Challenges

Most ERP and accounting systems have no special accrual processing routines for promotions or fees. Without a systematic and automated method for the calculation and generation of accruals for outstanding promotional and fee commitments, calculating an organization’s true liability requires significant manual processing. In Trade Promotion Settlement, accruals are an automated process which expense trade promotion-related commitments at the appropriate time. The system maintains a continual, real-time view of accruals.
Deductions are particularly prevalent in the consumer goods industry. It is the practice of short paying invoices by amounts deemed by the customer to be owed for promotional activities they carried out, or as a mechanism for them to claim expenses such as for unsaleables or late shipments. Deductions are often accepted with little documentation provided to substantiate them. Without an efficient means of validating them against approved promotional commitments they are frequently simply written off, incurring unnecessary cost for no benefit. Worse still, it is common knowledge that some unscrupulous customers, directly or via commission auditors, deduct or claim multiple times for the same promotional allowance, especially when they know the supplier does not have a system that detects these activities.

Features

• Deductions are removed from accounts receivable and placed in their own deduction ledger, where they are coded for analysis and tracking
• Deductions and claims are applied to the correct expense, promotion component and/or fee component
• Deductions and claims may be reviewed and validated with ease, ensuring for example that a claim relating to a promotion is only paid once
• The necessary journals, debit notes, credit notes and vouchers are automatically created for validated deductions, rejected deductions and payment of claims
• Deductions can be automatically reported and classified as aged, disputed, or other open status
• Automated invoice adjustment validation and settlement
• Rule-based workflow for multi-level exception management
• Flexible reporting by fund, account, period, or product group associated with each promotion agreement

Benefits

• Reduced open deductions liabilities from 5% to 30%
• Increased productivity for financial administration, trade funds management, and account management teams up to 60%
• Reduced dispute resolution time up to 90%
• Improved accuracy and availability of financial reporting associated with the settlement process

Next Steps

To find out how Flintfox Trade Promotion Management can meet your specific needs, contact us. We welcome the opportunity to discuss your situation.