In this guide 6 sections
Margin leaks. Distributor orders carry schemes applied by hand, and returns come back with no record, so the loss hides inside month end write-offs and credit notes. Hold one price list per dealer tier, write each scheme with dates, a threshold and a benefit, and book every return against its original invoice.
Start with the price list, not the scheme
Two price lists live in two heads. Sales quotes one rate. Accounts bills another. The gap is written off as a goodwill adjustment at month end, and nobody can say afterwards which manager, which phone call or which festival order justified it.
Fix that first. One price list per dealer tier, held in one place with an effective date, ends the argument before any scheme enters the picture. Tiers should mirror real terms such as distributor, sub-dealer, institutional buyer or supermarket chain, and each tier gets its own rate for each item and pack.
A change takes effect from a date. Old invoices keep their old rates. Record who approved any rate changed mid-month, since an override granted by phone and never written down is how two dealers on one tier end up with different margins.
- Tier name and its terms
- Rate per item and pack with effective date
- Approver for any override
- Minimum order quantity per tier
Write schemes as rules with edges
A scheme is a rule. It needs a product list, a start date, an end date, a threshold and a benefit, all written before the first order is taken. Buy twelve cartons of pressure cookers and get one carton of lids free is a clear scheme, while “Support the winter push” is no scheme at all.
Leakage appears at the edges. Dealers order just before a scheme ends and claim it applies, free goods ship on the wrong invoice, and two schemes stack when only one should. A system can test each rule at order entry, but only if the rule was written with a precise product list, date range and threshold.
Close each scheme with a reconciliation. Compare benefit given with benefit planned, then ask which dealers claimed free cartons that no qualifying invoice supports and which orders were keyed after the end date.
Track returns against the invoice they came from
Untracked returns are quiet losses. A dealer sends back dented pressure cookers, leaking hand wash bottles or short dated shaving foam with a handwritten note, and a credit note follows without a check. Nobody asks whether the cookers were sold at scheme rate or dented on a loose truck load, and the carrier is never told.
Every return needs a request naming invoice, item, batch, quantity and reason, and the warehouse inspects the goods on receipt and records what actually came back. Only then does accounts raise a credit note, priced at the rate printed on the original invoice, never at the rate on today’s list.
Reasons tell you where to act. Transit damage points at packing or the carrier, while expired stock points at slow dealers who ordered more than their shelves could clear.
- Return request with invoice and batch
- Inspection result: resale, rework or scrap
- Credit note at the original invoice rate
- Return reason code for monthly review
- Carrier or packing remark for damage
What the order system should hold
The order screen should show the dealer’s tier price, every live scheme that applies, and the dealer’s open credit and unpaid invoices, all on one page. It flags or blocks a bad order. No salesperson has to remember.
Behind it sit a scheme master, a return authorisation register and a dealer ledger tying invoices, credit notes and collections into one net balance. Statements show net position. Salespeople see true margin contribution.
Watch quarterly rebates. A turnover rebate paid on gross invoices, before returns are netted off, hands the dealer money for stock that came back. Pay it on net sales. State that rule in the tier terms.
Review the leaks monthly
Each month, list the schemes that ran, the benefit given and the orders that qualified, then list returns by dealer, reason and value of goods rejected. Look for dealers whose credit notes rise faster than their sales, and check every bonus carton shipped against the scheme master and the ex-factory rate on each invoice.
Bring sales, accounts and the warehouse lead together for an hour, and leave with one change, such as a tighter scheme end rule or a mandatory return form.
Start small. Pull last month’s credit notes and ask which ones had both a goods receipt and an inspection record behind them, then list the rest by dealer.
Dealer margin review sheet
A monthly review sheet in three blocks. Prices set each dealer tier rate against the rate billed, with overrides and approvers, while schemes show start and end dates, qualifying orders, benefit planned and benefit given. Returns list dealer, invoice, batch, reason, inspection result and credit note value, so every credit note links back to a goods receipt.
Open a blank worksheet to printQuestions owners ask
How many dealer tiers are too many?
Use as few as terms allow. Every extra tier adds a price list to maintain and another chance for the wrong rate to reach an invoice, so merge tiers that differ only by habit.
Can returns be refused?
Yes. Refuse a request that matches no invoice, batch or agreed reason, and share a written returns policy with every dealer before the festival season starts. Refusal becomes a rule.
Why do schemes stack by mistake?
Each scheme is keyed alone. Nothing compares them. Add a field to the scheme master saying whether it may combine with others, and have order entry test that field before it accepts the lines.
What should a dealer statement show?
Invoices, credit notes, scheme benefits, accepted returns and collections, ending in a net balance that the dealer’s accountant can tie to the ledger line by line. Keep it plain. Dealers query far fewer items when each adjustment is explained, with the invoice number beside it, and disputes then shrink to genuine differences instead of missing paperwork.