IT FREE CASH FOR MERCHANTS? – IT’S REBATABLE


Making profits isn’t getting any easier for builders’ merchants, yet there is often money to be collected, if you know how. BMJ talks to one ex-merchant about how to find it.


A


fter a spending decade in the merchanting industry at Grafton Group, Mark Gilham, VP Rebate Advisory at Enable, has seen it


all when it comes to rebates. His findings are eye-opening: “Many merchants don’t realise they’re leaving between 0.6% and 3% of potential rebate income on the table. Even in organisations with dedicated rebate teams, we regularly find significant sums being missed, and that’s often a percentage of a very big number.” This isn’t about suppliers deliberately withholding rebates. Rather, it’s a combination of complexity, manual processes, and simple human error that creates these gaps. For most independent merchants, rebates represent between 5-10% of income and a substantial portion of overall profitability. For larger operations, rebates can constitute an even more significant percentage of their profit margin. Yet despite this critical importance, the systems used to track these funds often rely on spreadsheets, manual processes, and knowledge residing with just one or two team members. “I often joke that the first rule of Rebate Club is nobody talks about rebates,” Gilham says. “But when rebates make up such a significant chunk of your profit, optimising them represents a major opportunity—whether you’re a national chain or a four or five branch operation.” The opportunity to recover missing rebates typically comes from three key areas: ¡ Uncollected entitlements: Simply not collecting what you’re already owed, particularly from smaller suppliers in the ‘tail’ of your vendor base. ¡ Calculation errors: Suppliers making honest mistakes in their calculations—it happens more frequently than you might expect. ¡ Missed tier opportunities: Not maximising incentive opportunities by failing to hit higher rebate tiers that could significantly boost returns. “We’ve found money for major national merchants who had dedicated teams managing rebates,” says Gilham. “Imagine what we could find for smaller operations. For a typical independent, that could mean an extra £20,000- £30,000. Who wouldn’t want that free cash going straight to the bottom line?” If you’re looking to consolidate and sell to private equity, the impact becomes even more compelling. Every extra pound of rebate income could be worth five times that amount to your valuation, as buyers typically value recurring


tens of thousands in found money going straight to the bottom line.


“Contract support and claim-backs are a common area where money gets left behind,” he says. “It’s a real headache—lots of small claims that quickly add up to a significant number. And then there’s how they interact with your rebates, it’s a world of complexity that really works against us.”


earnings at significant multiples. Alternatively, it’s simply extra cash in the bank when you need it most.


Check three key places for missing rebates:


¡ Settlement Discounts: Verify that all settlement discounts are correctly configured in your accounts payable system. ¡ Non-Rebateable Spend: Request a breakdown from suppliers of any recent spend (e.g., the past 2–3 months) that did not earn a rebate. You may uncover unexpected gaps. ¡ Rebate Credit Memos: Get a list of all rebate- related credits issued over the last 12–24 months. Cross-check these against your AP ledger and request copies for any that are missing.


While improved rebate collection provides immediate financial returns, the strategic benefits extend much further. Achieving true net-net visibility creates what Gilham calls a “eureka moment” for many merchants. This insight enables much more strategic decision- making across the business. With real-time visibility into rebate earnings, merchants can adjust purchasing patterns to maximise tier attainment. Streamlined processes mean faster collection of the rebates you’ve earned. Multi- location merchants can track how individual branches contribute to rebate targets, creating accountability at every level.


Gilham helped one Enable customer discover nearly £250,000 in missing rebates within hours of implementing proper tracking. For an independent merchant, this could translate to


June 2025 www.buildersmerchantsjournal.net


Understanding rebates This complexity extends to understanding what rebates are actually for. “There are what we might call ‘golf course rebates’—nobody knows why they exist, but they’re most likely agreed on the golf course,” Gilham explains. As the building materials sector continues to digitalise, rebate management is evolving from an administrative function to a strategic capability that directly impacts bottom- line performance. “We’re seeing practical applications of AI helping merchants ask important questions like ‘Where are my biggest buying opportunities right now?’ or ‘Which suppliers aren’t paying my rebate on time?’” says Gilham. “Even comparing this year’s contract to last year’s becomes simple with natural language processing.”


For builders’ merchants navigating today’s challenging conditions, the message is clear: rebate management is too valuable to leave to chance or outdated systems. “At the end of the day, it’s about claiming every pound you’re entitled to while structuring your purchasing to maximise future earnings,” explains Gilham. The path to reclaiming these hidden profits starts with an honest assessment of your current rebate management processes. Ask yourself: Do you have complete visibility of all your rebate agreements? Are you tracking performance against targets in real-time? Can you easily reconcile what you’ve claimed versus what you’ve been paid?


Builders’ merchants are increasingly turning to specialised solutions like Enable’s rebate management platform to automate these processes. “The ROI is typically measured in weeks, not months or years,” says Gilham. “And with economic pressures mounting across the construction supply chain, there’s never been a more critical time to ensure you’re not leaving money on the table that rightfully belongs on your bottom line.” BMJ


29


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76