revenue-management-solutions

Gross Margin Management

Overview

Transaction Valuation, Channel Incentives, Inventory Reconciliation, and Revenue Recognition Activities

Can you really manage gross margin? In the channel business - you bet. Reducing price erosion and erroneous overpayments are but two ways to positively impact gross margin and top-line revenue.

The set of activities relating to managing, implementing, and ensuring compliance for channel incentive programs is complex and time consuming. Entomo provides an automated, systematic process to manage all types of channel incentive programs and related transaction-based financials which impact gross margin and top-line revenue.

Gross Margin Management Solutions

Entomo supports a wide variety of channel incentive programs, including:

  • Rebates, SPIFFs, co-op, and MDF programs;
  • Pricing compliance programs like Ship-and-Debit, Special Pricing; and
  • Quoting or price protection programs, including 'rights of return' scenarios.

Entomo’s SmartHub® also manages critical financial functions related to channel activities. Our Transaction Valuation module enables you to precisely assign specific cost to specific product sold - critical to proper sell-through revenue recognition and getting an accurate channel inventory picture.

Sale-in-Sales-Out (SISO) inventory reconciliation enables precise inventory measurement to validate partner reporting, prevent fraudulent claims, and proactively manage overall channel inventory levels. You can also create accruals and make payments for channel incentive programs without requiring explicit claims from the partner, directly from SmartHub. Do all this while staying in compliance with industry revenue recognition mandates.

"Our channel information was scattered and incomplete. In 60 days, Entomo was able to consolidate information and give us a detailed view of our channel sales and inventory position. As a result, our channel business grew in volume and profit through better decision making." 

           - Tony Grieco, Vice President, Sales, PLX Technology

Maximize Channel Revenue and GROSS MARGIN


  • Plug revenue leaks
  • Optimize channel inventory
  • Improve sales forecasting
  • Timely and accurate revenue recognition
  • Understand true performance of channel marketing programs
  • Ensure compliance and avoid overpayments

GROSS MARGIN MANAGEMENT Benefits

Sales:

  • Know exactly which channel incentives are working by product or family, geography and individual partners.
  • Improve and streamline your channel relationships.
  • Channel partners receive accurate and timely incentive payments with full audit capability.

Finance:

  • Be confident all transactions are accurate, valued appropriately and accounted for based on industry compliance mandates.
  • Reconciled inventory enables better sales forecasting, reduced stock-outs, and reduced channel inventory.
  • Recognize revenue based on sell-through.

Marketing: 

  • Understand the true performance and effectiveness of channel-marketing programs. 
  • Create and manage channel incentive and pricing programs that follow financial revenue-recognition requirements.

 

A PROCESS TO DRIVE HIGHER GROSS MARGIN AND REVENUE

Transaction Valuation
Assign specific cost to specific product sold. POS transactions are verified and valued based on FIFO, price book, reported cost or other costing methods to gain a true, consistent measure sell-through cost and margin. Analyze and manage distributor and reseller margin by product, product family or other rollup level. Incorrect valuation can erroneously inflate revenues or commissions and make it nearly impossible to get an accurate channel inventory picture.

SISO Inventory Reconciliation
Understanding accurate inventory levels in your channel is critical. Simple inventory reporting by channel partners is an important first step, but not sufficient. Inventory levels are validated with independent calculations, starting with transaction valuation. Sales-in/sales-out inventory reconciliation is then performed to validate the correct beginning and ending inventory levels in the channel. SmartHub maintains perpetual (roll-forward) inventory and appropriate valuation and currency conversions.

Ship-and-Debit and Special Pricing Programs
Entomo supports worldwide quote creation and compliance, distributor price adjustment, ship-and-debit, special pricing authorizations and price-exception requests, among other compliance programs. 

Co-Op / MDF, Rebates, and Other Channel Incentives
Cooperative (co-op), Market Development Fund (MDF),rebates, SPIFF and other channel incentive programs can be created, approved, verified and managed while automatically feeding into finance for revenue recognition.

Price Protection Programs
Channel-centric companies often employ inventory-protection programs to partners rather than allow unlimited rights of return. Manage, approve and reconcile stock rotation, price protection and other inventory programs.

Revenue Recognition
The revenue cycle can be especially risky because revenue is not considered earned as long as distributors retain the rights to return products, or the sales prices is not “fixed and determinable.” Mitigate this risk and complexity by receiving and reconciling input from all sales and marketing activity and compile 100 percent audit-ready financial reporting using your corporate-accounting model. Support includes: chart of accounts, accounting-period options, trial/hard close, sell-in/sell-through conversion and much more.

Flexible, Configurable, Integrated Solution
Gross margin management modules can be used stand-alone or as part of the industry’s most complete and integrated channel management solution set.

Entomo’s team of channel management consultants provide best-practice-based guidance on implementing business processes.

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