Pay Up: On Time, Every Time

Delay in the disbursement of channel incentive payments can lead to a lot of
resentment from the partners. Vendors claim that they are trying to streamline
these operations. Find out just how beneficial will this be for the channel and
how can partners ensure that they make the process work

Incentive schemes are a
vendor's tactic to
acknowledge the channel's efforts in popularizing the product. While incentives
are something that the channel looks forward to expectantly, delayed incentive
payouts are a major cause for rifts between partners and vendors.

While vendors do their bit to ensure that channel payouts and incentives are
given on time, there are several occasions when delays occur. From manual
operations to incomplete data and invoice submission to logistic and
verification delays, the reasons are many and varied.

According to Jayant Gundewar, Chief Strategic Officer, Wep Peripherals,
delays in payouts usually result because the process is manual. As a vendor it
is better if one can automate the process and ensure complete transparency in
payouts. That way it also becomes easy to track, monitor and control the payouts
with predefined budgets.

Why the delay

Delay in payouts happens normally during internal processing, when data is
managed manually. Another reason for this problem is that dealers sometimes
provide inaccurate data, which then has to be cross checked and verified.
Additionally, delays result when the scheme's copy records are missing in
claims.

Added Prashant Mehar, Corporate Champion-Channel, Uptime Solution, Emerson
Network Power India, “Delay happens because of various reasons, which include
submission of incomplete data by the partner; incomplete authentication proof,
logistical delay such as courier not reaching on time and verification delays.
Otherwise most payouts happen within the stipulated time.”

Sharing his thoughts on the issue, Jose Leon, Marketing Manager-Channel
Programs, Xerox India said, “At Xerox we assure our partners of payout within 45
days of receipt of a claim that is complete in all respects, which we have been
now been able to deliver. In case of any unusual delay, which is generally
escalated by partners from the region, we take care of the same immediately by
working on the case on a priority basis and resolving the same. We believe that
faster payouts form a key part of our value proposition to the partner.”

Leon pegs two main reasons for delayed payouts. Firstly, because the partner
does not claim for a program within the stipulated time limit. Secondly, all the
required documents are not submitted along with the claim.

“Time starts ticking for us the moment we receive a claim at our claim
center. We need to make sure that all documents are in place. If not, we send a
communication back to the partner to complete the documentation so that we can
disburse incentives before
45 days,” Leon stated.

While agreeing with his fellow vendors, Sameer Mathur, Director-Solutions
Partner Organization, HP India feels that delays can also happen because vendors
deal with more than one kind of product categories, each one of which has an
incentive scheme running at some point or other.

"We are putting in place processes to verify the correctness of the data given to us so that payout delays do not happen"

sameer mathur, Director-Solutions Partner Organization, HP India

Vendors trying hard

While partners blame the vendors for not doing enough to make the payout
faster, vendors plead their case saying they are doing their best. Samba Moorthy,
Senior GM-Sales and Marketing, Epson India feels that it is every vendor's
endeavor to ensure swift and efficient operations when it comes to channel
payments. “Over the years we have put in place systems to ensure incentives are
cleared on time. We have a team of people at Epson whose only job is to process
timely payout of channel incentives. We have also built systems and put in place
automation to ensure this happens, he indicates while adding, as our system is
in place we have not had any issues for the last few years. We operate within a
disbursement time frame which varies depending on certain parameters within a 30
to 90 day timeframe.”

When there is no well-defined timeframe for the reseller incentive payment,
delays happen. “On an average the payout from our side takes place in 60 days
time. Resellers however expected us to pay the monthly incentive in 30 days
time. None of the payments happen within this expected time and there is no
consistency in the payment time. This caused unhappiness among resellers and we
decided to automate the process,” Gundewar said.

Mathur admitted that delayed payouts are a common phenomenon, but added that
HP has always tried to ensure that payouts are disbursed on time, every time.
“Our payout time is between 30 to 45 days usually. Delays also result because
there is no effective infrastructure or manpower at the vendor's place to handle
claims, verify them and ensure timely payouts. The biggest loss when delays
happen is that it tells upon the partner- vendor relationship,” he said.

According to Leon, the current time limit for disbursing payments in Xerox is
45 days, although more than 80 percent of complete claims are settled within 30
days.

At Emerson Network Power, most of the incentives are cleared within 30 days
to 45 days from the day the case is submitted. So it is safe to assume that 45
to 60 days is the usual timeframe required by a vendor to disburse payments.

How partners can help

Some of the causes for the delay of channel incentive schemes include lack of
proper systems and procedures or when they are not clearly defined by the
vendor. Most vendors claim that they are upgrading their system to ensure that
the entire process is automated.

But there is no escaping the fact that there is an equal onus on the channel
to ensure that this system works fine, be in manually or automatically. Late
submission of required documentation by the partner or improper documentation
(no supporting details) can also cause the delay. To avoid this, partners
submitting the claims should always ensure that they enter their cases well
within the deadline.

Another thumb rule partners need to adhere to is providing all the requisite
documentation for the claim processing. To get an idea of what is required it
makes sense to get details about it right at the inception of the scheme.

Partners spoken to however felt that payout delays happen at the vendor
level. What worries them is that things have not changed very much in spite of
many complaints.

According to KL Lalani, Lalani Infotech, “Except for some occasional
instance, in most cases, incentives payments get delayed. Every channel partner
has to deal with this on a regular basis. It is the fault of the OEMs and no one
else can be blamed for this. They are just not willing to form a proper
procedure for incentive schemes and disbursements.”

What bothers most partners is the fact that in most cases the company
representatives make verbal commitments but fail to deliver. In those cases,
partners almost give up hope on getting any incentive at all. This is most
evident among upcountry partners, be it those in Erode, Trichy, Mangalore, Hubli
or Trivandrum.

