Post-audits can surprise any CPG manufacturer. What do you need to help defend them? Here are some things you’ll need:
Complete and accurate details for every trade promotion event over the past 3 or more years: Information should include:
- The promotion’s start & end ship dates, order dates, and anticipated retail performance dates
- Details for each allowance by item
- Notes, audit trail and approval history can be helpful
For direct ship accounts, a full and accurate history of every qualifying shipment: While this information may not be necessary for scan-down promotions, it can still provide a basis to help dispute over-aggressive sell-through claims.
All check requests and deductions, identified by promotional event: You should have all the details for each settlement. For checks, the check number, amount, pay-to, promotion number, items, check status, etc. For settlements, you’ll need the original deduction information when the short-pay was taken by the retailer, but you’ll also need all the details of where you expensed allocated that deduction. You’ll need to show the promotion number, the items on the promotion, allowances, amounts matched, and other information.
Also capture the retail performance that’s required to qualify for the allowance, and/or what was agreed-to or anticipated. Any additional documentation that’s available to your sales and broker force should be attached to the promotion and settlements as back-up documentation.
If you have all of the above information, you are in good shape to defend post-audits. However, in the tradition of late night TV commercials, “But wait, there’s more!”
POS and syndicated data from IRI and Nielsen can be helpful establishing what actually happen at retail. You can use syndicated data to confirm or deny that you received the required specific in-store merchandising, such as a display with a reduced price-point. Even non census-level data can provide excellent insights to promotional lift. Syndicated data isn’t perfect, but along with your internal data it can help tip the scale to your favor.
At this point if you are thinking that there’s no way you have all this information, chances are good that you are using Excel to manage your trade promotions. If you had a trade promotion management solution, it would provide work-flow that captures all of the above internal data necessary to help defend against post-audits.
If you use NetSuite as your ERP, iTPM is a native SuiteApp that can help you capture all of the data to help defend against post-audits.
CG Squared, Inc.