Agreement Audit

The Background


A well reknowned supplier of goods advised of a price increase on certain lines in accordance with a window within the supply agreement. Forensic analysis showed that prices may not have been in line with the terms of the previous agreement. Calculations showed that a major overcharging situation could have been occurring for a number of years.

The Process


The supplier was advised of the intention to audit the clients account. No mention was made of our beliefs until evidence was clear.

The Challenge


To verify figures and ensure ongoing supply from this valued vendor while ensuring that any overcharging was recouperated by the client.

The Results


Within 48 hours of informing the supplier of the impending audit, the Global Account Director telephoned to arrange an urgent meeting. They informed that the audit preparatory work had uncovered some erroneous pricing. They wanted to stop the audit and pay the differences found so far. The audit proceeded and pricing discrepancies amounting to a whole years’ expenditure, going back to the commencement of the agreement were repaid within one month. The relationship remained intact and indeed prospered with updated supplier management methods in place.

Conclusion


Often it is the most seemingly trusted suppliers who may be exploiting a position of having a close relationship, sometimes maliciously, sometimes through ignorance or systems restrictions. An objective approach to commercial relationships is vital with all suppliers. With a little bit of skill and foresight potentially combustible situations can be managed for the better good of all concerned.

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Contact Pyramis

Jim Willshaw (MBA, MCIPS, MIIAPS)

Jim is an experienced procurement professional acting as a consultant, speaker, coach and trainer to leading organisations all over the globe.

Get in touch by calling:

+44 (0)7775 818901


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