The Importance of a Comprehensive Auditing Strategy for Your Channel Partners

Audits of channel partners is an essential part of a channel compliance program. Mature programs typically have achieved buy-in from various stakeholders within the organization such as finance, internal audit, compliance, legal and especially sales. The overall objectives for channel partner audits should include testing for completeness and accuracy of POS reporting and claims submitted by the channel partner, as well as an assessment of contractual compliance to the partner agreements and pricing program terms and conditions.

The typical financial findings relating to incentives and rebates include:

  • Claims and payments made on sales to ineligible end-customers
  • Products procured from unauthorized sources
  • Products claimed ineligible for volume rebates
  • Claims on products subsequently returned
  • Product claimed across multiple programs
  • Inappropriate use of MDF Funding
  • Duplicate claims

The audit process also identifies opportunities to improve internal systems and processes internally and at the partner. It will help both the OEM and channel partner to implement controls and change processes that mitigate future incorrect payments and non-compliance.

A comprehensive channel compliance monitoring program is critical for establishing that eligible products and eligible customers receive incentives and rebates. OEM agreement terms and pricing program policies dictate who qualifies for incentives and rebates but its critically important that OEMs are monitoring and enforcing these policies. Consistent consequence management is necessary to encourage appropriate behavior. If there are no consequences, then overpayment and incentive program abuse can increase.

OEMs face challenges in assessing partner compliance associated with:

  • end-user verification for special pricing at Distributor & Reseller
  • verifying that POS reporting and Claims include returned products
  • claims on product movements rather than actual sales
  • claims on both invoice cancelations and re-bill invoices
  • partner submitting claims on refurbished products

OEMs may implement a range of Internal Audit initiated audit activities (e.g., questions on specific claims) through to full scope audits utilizing third-party auditors. Channel partners often cite confidentiality concerns with providing certain details to the OEM directly and will not want to share the level of information and detail that a third-party auditor is able to receive.

Connor is re-imagining channel compliance with a globally distributed team of consultants with deep Big 4 and industry experience, and local expertise. Our technology-first approach is tailored to your specific channel environment and is powered by our dedicated team of passionate compliance experts.

With our custom support and guidance, your channel audit program can pay for itself within 12 months. In fact, past channel programs have historically exceeded 10x ROIs.

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Getting started with Connor is extremely simple. To highlight our unparalleled expertise and service, we provide efficient proofs-of-concept that are not resource intensive. Contact us today!