When it comes to discounts, there are two sides to the story: customer discounts and supplier discounts. How to distinguish between the two can be confusing. So, to explain the difference between customer discounts and supplier discounts, we will take a different approach, considering them a tango rather than a war. We know that many of our competitors make a big difference between managing customer discounts and managing supplier or supplier discounts. That`s ok. Within a company, it`s common to separate the two – customer discounts are often routed through sales and supplier discounts are often routed through purchase – but we should avoid seeing them as opposing forces in a war for profit. UCLA typically negotiates volume or commercial discounts rather than accepting incentives or entering into discount agreements with suppliers. An exception is the Strategic Sourcing discount program for on-campus purchases. The Strategic Sourcing group receives operational funding from supplier discounts (or favouritism incentives). The group negotiates contracts that offer significant discounts and added value for the goods and services the university can purchase. Strategic procurement is not supported by public funds (see link).
Sales margin analysis can be very difficult to obtain. It is necessary to consider customer discounts, supplier discounts, net purchase price, net selling price, etc. All of this has to be in the mix – not to mention contract sales where the manufacturer effectively supports your selling price even on some sales – making understanding your margin on some sales very obscured. True transparency gives you the answers to at least some of these questions: market transparency to improve decision-making, which increases profitability. And seeing both sides of customer and supplier discounts internally can ensure that transparency quickly, easily, and painlessly. Another benefit of viewing customer discounts and supplier discounts as a related activity rather than an isolated activity comes from looking at both aspects of the use of discounts within an organization. Supplier discounts are a term used when a company manages its revenue stream from discounts owed by its suppliers. Ultimately, your income statement reflects your overall level of profitability. But how do you know where you`re going to improve that? Which product should you sell the most? Which customers should you sell to the most? Which products should you remove from your range? The devil is in the details.
Discounts are offers made by the Supplier either to return part of the cost of the Order to the Buyer, or to provide additional consideration or compensation to promote the purchase of goods and/or services. Examples: You may see customer and supplier discounts as opposing forces, and many people do, but that`s not the case. At Enable, we see both sides and recognize that the revenue stream a company manages with its suppliers is exactly the same flow as the customer remittance liabilities its suppliers manage for them. The square dance of customer discounts and supplier discount management is a matter of clarity on the transit margin. Here`s another example of a discount to illustrate: when you buy a product, you get a discount on that product, you sell that product to a customer. As part of this offer, you sell at a price and offer a discount later. When you put it all together – and figure out how much margin you`ve made selling to that client – square dancing becomes a real party. When it comes to joint business planning, dancing together, customer discounts and supplier discounts should not be distinguished: they are two sides of the same coin.
And if those pieces can be turned into more parts, that`s good for everyone. Instead of an intense tango, the internal management of customer discounts and supplier discounts within a company is more like a square dance. Everyone dances synchronized. And although they usually dance separately, the pattern is consistent, consistent and makes for a good time: if done right. Customer discounts are a term applied to the business process where a company manages the remittance liabilities it owes its customers: the remittance money it will pay to its customers at some point in the future. “My team has all the contracts and supplier relationships. It is up to us to discuss rebates and try to improve the conditions for mutual benefit. If the discounts go up, it will work for affiliates – they get a higher discount – but it also means that our fees are higher than a portion of the trading fees. “A second national company, which resells veterinary supplies, supplies goods to its stores, resells them and charges a supplier negotiation fee (NFC) as part of the agreement. In the past, they relied on Excel spreadsheets to calculate the difference between the cost of goods, rebates received from commodity manufacturers and the rebate passed on.
After massive business growth, they realized how dangerous spreadsheets are for discount accounting and turned to Enable to handle this complex calculation for them. And they didn`t regret it. Department buyers and others cannot accept incentives or discount offers from a supplier without the prior approval of Campus Purchasing. If a supplier suggests incentives or discount agreements, refer them to Campus Purchases. The purchasing staff will check the terms of the offer to determine if: If you know it`s paid, great.