Rebates - how do you treat them?
If you claim a rebate as part of your contract with a supplier, how do you report these? Are they classed as savings? Do they get added to the top-line? Do they filter back down to the relevant budget holder to be reinvested?
Hi Lewis. On the question about where the rebate filters back down. I like to see it allocated to the stakeholder's cost centre. This may not be the cost centre which has funded the purchases. For example, one contract I managed (relocation services) the costs were borne by the hiring managers, but the contract was managed by a central HR team. We allocated the rebate to that central team. Apportionment to dozens of individual cost centres proved ineffective.
I support Michael Angel view. Usually in Indirect Procurement a rebate is established and is tracked as a savings opportunity against the spend. This is one way, another way is to invest in SRM and business partnering to leverage the service, innovation which add top line revenue to the company. procurement now days needs to bring in commercial efficiency, savings and revenue.