Post audit claims are made to demand some payment by the 3rd party company. These claims are usually overpayments or some other credits that were not issued but they owe them. Usually, the manufacturers of small level face these issues when they are working with international retailers. And it is not the retailers but the 3rd parties that make the claim.
The 3rd parties make the claim on behalf of the retailer. Thus, they get paid in case of successful recovery. However, half of these claims are wrong. In order to get their incentive, companies make invalid claims and trap the manufacturer. Therefore, if you are getting involved in such a business or you are already into it, you need professional assistance.
Post audit claims are not good for the trade budget. Therefore, if you think that you are getting involved in a wrongful claim, click here to visit claimsrecoverygroup.com They work at claim recovery and help you get rid of invalid claims.
1. What are these claims?
Source: fasttaxservices.co.uk
A 3rd party issues the claim on behalf of their customer. The issues that might take it to this extent involve, errors in invoicing, violations of standards, and not complying with the standards. Furthermore, it can also be caused by issues related to trade promotions. And it also involves any overpayments or due credits.
After the 3rd party claims for post-audit, a thorough investigation begins. The supplier agrees to the investigation and allows to check for all the related documentation. However, because time passed, all documents are not available and this causes problems.
Major drivers
Any sort of trade promotions, pricing of products, and the commission for the auditors act as a driving force.
2. Invalid and wrongful
Source: pinterest.com
According to the reports, about 50 percent of post-audit claims are false. Therefore, they turn out to be invalid and wrongful. It is because of certain reasons;
- About half of the claims are double or triple dipped and thus, they become invalid
- Deductions take place because of policy differences and this happens before the end of the investigation period
- Auditors also include some allowances that were resolved before
3. Handling these claims in a better way
Source: unsplash.com
As half of the post-audit claims are false and wrong, there is a need for proper investigation. Furthermore, you should know how to handle it in a better way. There are certain ways that can help you to get better results but it needs actions at a higher level. The things that you can do include:
Establishing a proper policy
There should be a proper post-audit policy that can set regulations for involved parties. The policy should include;
- Putting a limit to the claim date. Auditors must be bound to not make any claim that is certain years old. Thus, the old claims should not take place.
- For every single claim, the relevant authorities should demand proper documentation.
- If there are any unrealistic resolutions, put an immediate hold on such timelines.
- There should be transparency during the grace period.
- The policy should be flexible enough and should be buyer-friendly.
Not delaying the processing
After the claim is made, there should not be any delay in the processing. The authorities can reduce resolution delays and some other write-off risks through timely actions. And if you want to avoid write-offs, there are a few strategies that you can use. These include;
- The relevant authorities should make sure that there is a proper understanding of timelines between both parties (i.e. supplier and customer).
- Make sure that the auditor or customer cannot make any deduction before the end of the grace period.
Ignore post audits that are not documented
Documentation is a vital thing in post-audit claims. Therefore, the relevant authorities should make sure that they reject all the claims that do not have proper documentation. In addition to this, you will also need all the necessary documents that include; copy of invoices, POD and BOL, and also the causes of deductions. Furthermore, you should also have all the necessary information.
4. Preventing post-audit claims
Source: unsplash.com
If you are getting involved in a business deal, it is better to take all the preventive measures. This will allow you to get rid of unnecessary troubles in the future. Here are some of the things that you can do:
Proper documentation
One of the best ways to prevent any possible trouble is to have proper documentation of everything you do. You must maintain all the documentation and reports related to the finance among the companies that are traded publicly. The internal control will let you do this. Furthermore, you should also keep all the promotional deals in a documented form.
Use a proper management system
While you are doing documentation, you have to ensure the minor details about things. Therefore, it is important that you have a proper management system for documentation. And if you want to avoid any misplacement, you should consider having a document repository.
It will provide you access to all the necessary documents on time. Furthermore, you will be able to arrange the documents on the basis of your clients. And if in case, you face any claim, you can fight back.
Policy statement
If you are a supplier, it is important that you create a post-audit policy statement. It is not necessary that all the clients will agree with your policy but it is the first thing that you should do. Because it will let you set the rules of the deal. You can make amendments to the policy, depending upon the situation.
After both parties agree on the policy, sign the documents. This will act as proof in case of any future complications. Furthermore, if the other party makes a false claim, you can use these signed documents to prove your point.
