Pricing & Allowance Audit
Recover the hidden revenue in supplier invoices.
Suppliers change their prices frequently based upon contractual agreements, commodity influences, incentives, and for many other reasons. A thorough review of all data and contracts during a recovery audit will identify potential price differences, which are then analyzed for validity.
Examples of pricing overpayments uncovered during our recovery audit:
- Price increase or decrease occurs without proper supplier notification
- Order in transit at the time of a price change
- Product shorted prior to price change
- Pricing based on size of shipment
- Price protection
- Unauthorized charges included on the invoice
- Product returned to the supplier at the incorrect price
Suppliers offer allowances reducing the gross price to promote their products or to encourage more purchasing. Identification of allowance errors can be complex and requires knowledge of the industry and strong analytical skill. Our audit recovery process allows us to maximize profit recovery in this area.
Allowance errors found during a recovery audit include:
- Allowance not included on the invoice
- Supplier bill back not calculated properly
- Allowances for the early buy of merchandise
- Allowances for promoted products, new products or new stores
- Allowances offered in lieu of payment on defective products
- Allowances based on volume purchased
Accruals and Rebates
Many suppliers offer incentives to achieve certain sales volume levels. The formulas to calculate the funds range from the simple to the very complex. These agreements need to be carefully analyzed to insure all earned accruals and rebates have been collected.
Some variables which should be accounted for when analyzing the accuracy of these agreements include:
- Gross or net cost of product
- Time period based on purchase, receipt or invoice date
- New items
Many suppliers offer discounts for timely invoice payment. These discounts are not always readily identifiable within the client’s data. Some clients net them out or track them in a separate system. Some will reconcile these on a periodic basis. We collect and analyze all available data and review contracts to perform a thorough recovery audit, identifying any earned discounts not captured.
Examples of potential discount errors found during a recovery audit:
- Cash discount not included on invoice or included at incorrect rate
- Cash discount not calculated on the gross amount of the product
- Discounts erroneously not deducted
- Discount added back for returned product
- Early pay / anticipation discounts missed
- Discounts on credit memos