What is "Ship and Debit" and How you Prevent Costly  Errors

Ship-and-Debit rebates are allowances used by electronic and technology original equipment manufacturers (OEMs) to protect channel distributor margins when the distributor must sell at less than the in-stock price. For example, a rebate may be appropriate when the OEM reduces its product prices, as a response to changed market conditions, or when a distributor is required to lower the resale price to be competitive close a large sale.

Our matching and reconciliation Ship and Debit software enable us to identify, investigate, and validate these allowances against your Ship and Debit agreement to identify inaccurate payments. Records reviewed include EDI, XML transactions, SKU price variances, product returns, price protection, in-field transfers, rebates, short shipments, drop-shipments, stock rotations, sell-ins, sell-through, and impact of other rebate and allowance programs.

An OEM may have volume, mix, and sales rebate programs, and perhaps as well directly with a distributor's end-customer. If not careful, the OEM can end up paying Ship and Debit claims on top of the other allowances already given. In another example, the product has to be purchased directly from the OEM, instead of third-party diverters at lower than OEM prices, and then improperly claimed under a Ship and Debit program.

After careful review, our auditors contact the reseller or end customer for supporting details, and obtain repayment for any excessive or erroneous claims.

Prevent abuse and errors

Prevent and recover erroneous deductions

Avoid profit leakage

Fast startup with no learning curve

Success fees make us partners in the project

What is the typical Ship and Debit Process?

1. The distributor requests, and the supplier initiates a Ship and Debit terms agreement.

2. The distributor initiates a Ship and Debit claim (debit memo) for a difference in pricing, a discount or rebate to reduce the cost to the distributor for in-stock inventory or the amount of a sale.

3. The OEM must validate the claim by verifying distributor sales and inventory documentation against the OEM sales records and program requirements.

4. A careful Ship and Debit review is needed because of the potential for error or abuse. For example, the distributor inventory must be proved to have been purchased directly from the OEM and not from third-party diverters at lower than OEM pricing and then claimed under a Ship and Debit program.

5. The "settlement" or payment for the Ship And Debit claim can be by means of a direct payment or credit memo to offset a deduction.

Our Audit and Recovery Process is Non-Intrusive

Our process is straightforward and does not require any support from your staff except for the required data and documentation. Supplier contacts are kept professional, friendly, and collaborative. The process is easy.

  1. You provide a data (ship and debit, trial balance) download and document access, plus an introduction letter, if needed.
  2. We run your ship and debit claims data through our unique software, find and audit the excess payments, plus any exceptions for further review.
  3. We obtain backup from the resellers and carefully analyze that against your data to verify claims.
  4. After a supervisory review, we contact the reseller for repayments due to you, and we reconcile any discrepancies in positions.
  5. We bill you after identifying the amount due. We will assist in that process.
  6. You receive a management report identifying steps to reduce such instances in the future.

 

 

Ready to find out more?

Drop us a line today to arrange a no-obligation review!