Does your company include advertising allowances in your product costs?
Today’s post is by Ronald D. Southard, CEO at SafeSourcing Inc.
Does your company include advertising allowances in your product costs?
An advertising allowances is a fund allocated by the provider to be paid to a merchant for the purpose of advertising a specific product or brand. The advertising allowances could be in the form of either a discount from the wholesale price of a product or a reimbursement to the merchant for advertising costs which have already incurred.
Let’s face it, when sourcing your for resale products, having all costs associated with that product make life much easier for your procurement department or your third-party SaaS partner like SafeSourcing Inc.
Finding out that you have an advertising allowance after you have sourced something creates huge issues. Let’s say that your current vendor embeds those discounts in the up-front product cost and not as a payment at the end of the quarter or year. While it may be a net-net benefit, it is accounted for differently. Management may be looking for that payment only to find out it is now included in your current cost. Oops!
At SafeSourcing we have a list of questions that are part of our white glove services that we ask and document the answers to that allows us to uncover everything that is included in your current contract language and where there are potential surprises in your P&L.
If you’d like to learn more about how SafeSourcing can assist in properly analyzing the total cost of your annual purchases, please contact a SafeSourcing customer services associate.
