What is a sales audit and why do I need it?

Is exactly that, an audit of the sales you have made to your customer. At Salitix we specialise in the sales of stock that Food and Drink suppliers make to the UK Grocers, like Tesco and Asda and the commercial arrangements that are made for increasing those sales, i.e. like in-store promotions and/or the joint business plans that are created to promote growth in sales and profit during particular trading years. It’s a highly commercial, transactional, fast moving environment where change is constant and the turnover of people high. Because its commercial and fast moving, things change constantly, right up to the point of execution, which means the opportunities for errors to be made is high. This is borne out by the volume of historic audit claims the Retailers traditionally make against their supply bases for any trading year under review – as much as £200M annually in validated, paid audit claims. In a market where margins are tight, this is a significant amount of profit that suppliers cede to their customers many months after the transaction was made and the year in question ‘closed’ and those margins used to calibrate prospective trading activities.

If you supply a product to any Grocery Retailer you need a sales audit because that £200M the Grocers auditors are securing from their supply base represents a PARTIAL RECONCILIATION of the trading activity only. What this means is that the Grocers auditors conducts a complete reconciliation of the trading (as they must to identify any error) but then only presents those errors, or ‘potentials’ that they believe are due back to the Grocer, while purposefully ignoring, or suppressing the errors or ‘potentials’ which they believe may in fact be due to the supplier. If you receive retrospective audit claims from your customer then it is essential that you conduct your own, complete sales audit and review of trading. Even if the claim you have received is valid, it may in fact be off-set to zero by another, unrelated claim, that you are unaware of and which the Retailers auditor has purposefully ignored – a ‘lose lose’ if ever there was one.

To summarise:

The sales audit is a forensic reconciliation of the actual transactions and the commercial dialogue that underpins those transactions you have with your customers, in this instance with Grocery Retailers. It is quite different from the process whereby a commercial finance manager calculates an accrual based on the expectation of how a transaction, or agreement will perform. If something has changed and the finance manager is not aware of that change, then the accrual will not be a good gauge of accuracy. In the transactional environment we have described, it is easy to see how your customers can generate £200M of validated claims each year!

Salitix are experts in conducting sales audits. 

Why: Because we have many years of experience in delivering the forensic review that the Grocer conducts – the ‘goods for resale’ audit. Experience that we have then taken to form Salitix, the only dedicated sales auditor focused on the food and drink supply base in the UK. We now have ten years and counting of hard earned experience conducting, validating and settling the errors and claims that these suppliers typically have and are due from their customers – the Grocery Retailers. It’s been a difficult journey and will continue to challenge, but it’s a journey that we relish and a service that all of our customers will testify generates significant bottom line value for their business.

Don’t hesitate, get in touch now and see how Salitix can help your business defend its hard earned profits.