Detailed reconciliation by Salitix recovers almost £150k in misallocated trade spend for cosmetic giant

Our client is a global cosmetic group with annual revenues in excess of £40bn. It sells well-known skin care products, makeup products, hair care products, perfumes, colouring products, and much more. Its successful UK business is marketed through mass distribution, distance selling, hair salons, and pharmacies, and volumes and numbers of SKUs are significant. This means regular range reviews and refreshes leading to discounts on old stock inventories.

Challenge: Double funding due to mismatched agreements

The luxury fragrance lines have big range resets every year, and a key retailer de-lists an average of 20 to 30 products a year as they go out of fashion. Our client would heavily discount the de-listed stock – effectively writing its value off to assist with quick sell-through to make way for new products.

However, the retailer was routinely raising the previously agreed retro funding invoices on these de-listed products where they formed part of an ongoing/wider promotional activity. This was because the promotion would be agreed months in advance, whereas the clearance agreements happened at short notice, leading to a situation where our client was double funding the sale of the stock.

Solution: Detailed reconciliation of agreements

Like many busy commercial teams working in a highly transactional FMCG environment, our client found it difficult to properly connect the retro funding claims (which had been agreed, so appeared valid) with the newly agreed mark-down arrangements that replaced them. Salitix on the other hand, specialises in this kind of detailed reconciliation where an experienced auditor will look at a trading period as whole, not just in the moment. This enables us to join the dots between agreements that may otherwise appear remote from each other. Using email data to identify both agreements, the auditor was able to identify the unintentional duplicate fund and raise a claim to recoup the funding paid incorrectly.

Results: Close to £150k repaid within 6 months

A claim for £149.6k was submitted to be validated and repaid in full by the retailer within six months. While a small percentage of the total annual funding, it still represented a significant number of sales and a meaningful proportion of the net annual profit for that business with the retailer in question.