Let’s play a quick game of word association. If I say "Auditor," what is your visceral reaction?
If you are like most sales or trade marketing professionals, your heart rate just spiked. You’re picturing a windowless conference room, stacks of paper invoices, and a stern-looking individual asking why you approved a circular ad three years ago for a SKU that no longer exists.
For many in consumer goods, trade spend is the "Wild West"—a frontier of handshake deals, complex spreadsheets, and the occasional "guesstimate." But for your Finance team, trade spend is significant and precise, and treating it lightly is a dangerous game.
This is likely what keeps your CFO up at night. They aren't worried about whether the end-cap display looked pretty; they are worried about accruals, liquidity, and unexplained variances.
If you want to stop being the department that causes the Finance team to hyperventilate during close month, and instead become their favorite colleague, you need to audit-proof your trade spend. Here is how to move from "chaotic spender" to "financial steward" (and maybe even get a high-five from your CFO).
Here is the dirty (not-so) secret of the industry: Retailers are excellent at taking money. Sometimes, they are a little too enthusiastic about it.
Retailers will often deduct amounts from invoices for a variety of reasons—pricing discrepancies, shortages, or promotional bill-backs. The problem? They deduct first and explain later. If you are managing this process manually, you are likely letting revenue slip through your fingers. Research from INMAR intelligence suggests that anywhere from 10% to 25% of retailer deductions are actually invalid. When you are spending 15-25% of gross revenue on trade, that is real money!
Even worse are post-audit deductions. These are the claims that come back to life years after you thought the books were closed. A third-party auditing firm hired by the retailer digs through old data and decides you owe them money from 2022. Surprisingly (or not), it is estimated that up to 50% of these post-audit claims are invalid.
If you don't have a digital paper trail, you have no defense. You just have to pay up. That is a direct hit to your company’s bottom line, and it drives CFOs absolutely bonkers.
If your "system of record" is an Excel file named Trade_Tracker_FINAL_v3_UPDATED_Jan(2).xlsx, you have already failed the audit.
Spreadsheets are fantastic for keeping track of your personal budget; they are terrible for managing millions of dollars in trade investment. They lack version control, they break when formulas get too complex, and most importantly, they have zero audit trail.
When an auditor asks, "Who authorized this increase in trade rate?" and your answer is, "I think it was Dave, but Dave left two years ago," you are in trouble.
To audit-proof your spend, you need a centralized TPM system that logs every move. You need to know who created the promotion, who approved it, when it was modified, and why. Modern TPM solutions (like CPGvision) create an immutable digital footprint. This isn't just about policing your team; it's about protection. When the auditor points a finger, you can point to a timestamped, user-stamped record.
The biggest friction point between Sales and Finance is the "Unidentified Deduction." This is a lump sum taken by a retailer that sits on the books, aging like milk, because nobody knows which promotion it belongs to.
Audit-proofing requires validation. You must be able to match a specific deduction to a specific promotional event.
This is where technology saves your sanity. Instead of manually cross-referencing three different PDFs, modern deduction management tools use advanced filtering and AI matching functions to align spend against performance. You can validate the spend, clear up short pays, and ensure the expense is coded to the right General Ledger (GL) account.
When you can cleanly match a deduction to a plan, you turn "mystery money" into "verified expense." Finance loves verified expenses.
Remember the old days of keeping receipts in a shoebox? Let’s not do that.
To survive an audit, you need both the original agreement and Proof of Performance. What level of discount did you agree to fund? For how long? Did the ad actually run? Was the display actually built? Did the price reduction actually hit the shelf?
If you wait until the audit to find this proof, you are too late. You need a process where contracts and proof of performance documentation are attached to the promotion record in real-time.
Nothing scares a CFO more than a surprise bill. When Sales overspends but doesn't update the system, Finance under-accrues. Then, when the bill comes in, profits take a hit, and quarterly guidance gets missed.
This is often caused by the "dip" in communication between Sales and Finance. Sales reps are optimistic; Finance is conservative.
Audit-proofing means closing this gap with Accrual Accuracy. You need a system that updates the financial forecast the moment a sales rep changes a volume estimate or a trade rate in the field. This "live link" ensures that the money Finance thinks you are spending matches the money you are actually spending.
When your accruals are accurate, you protect the company’s cash flow and liquidity—two of the CFO’s favorite words.
It is easy to view "audit-proofing" as a boring administrative chore. But look at it through your CFO's eyes.
Unexplained deductions erode trust. Surprise costs threaten their job security. By implementing a rigorous, transparent, and documented trade management process, you aren't just doing "paperwork." You are protecting the company's capital.
You are ensuring that every dollar spent yields a return, and more importantly, that you can prove it. You stop being the department that Finance views with suspicion and start being the department they view as a strategic partner.
So, ditch the spreadsheets, digitize your proof, and let the auditors call. You’ll be ready for them.
Learn how CPGvision can help you strengthen your audit trail, and become your CFO’s best friend, contact us.
Related resources:
White Paper - How to Master Deduction Management in the CPG Industry
Ensuring Financial Discipline with Trade Promotion Management Software