Post-Audit Claims Policy

Post-Audit Policy is Critical

Post-Audit Deductions are one of the most vexing business issues faced by vendors, especially in the retail channel.

Most post-audit claims are by third-party auditors paid a commission to charge you back  These claims can be one to several years old, representing hundreds of supposed infractions,  and are always difficult and sometimes impossible to research.

Post audit claims management is a zero-sum game; the customer deducts the claim and you have to disprove and fight to get the money back, and often they only give you a short time to research it  The onus is always on the vendor to investigate, reconcile and challenge the claims, or take a hit to profits.

Disturbingly, our experience is that a very high percentage of post-audit claims are overstated or even entirely wrong, which can be attributed to double deductions, bad documentation, or misinterpretation of trade promotion details.

It is essential that you have a written corporate policy, clearly communicated to customers (and post auditors), which serves as your notice to them as to what proof you require for consideration of post-audit claims  If you have a written policy, your position is stronger than without a policy  Your policy document needs to be signed by your President or CFO and sent to the appropriate customers and auditors.

Remember that a post-audit deduction can include hundreds of line items from many orders and invoices  Consequently, you need powerful variance matching and reconciliation automation and an expert post-audit defense in order to prevent losing profits.

The following is just a guide  If you have any questions about managing post-audit claims, please use our contact page.

Post-Audits do not have to be a “cost of doing business”. Defend yourself.

Model Post Audit Policy

1. Confidentiality of Trading Practices, Deals, and Terms

Our product, promotion, pricing, operations, and customer information are confidential and trade secrets and must not be disclosed or shared without our express approval. Confidential information may not be shared between post-auditors outside of your organization.

2. Post Audit Claim Timeline Limits

We must be allowed 75 days to research post-audit claims and respond before taking a deduction. Deductions violating this will not be honored

All post-audit claims must be submitted within six (6)months of the transaction.  Otherwise, they are invalid and will not be considered by us. If deducted, they must be repaid.

Claims for shortages or other shipping issues must be presented within four (4)  months so that we have the opportunity to investigate and file claims with carriers where appropriate.

3. Documentation Requirements

Complete documentation, sufficient for us to properly research the post-audit deduction must be provided, including:

a. Trade Promotion Deal Deductions

• Deal sheets or contracts signed or issued by us.
• Documented Proof of performance.
• Backup detailing the specific reason is required for each trade promotion deduction.
• Documented Proof of Performance includes deal sheets, proof of performance,  invoice copies, purchase orders, etc.
• Deal sheets relating to non-applicable regions or date periods will be rejected.

b. Pricing Deductions (non-Promotional)

• Back-up documentation including the invoice detailing the specific reason for the deduction.
• Supporting pricing documentation (orders, price sheets, etc.)  to prove your pricing claim.
• Detailed backup documentation is required for each individual deduction.

c. Shortage Deductions

• Signed proof of delivery or bill of lading showing shortage and all discrepancies noted or in case of a container load, the seal number, and statement of the condition of the intact seal at the time, signed by the driver at the time of delivery.
• Listing of all products received by SKU,  including not only shortages but also overages.
• All backup documentation in order to allow a full investigation of the claim.

4. Communications Policies

• We will communicate with the post-auditor or direct with the customer on any issue as we deem appropriate to resolve a claim.
• Our communications will not be limited to the post-auditor.
• A specific point of contact must be provided if we need to communicate with the post-auditor.

5. Post-Audit Deductions that will not be considered or accepted include

• Claims not meeting the policies described above
• Claims without complete and clear  backup documentation
• Payment cash discounts or anticipation
• Nuisance charges, including deduction, documentation, or coupon processing fees
• Duplicate deductions, triplicate deductions.

6.  Special Address for Post-Audit Correspondence

All post-audit claims must be submitted to the following address, attention: Post Audit Department, providing a physical and Email Address, phone, and fax number.

Signed  ______________________, Your President or CFO