Margin & pricing
The discount nobody approved: keeping trade spend from eating your margin
5 min read
Few distributors lose money in one loud event. It leaks out a shilling at a time: a discount agreed on a phone call, a promotion nobody logged, a price exception that quietly became the norm for one loyal customer.
How trade spend goes invisible
A sales rep promises a discount to close the month. A loyal wholesaler is given the old price for three more weeks. A supplier promotion runs its course, but the rebate is never collected or is collected and never matched to the spend that earned it.
None of this appears as a loss. It appears as margin that is thinner than expected at the end of the quarter, with no record of who approved what, for whom, or whether it paid for itself.
Making every price move visible
The fix is not banning discounts; it is giving every price exception a name, an owner and an expiry. When each discount, promotion and rebate sits in one record against the customer and SKU it belongs to, the question changes from what did we spend to what did that spend return.
Distributors who see this daily can see which top-selling lines carry the thinnest real margin, which promotions earned their keep and which rebates are still owed to them by suppliers before they lapse.
What changes for the business
Pricing decisions move from memory to record. Sales keeps the flexibility to close a deal, but finance sees the cost of every concession the day it is made. The margin you planned for is the margin you actually keep.
Common questions
- How can distributors control discounts without slowing down sales?
- By recording every discount, promotion and price exception in one place against the customer and SKU, with an owner and an end date. Sales keeps its flexibility, and the cost of each concession is visible the day it is made rather than at quarter end.
- What is the biggest source of lost margin in FMCG distribution?
- Usually untracked trade spend: unapproved discounts, price exceptions that became permanent, and supplier rebates that were earned but never collected or matched to the promotion that earned them.