Against the current economic backdrop companies are constantly looking
for ways to boost their bottom line.
Particularly over the past year we have seen companies trying to extend
their payment terms by all manner of means – some fair, some foul.
In addition to this many are looking into the question of obtaining “rebates”
from their suppliers.
Some retail chains have recently announced that they will be introducing
a rebate scheme with effect from next year. Suppliers will be asked for a 0.75%
rebate if their sales grew by 10%.
Earlier reports have suggested said the rebate would rise to 5.25% if
sales grew by more than 50%.
Amongst suppliers there is always a battle to secure sales but there
also has to been a commercial realism.
If by securing so-called “prestige” business the overall operating
margin carries a disproportionate return then it becomes a question of
commercial realism.
In such situations it may well be argued that such business is best left
to others.
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