Pricing, Returns, and Payment Terms

Issue: C&CA auditors had been auditing a large, $15 billion client for several years. Based on our work to uncover the true root cause of payment errors, we identified significant problems with vendor returns and went on to identify and recover millions of dollars in returns, credits, and pricing claims. This also resulted in a reduction of vendor returns. Findings: One of the significant findings was in the area of returned goods, where C&CA was able to reconstruct the client’s database and identify those items for which vendors had not provided a full and complete refund. Additionally, we identified and recovered significant dollars related to pricing issues where the client was overcharged for product by its vendors. Financial Impact: During a 2½-year period we identified and collected over $33 million in recoveries. Solution: C&CA's identification of significant problems with the client's payment terms and discount policies led to a proactive initiative to improve and correct current processes and policies. Industry benchmark studies helped to guide the client to reassess and revise its payment terms and discount policy, resulting in significant cash flow savings. We further assisted the client in their efforts to improve terminal equipment and perpetual inventory system controls by successfully integrating two large systems to generate the data required for pricing analysis. This resulted in corrected pricing information, and improved accuracy of monthly management reports.

For more information on Pricing, Returns, and Payment Terms talk to Cost and Compliance Associates Ltd