If there’s one consistent thing about special pricing agreements (SPAs) across the globe, it’s the complexity and difficulty of managing them. These intricate and complicated deals have been the cause of many sleepless nights, haunting the dreams of finance and sales teams the world over.
Notoriously confusing and complex, SPAs present many unique challenges to the teams that wield and benefit from them. From wasting your team’s valuable time to causing friction and disputes with your trading partners, SPAs have developed a reputation for being tough to work with – but in reality, it’s the inefficient processes and tools we use to manage them that make SPAs such a challenge.
In this blog, we’ll explore some of the most common challenges and anxieties surrounding SPAs – and reveal how the right tools can help you overcome them.
But first…
What Are SPAs?
The subject of SPAs is made all the more complicated by its inconsistency. These deals are referred to by various names across a wide range of industries:
- Special pricing agreements (SPAs)
- Ship and debit
- Contract claims
- Contract support
- Chargebacks
- File backs or claim backs
- Sales rebate agreements
For the sake of simplicity, we’re sticking with SPAs. While there is some disagreement regarding the definition of these deals, most agree that these names refer to the same basic concept. SPAs are strategic pricing agreements where manufacturers offer distributors discounted pricing on certain SKUs. After selling the discounted product to the customer, the distributor can make a claim to the manufacturer, boosting sales for both parties with the comfort of an assured margin for the distributor.
The Myriad Struggles of Managing SPAs
Whether you’re a distributor submitting SPA claims or a manufacturer paying them out, any business managing SPAs knows how intricate and complicated they can be. SPAs present unique difficulties for both sides of the agreement:
For Manufacturers
When it comes to managing SPAs, manufacturers bear most of the responsibility and because of this, typically face the steepest challenges. Managing data, calculations, accruals, payments and claims, manufacturers spend a significant amount of time attempting to keep up with these complex deals and their many moving parts. But time-consuming tasks aren’t the only things that go bump in the night.
Miscalculations, missed payments, mistakes in the balance sheet; these specters lurk in the shadows of finance teams’ nightmares, resulting in costly conflicts between trading partners and requiring hours (if not days) of effort to resolve. Perhaps the most tragic element of these obstacles is that they are preventable, often the result of outdated manual processes and operational inefficiencies.
For Distributors
For distributors, improper SPA management can lead to missed opportunities and lost revenue. Making any kind of claim to a business can be a delicate matter, requiring the utmost diligence and care. Any errors, ambiguity or insufficiency in your proof can result in the negation of your contract terms and a failure to make up the lost margin.
While much of the responsibility of SPAs can fall on manufacturers, it’s up to both sides to resolve any conflicts or disputes in a timely and amicable manner. A SPA can be an invaluable strategic pricing tool, but both sides must keep up their end of the bargain to make them work.
What Does Effective SPA Management Look Like?
Over the years, many businesses have attempted to manage SPAs on ill-fitting legacy solutions such as spreadsheets or ERPs. While systems such as these can work for a little while, they can quickly become unsustainable as the volume and complexity of your SPAs grow.
The most effective SPA management processes should be optimized with the latest tech: streamlined and automated at every turn to support internal efficiency and productive collaboration. Your collaborative processes should be supported by a centralized system, promoting transparency, alignment and clarity.
Attempting to fit your data into generic, inflexible and manual systems can do more harm than good for your deals. Your SPA management system should be comprehensive and thorough, with a suite of features designed specifically to support your flexible pricing strategy and streamline the process of managing your deals. Don’t settle for less; SPAs can be a critical driver of sales, loyalty and growth if you support them with the right tools.
Regaining Confidence and Control with SPA Management Software
We know SPAs can be tricky. If you find that SPAs are taking up too much of your day and keeping you up at night, perhaps it’s time to make a change.
Automating your processes can grant you a level of confidence and control that you’ve never held over your SPAs. While the prospect of transferring your data and reworking your processes around a new system can seem intimidating, it doesn’t have to be. Some SPA management platforms such as Enable have committed to making the transition as quick and seamless as possible, bringing your team to value faster.
Don’t let SPAs keep you awake. With Enable, you can sleep soundly again knowing that your SPAs are in the capable (digital) hands of an automated SPA management solution.
Download our whitepaper to learn more about managing the many complexities of SPAs.
