We have spent years working in trade promotion management and have developed our own set of best practices for efficient trade spend.
We’ve all heard stories or personally experienced a great brand go under due to miscalculations in budget and thousands of dollars lost in unexpected chargebacks.
Despite this industry-wide problem, the existing trade promotion management tools on the market require constant input and babysitting from the brand’s sales and finance team.
The brand not only pays for the service but also takes on extra work entering promo calendars, discounts, expected lift, SKUs involved, and continually updating new promotions.
Ultimately, the brand needs to reconcile the invoices paid, deduction documents received and request missing documents.
This is a simple bookkeeping process, but it often is done by highly paid member of the brand team.
After all deductions are entered, matched, and reviewed, the brand needs to balance the books and adjust the forecast to actual.
Finally, for erroneous or disputable charges, the brands must gather documentation and forms, and navigate the dispute process to recover lost revenue from the distributor.
This again is a very
time-consuming process.
Wouldn’t you like to have someone in your back office who does
ALL of the above?
Wouldn’t you just like to know that you have a dedicated back office team member assigned to your brand who can manage 99% of the above and only come to you for clarification?
That’s what we do.
Our Best Practices for Trade Deduction Management
Establish Consistent Policies
Set standard service-level agreements for vendor payment, establish a budget for each promotion, and define how deductions will be handled.
Track Deductions Accurately
Ensure that there are no discrepancies between deductions and amount paid. This can be done using your accounting software.
Monitor Promotion Performance
Review the cost of promoting by tracking deductions to see if you’re getting a decent contribution towards your bottom line.
Promotion
Planning
Anticipate deductions amounts and plan for them in advance. You should be able to forecast future deductions with considerable accuracy.