Stop struggling with trade promotion deductions and reduce your post audits!! Companies do not have to spend so much time and energy validating and approving deductions for trade promotions and other sales related programs. Third party auditors say that that the most common reasons for post audit claims are for things that can be avoided by writing more specific sales agreement and closing the “loopholes.”
For example, make sure that the “Contract Term” specifies a definitive start, end date, and expiration events or whether the agreement is “evergreen”. When referring to dates, make sure it is crystal clear whether the dates are PO date, invoice date or shipment date. When defining something based on quantity, be specific as to whether it is in units or dollars and whether it is a gross or net number. When the calculation is based on a “net” number, be clear on how the calculation is performed (e.g., if an allowance is based on “net sales dollars”, what is included / excluded from the calculation to arrive at net sales – for example, how are defective returns treated in the calculation?)
Having a “Post Audit Policy” in your company is not a quick fix that will make all of your post audit issues disappear, however it can serve as a tool to help guide post audit discussions and may provide support during conversations with third party audit firms. Without a post audit policy, you are left to play by the rules of your customer’s policies.
When negotiating post audit policies with your customer, ask for a copy of their Post Audit Policy. Identify any areas where there are discrepancies between what they state and what you want and use these to help focus your discussions. Even if you are unable to get them to revise their policies, you will have a thorough understanding of their post audit process and will be more prepared to handle their claims (and will quickly be able to identify instances where they or their 3rd party auditors might be deviating from their policy).