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Optimize Vendor Specials and Rebates

Today’s typical marketer needs to take full advantage of vendor specials and rebates to maximize profits. Due to the sheer volume and complex paperwork required for these rebates and specials, however, many companies lose track of them. Here’s a game plan for maximizing vendor promotions.

Designate vendor program responsibility. As with any other business endeavor, someone needs to be in charge and take full responsibility of vendor programs for success. Designate a single individual that will enthusiastically take on the role. We’ll call this person your Vendor Programs Manager (VPM). To make a cost-effective time and payroll decision for this position, estimate your company’s total annual vendor program dollars. In large companies, VPM may be a full-time position.

Document available programs. In too many marketer companies, specials are kept in a manager’s head. This works fine until that manager goes on vacation or gets ill. Instead, utilize a contact management software program such as ACT! to track available programs. Documentation should include beginning date, ending date and any qualification criteria.

Your software file should include fuel branding rebates and any temporary fuel allowances or oil price support. When appropriate, the documentation should be kept on a customer-by-customer or site-by-site basis. Supplier volume-driven business development funds can also be recorded and managed in the same software system.

Negotiate and create programs as needed. It’s amazing what some marketers negotiate. Many marketers literally design new promotions and then present those ideas to vendors for approval. If you need support due to competitive pressure — ask. As with any negotiation, be sure you are talking to the right person. Your direct account representative is usually not the best one to negotiate with since their bonus criteria may directly conflict with any price support. Do your homework on a vendor-by-vendor basis to find out the right person for your negotiating effort. Be sure to document all proposals and record key contacts.

Get it in writing. Even good vendors have turnover, so make sure verbal promises are followed up by written commitments. Keep a separate file drawer for vendor commitments filed by vendor and make a note in your software documentation when the written commitment is received plus expiration. When commitments apply to certain sites or customers, duplicate the commitment letter for the customer or site file.

Pay attention to the fine print.  Most specials and rebates require performance. You must sell a certain number of units within a given time period. Make sure those requirements are noted in your software system and communicated to appropriate personnel.  To monitor volume requirements, set-up ticklers to check committed unit volume progress at pre-designated periodic intervals. The intervals should be spaced so there is time for appropriate corrective action if your company is falling short on any of its commitments.

Track Estimated Dollars and Due Dates – Using past sales history or projected volumes, make an estimate of the amount of funds due from each vendor and the due date.

Communicate Vendor Receivables to Accounting. Vendor rebates and special reimbursements should be entered into the GL system similar to any other receivable.

Set Ticklers – The VPM should set reminders in their system for critical dates. These would include periodic volume audits, kick-off activity reminders, expiration dates, paperwork due dates and payment due dates. Many marketers forfeit vendor funds simply because they miss the reimbursement paperwork due date.

Notification of Receipt – When vendors make payments, those payments will typically go directly to the receivables area of a company. Therefore, a process must be put in place for the VPM to be notified of any payments received. This can be a simple email, copy of the payment, or any other workable solution that fits your office situation.

Double Past-Due Tickler System – When a vendor does not pay on time, both the VPM and accounting departments should know immediately. If the receivable was entered correctly, accounting will see the missing money as a past due on the accounts receivable aging and listing. The VPM will know the payment is missing immediately from their tickler system.

Follow-up with vendors – It is amazing how much vendor money goes uncollected, because marketers “trust” their vendor to remit payment. Don’t make this mistake. When expected money is not forthcoming, the VPM should be the one to call the vendor and track down the missing funds, taking whatever corrective action is necessary.

Designation of a VPM and adherence to these procedures has meant significant increase in vendor payments and therefore healthier bottom-lines for many Meridian clients. In today’s super competitive marketplace with its thin margins, don’t let any stone go unturned, especially with vendor free extra money for doing what you’ve always done.

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