Retail merchandise recovery audits are an effective way to recoup funds lost due to overpayments, under-deductions, and simple human error.
But like any meaningful business initiative, audits require time, resource, and budget. How do you know if you’re maximizing your investment in the program?
01: Establish Shared Guidelines
From policy platforms to agreeing on rules of engagement, creating audit guidelines for everyone involved can help set expectations and promote collaboration between retailers and suppliers. It can also facilitate faster claims processing both from a collection point of view and payback resolution.
Common ground rules can reduce ambiguity and create a consistent framework for analyzing accounts payable processes. Retailers can use what they learn from audits to continuously identify root causes and fix them, ensuring leakage isn’t repeated.
From a reporting perspective, having guidelines gives clarity to suppliers, who can see the various claim categories, the period of applicability, and claim schedules.
That reduces the likelihood of disputes and shortens the duration of escalations when they do occur.
02: Expand the Scope
As business models continue to evolve, retailers are looking at other areas of their operations to identify new sources of leakage:
Click and collect services, where customers make an online purchase and collect that purchase at a designated location, have opened up opportunities for recouping lost promotional discount rebates.
Digital flyers can be another source of opportunity. Cost of advertising, listing of UPC’s, and promoting items using this vehicle could be beneficial.
Mobile purchases where consumers use shopping apps to pay, or scan to complete, payment for purchases, are sharply on the rise. Discounts and promotional offers are often applicable, and opportunities for claims can arise.
Market-basket promotions with multi-vendor promotional strategies or other complex funding models make it harder for retailers to ensure accurate tracking, validating, and billing.
03: Accelerate Audit Timelines
Audit acceleration is a huge area of focus across the retail industry, and the demand for more timely audits is on the rise. It’s easy to understand why.
To capture as much current-year funding as possible, retailers want audits to happen closer to the original deal or transaction.
Suppliers, meanwhile, see opening prior year books as a major pain point. Accelerating audit timelines helps reduce friction and push back. Collection rates improve because the buyer-vendor negotiations and documentation are much more readily available.
More than 90 percent of PRGX retail clients have moved to some type of accelerated audit structure, and many have plans to evolve their audit program continuously.
04: Remove Friction and Improve Relationships
It isn’t just a matter of signing contacts and placing orders. Buyer-supplier relationships are built on a process of active and ongoing negotiations.
Recovery audits have become part of the framework that ensures the results of those negotiations are executed and billed correctly. But the process of claiming back lost funds can still lead to vendor abrasion.
After five decades working with some of the world’s largest retailers, PRGX has learned that the more transparency there is around audit processes, the less friction there is.
Giving suppliers access to claims so they can review the details themselves is another way to minimize abrasion and reduce challenges. Letting them check the details of a deduction or claim can save time, reduce the number of queries, and promote faster payback.
Want to learn more?
Check out the How to Optimize your Retail Recovery Audit Program e-book or webinar to find out the latest trends and best practice are helping retailers realise greater value — faster.