There’s a sneaky line item hiding in your rebate program performance, and it’s quietly eating into your margins.

It’s called rebate breakage, and if you're not tracking it, you're probably tolerating it.

What Is Rebate Breakage?

Breakage occurs when a distributor qualifies for rebates but never claims them. Sounds harmless, right? After all, if the rebate isn’t paid, the supplier keeps the money. Everyone wins? Not quite.

In reality, rebate breakage usually points to inefficiencies, confusion, or a lack of transparency—none of which build strong trading partnerships. And in the long term, what looks like short-term savings can cost you trust, loyalty, and growth.

Why Breakage Happens

Breakage is almost always a symptom of poor rebate management practices. Some of the most common causes:

• Complex, hard-to-understand program terms
• Lack of real-time performance tracking
• Manual claim processes that are slow or error-prone
• Distributors who don’t know what they’ve earned—or how to claim it

Breakage Hurts More Than It Helps

When partners don’t claim what they’ve earned, the result isn’t just missed payouts—it’s missed opportunity:

• Distributors may disengage from future programs
• Suppliers lose visibility into what’s actually driving behavior
• Finance teams get inconsistent forecasting
• Relationships become transactional instead of collaborative

Breakage creates friction, not loyalty. And trust is one of the greatest factors in a successful partnership.

How to Eliminate It

Design rebate programs to maximize clarity, trust, and follow-through. That starts with using rebate management software like OneRebate to:

• Provide real-time visibility into earnings
• Automatically track performance milestones
• Eliminate manual claims with automation
• Create a shared source of truth between partners

When both suppliers and distributors see value clearly and instantly, they’re more likely to engage, act, and grow together.

The Bottom Line

If your rebate program is quietly accumulating breakage, it’s time to decide if your business is designing programs for impact or just for accounting.

Rebates should build momentum, not frustration.