebates have been part of doing business for a long time, and act as a type of incentive to motivate trading partners for mutual success.

But for many reasons, rebates don’t always drive the behaviours they were intended to, and they have always been tricky to administer from an accounting perspective. In fact, when you train to become an accountant, no one teaches you rebate management.

The reality is there is also often very little accuracy in tracking rebates, causing variances to the bottom line, not because anybody is doing anything wrong, but because there’s so many moving parts and not enough hours in the day to keep an eye on everything.

Technology platforms, like Enable, are transforming all that by bringing visibility to what is actually happening to give you much greater precision. We’ve also built a framework that helps people take the ‘murkiness’ out of rebates and turn them into ‘black and white’.

EF – Why should CFOs take notice?

MG – As the custodian of the profit of a business, the modern CFO is not just responsible for reporting profit, but influencing it. If you are influencing profit, you need to be influencing rebates because they can be a big driver of profit in your business.

On one side, if your business is selling – therefore paying out rebates to customers – I would urge CFOs to pay attention to how much in rebates you’re paying out compared to other lines in your profit and loss. In some cases, you’ll find the rebate line is a bigger number than, say, your payroll. Give the line in your profit and loss account the attention it deserves. If you’re paying out growth rebates, are you getting growth? If the answer is no, your programs should be revisited. Sometimes the most subtle of changes can drive a better behaviour – and small percentages can make a big difference.

On the flip side, if your business is buying – therefore collecting the rebate from your supplier – are you sure you’re collecting everything? And are you maximising your contracts or missing targets?  For example, are you failing to stock a certain product which actually would have rewarded you massively for doing so? You need visibility over these things to make sure that all the hard work done by your commercial teams is turned into dollars on the bottom line.

As these challenging economic conditions continue, CFOs need to consider where there are opportunities to reduce costs or increase sales – and rebates can often be a great place to start.

EF – What kind of results have you seen achieved?

MG – If I look at my first-hand experience at Grafton, in our UK merchanting division we had around 4000 suppliers, and 700 contracts with rebates. We were collecting £200 million in rebates, which was more than our operating profit and therefore critically important.

When we started truly interrogating those rebates, and implemented Enable, we found an extra £1.2 million – two thirds of that came from the long tail of the rebates, where we were just not giving it the attention it required. My investment into Enable was justified and what was even better was that the payback was delivered in the first year, and then every year thereafter. It’s rare to have such rewarding investment opportunities, but I can confidently say that investing into your rebate management capabilities is one of them.

EF – What types of organisations are likely to gain the most from a rebate strategy?

MG – Businesses in any industry, and of any size, can use rebates as tremendously powerful incentives. We see them used across retail, manufacturing, distribution, fast moving consumer goods, services and elsewhere.

As an example, when a recruitment company, that normally charges a 15 percent recruitment fee, wants a big contract with a customer who only wants to pay 10 percent, they could say, well, once we’ve done X placements with you, we’ll take it down to 10 percent and we’ll rebate you back. It means the customer only gets that rate if they do what they say but has an incentive to recruit more.

EF – Since starting up in 2016, Enable has enjoyed remarkable growth, breaking into the coveted unicorn status earlier this year. Tell us about this upward trajectory and what’s been key to it?

MG – From a bootstrapped start-up in a single location in the UK, we now have nearly 700 people spread across the globe and in January, we closed a Series D raise which saw the valuation of the company exceed $1 billion. We’ve accomplished this by building trust with our clients, which has been critical to our growth.

And the growth has been phenomenal and shows just how deep interest is in better rebate management. The market is acknowledging how important it is to properly incentivise behaviours with rebates. Plus, we are seeing new industries and types of businesses approaching us for support, ranging from smaller companies to some of the biggest household brand names.

If a company isn’t sure what good looks like, our Enable Advisory service can help. One of the commercial optimisation services we offer is our ‘rebate health check’, where we will go into a business and do a cradle-to-grave review of rebate management processes and recommend how to get to industry best practice. 

We also have initiatives like our rebate strategist community – a completely free online community for rebate professionals coming together to share information, ask questions of each other, debate the merits of certain rebate schemes and the like. It’s a key part of what Enable is trying to do, to educate and build a global community for rebate management professionals, and to bring rebate management proudly out of the corner.

To learn more about Enable and rebate management visit: www.enable.com