Solving a 3-year pendency for a multinational FMCG

Overview

A multinational FMCG brand had to reconcile a large number of distributor claims in a specific market. Such claims were set off against the receivables from distributors. These claims were provided annually creating cash flow challenges and tedious audits. Matrix Business Services was engaged to clear the backlog and reconcile claims appropriately.

Facts

Problem Statement

Claim pendency for 3 years
Distributors submitted multiple claims in a month against activities authorised by the company towards promotions
Some of the claims were multi-branded claims and accounting for them was a challenge
All claims pending approval were received via e-mails into the inbox of different budget owners, who were a part of the sales team and couldn’t spend time clearing these
claims.

The Matrix Solution

Backlog clearance

Onboarding sessions were set up with the budget owners to understand the promotion
plan, budgeting process, business landscape, KPAs, approval hierarchy, and more.
The pending distributor claims were listed and Matrix engaged with the distributor teams
to confirm the balances.
Against the pendency reported, line-level checks were done to check if the claims were
indeed received. A common SharePoint was created for distributors to upload the
supporting documents.
Daily trackers were sent on the status and the organization was recommended to give
an ultimatum to the distributors to submit the respective details.
The claims were classified basis an ABC analysis (given the magnitude) and an
exception was sought for clearing the claims below a specific threshold with bare
minimum support.
High-value claims were thoroughly checked to confirm performance.
Duplication in claims was identified and raised to the distributors to provide reasons and RCA.
Other rejections were mailed to distributors for alignment or further proof of performance
The company’s approval was sought to split multi-branded claims in sales salience of the respective years and the claims were charged to the right Profit Centers and spends booked to right cost centres

Long term solution

A detailed SOP/ Jobaid was created in collaboration with the company
Relevant approvals were sought and the SOP was deployed to the distributors as well
Expectations were set right in terms of performance needed against every spend type
and a detailed Business Risk Acceptance document was created to record certain risks
that have to be assumed along the process due to market conditions, the magnitude of
data, cost-benefit, data constraints etc. and compensating controls were identified for
every risk & documented with approvals
A traffic light report template was aligned & created as a platform for highlighting the
management outages distributor wise and the results of compensating controls
Measures were identified such as continuous defaulters, duplicate claims submissions,
any cases of fraudulent practices and action items & owners were documented for the
same
Ancillary checks & balances for compensating controls were set – such as checking any
inflation in sales by deriving sales through inventory and shipment and comparing the
same to claimed sales
The digital platform created for claims submission and live status tracking

The Result

The claims were bucketed in to clear statuses on where it is pending – either with the
company, distributors (or) Matrix and targeted deadlines were plotted for clearance
The practice of set-off against receivables stopped – claims were either cleared within
SLA (or) identified as pending inputs from distributors
Cashflows improved tremendously due to stopping of set-off and due to identification of duplication in claims
Accounting right against relevant IOs and GLs enabled through right identification & scientific salience application
Frauds identified – Examples – Duplication in pictures submitted for visibility claims, GPS coordinates in pictures not leading to the stores, Inflation of sales, Returns against sales that were paid for promotion etc.
Clear visibility to management teams on the status via digital platforms
Quick turnaround & SLA enabled through Macro tools, BOTs and other means of
digitisation (such as apps for tracking visibility)