Rebate recovery, explained

Plain answers for purchasing directors and controllers at plumbing, HVAC and electrical distributors.

• What is rebate leakage? Where distributors lose earned vendor rebates

  Rebate leakage is vendor rebate money you earned but never collected. Where it comes from, how to measure it, and how distributors get it back.

• Is hitting the next rebate tier worth it? The break-even formula

  Compare the extra rebate to the cost of carrying the extra stock. The break-even formula, a worked example, and what it leaves out.

• Retroactive vs. incremental rebate tiers: what's the difference?

  Retroactive tiers raise the rate on every dollar once you cross a threshold. Incremental tiers only pay the higher rate above it. Examples and why it matters.

• How to reconcile vendor rebate credit memos against your accruals

  A step-by-step way to match vendor credit memos, checks and deductions to rebate accruals, and catch bundled or short payments.

• What is inventory carrying cost for a distributor, and how do you estimate it?

  Carrying cost is the yearly cost of holding inventory as a percent of its value. What goes into it, a worked estimate, and how to use it.

• Vendor rebate audit checklist for distributors

  What to gather, what to check and what to send the vendor when auditing rebates. A practical checklist for plumbing, HVAC and electrical distributors.

• Why year-end rebate tier pushes often lose money

  Buying extra at year-end to hit a rebate tier looks profitable. Carrying the stock often costs more than the rebate pays. How to tell before you buy.

• How should distributors accrue vendor rebates?

  Accrue vendor rebates as you buy at the rate you expect to earn, true up when tiers change, and reconcile to what's collected. A practical guide.

• Buying group rebates vs. direct vendor rebates: how to track both

  Direct rebates come from your own vendor agreement. Buying group rebates flow through the group. How they differ and how to verify you got both.

• Vendor programs distributors forget to claim: growth rebates, SPAs, co-op and more

  Growth incentives, special pricing claims, co-op funds and price protection often pay only if you claim them. What to check for each one.