The biggest bone of contention is that many a time even if commitments are
supported with e-mails or written documents the partner gets harassed because
the dues are never cleared on time. They are told that the general time of
disbursement is 15 days after completion of a quarter. But many times it is
delayed for
an indefinite period of three to four months after the said time limit.

"Our web-based automation payout scheme offers more transparency of payments details"

jayant gundewar, Chief Strategic officer,WeP Peripherals

Said PK Sinha, Astric Computers, Patna, “Generally, companies claim the
disbursing time limit to be a quarter, but they rarely stick to it.” He also
felt that the entire process is too complicated currently. Firstly, there is a
distributor who acts as a middleman between the partner and the vendors. Also,
at times the local representatives of the vendor companies are involved.

During the end of a month or quarter, distributors and local representatives
of vendors are under pressure to achieve their targets. Therefore they approach
partners and lure them with various incentive schemes. When the partner
approaches the company for disbursement, confusion evolves and causes delay in
payments.

“Incentive are always a challenge for us. Verbal commitments are always a
threat, whether it is from the distributor or company representatives, when it
is not backed by proper documents,” said another partner on condition of
anonymity. It is therefore advisable to take the commitment in written format
duly stamped and signed by the company authority or through official mails.

Automation in the picture

Automation of payout schemes is one of the best ways to resolve delays in
payments. A case in point is the web-based automation payout scheme initiated by
Wep Peripherals for its partners. “There is more transparency of payment details
from WeP now and we also have cheque bunching facility. The timeframe of
clearance of payment has reduced from an average 60 days to 25 working days,
which is really motivating us to put in an extra effort,” said Ketan Modi of
Ahmedabad-based Delta Enterprises and a partner for WeP.

Given that delays in payouts happen, fact remains that most vendors do their
bit to
ensure timely incentive
payouts. From automation to efficient management all possible ways are employed
by the vendor to keep their
partners happy.

WeP's web-based automation of the payment process ensures complete
transparency in payouts and creates one point of interaction for all kinds of
payments. It
also ensures easier future provisioning and systematic tracking, monitoring and
controlling of payouts with predefined budgets. WeP has designed a dedicated
portal for reseller payouts where the partners can view their monthly earnings
online like a bank passbook. Each registered reseller is provided a unique login
and password to access his account.

According to Gundewar, “A cross-functional team from sales, finance,
operations, application development and quality laid out the detailed processes.
The activity also involved active participation of WeP's bankers to automate the
online processing and cheque printing. The reseller payouts reach almost 600
towns in India every month like a dividend cheque.”

Gundewar also felt that automation was the best solution, considering the
ease of use across the chain. “It is feasible but requires a quality framework
and a cross functional team effort to roll it out. Some of the controls will be
external to the company. WeP used six sigma methodology to implement the
project.”

Most the other vendors too have taken automation into consideration. At
Xerox, most of the partner programs claim process is on-line, so validation
happens at the first level of claim registration itself to weed out in-complete
claims at the first point of contact.

Secondly, Xerox has a dedicated claim center fully integrated with CRM and
ERP to ensure that they are in sync with all partner transaction on a real time
basis. Moreover, all the partner programs are devised in such a manner that the
partner has to provide the routine information available with him in his
day-to-day transactions with Xerox national distributors or sub-distributors.

Leon feels that automation is a feasible solution to a large extend. But it
comes with a problem of its own. “The challenge is to get the channel to follow
the system. Only when partners are able to gauge the benefit of the same, then
this challenge is also taken care of gradually,” he noted.

“We can use technology to make disbursement process smooth. Web based
claiming management system can improve the speed of disbursing the incentives.
At Emerson,
we are already in the process
of setting this up and it
should be up and working
within next two quarters,”
said Mehar.

Since Emerson does not have a web-based claiming management system right
now, it has tied up with an external agency that specializes in such activities.
While disbursement of incentive has been outsourced, the company keeps a track
of the functioning and disbursement of funds
to the partners. The partners
can also approach the
company incase of any dispute with regard to the incentive payment.

“Though setting up an automated system will help in speeding up the process,
some challenges that come
along include authentication because the new system
must talk to the internal
system/distributor system,”
Mehar shared.

Epson conducts a regular audit to monitor satisfaction levels of partners
related to channel payouts. Regular audits not just check the satisfaction
levels, but also do a periodical audit on any outstanding
claims that may exist and
have resolution tasks set on each of such pending issues. Automation, according
to Moorthy, helps to systemize and build controls to ensure that the timelines
are met.

“However, with the positives come the negatives, and in this case from the
channel perspective this means tighter controls and therefore stricter
rejection. To keep the channel happy therefore the automated system must have a
fallback option for deviations. Another key challenge is integrating the vendor
system with the reseller systems,” he said.

At HP, there is a portal, which the partner can access so that they get
information on what programs are running and
also how much time they have for it. Additionally, there is a speedometer, which
helps the partner to track his performance and ensure his qualification
and submission of relevant forms on time. “Automation
is a possibility. However the biggest challenge there is the accuracy of the
database that is given to us. We are in fact putting in place processes to
verify
the correctness of the data
given to us so that payout
delays do not happen,” added Mathur.

Bottom line

Delayed payments there
fore are an accepted norm.While vendors try and devise ways to minimize delays in payouts, it appears that
the partners have to do their bit to ensure that they provide accurate data for
processing
and cross verification. While automation is a key way
forward, the challenge that vendors face is the correctness of information that
is gathered. Till they devise a way to ensure transparency there, the challenges
would remain.

SUBBALAKSHMI BM

subbalakshmibm@cybermedia.co.in


(With inputs from Pooja
Sharma and Piyali Guha)