Worksheet: Agree one source of truth for price and margin

The data usually exists. It is scattered and untrusted, not missing. This sheet agrees one source for realised price and margin, writes the allocation rules once, and fixes the ten worst defects this quarter. It builds the Competent step of the check:

One agreed source shows price, volume, discounts and margin by customer and product.

Step 1. Agree the source, field by field

Field	Where it lives today	Agreed source	Owner
Invoice price and volume
List price at the time of sale
On-invoice discounts
Rebates, by customer
Freight, by delivery
Cost of goods
Customer hierarchy (parent, site, segment)
Product hierarchy

Step 2. Write the allocation rules once

Cost	Rule	Signed off by
Rebates	e.g. Actual rebate paid, by customer, accrued monthly
Freight	e.g. Cost per drop plus cost per tonne, by delivery zone
Overheads

Build profit at invoice level, then roll it up. Rolling up from product averages hides the small orders.

Step 3. The ten worst defects

#	Defect	Example	Revenue affected ($m)	Fix	Owner	Fixed by
e.g.	Duplicate customer records	One builder under four account numbers	12	Merge and lock new-account set-up	Credit team	30 September
1
2
3
4
5
6
7
8
9
10

Common ones: several customer hierarchies, and rebates booked at head office but never allocated. Also freight in one lump, product codes changed mid-year, and prices typed in by hand.

Step 4. Test it

Test	Pass?
Revenue in the source matches the ledger within 1%
Rebates allocated to customers add up to rebates paid
Freight is allocated by delivery, and the revenue split is not used
Finance and sales both use this source in their monthly reports

Done when: one agreed source shows price, volume, discounts and margin by customer and product. It reconciles to the ledger, and the ten worst defects are fixed.

Adapted from our own pricing process (PSP, 2004).