Q1 Reconciliation—Promos, Pricing, Surprise Debit

Q1 is the quarter where everyone asks the same question:

“Did we actually make money on that holiday volume?”

Because the truth usually arrives late—through promotional billbacks, pricing deductions, and post-audit debits that land weeks (or months) after the product shipped.

NRF’s Retail Monitor data showed 2025 holiday sales (Nov. 1–Dec. 31) grew 4.1%. That’s a lot of invoices, a lot of promotions, and a lot of opportunities for the math to drift.

And drift is exactly how deductions happen.

Promotions aren’t “spend.” They’re a liability if you can’t prove them.

Most suppliers think of promotions as a sales lever. Many retailers process them as a compliance and reconciliation exercise.

Which is why trade spend is one of the easiest places to lose money quietly.

McKinsey notes that consumer packaged goods companies invest about 20% of revenue in trade promotions—and that 59% of promotions lost money globally (with an even higher figure cited for the United States). Other industry references place trade promotion spending in a wide band (often 11%–27% of revenue, depending on company and category).

If you can’t tie the promo agreement to execution proof to invoice-level deductions, you’re not managing trade spend. You’re hoping.

A fictional example (for illustration only)

Fictional example: Sales has an email approval for a holiday feature and endcap. Finance accrues at one rate. The retailer deducts at another. Then a price-file update lands late, and you get a “cost difference” deduction on every invoice for two weeks.

Nobody is lying. But the system is still taking money.

That’s the Q1 reconciliation trap.

The three most common Q1 deduction triggers

1) Promo agreement mismatch

• Off-invoice vs. billback confusion

• Wrong effective dates

• Wrong item list (a new pack size sneaks in)

2) Proof gap

• The promo happened—but you can’t prove it in the format the retailer accepts

• Or you can prove it, but it lives in someone’s inbox, not your dispute file

3) Price-file lag (cost difference deductions)

• Your list cost changes, but the retailer’s file doesn’t

• The retailer “true-ups” by deducting the difference—often repeatedly until corrected

The Q1 solution: a simple “three-way match”

If you only steal one idea, steal this.

Every promo and price-related deduction should be tested against three things:

A) The agreement

• Promo form, email confirmation, program terms, item list, rate, dates

B) The proof

• Ad screenshots, circular pages, retailer portal confirmation, store photos (when available), display agreements

• Anything that demonstrates execution (not just intention)

C) The invoice tie-out

• Invoice numbers and dates that align to the agreement window

• Deduction rate math (is the retailer taking the right percent/dollars?)

• Quantity and item identifiers match what shipped

When you can’t match A + B + C, you’re going to get “negotiated” by the deduction system.

The Q1 Promo Proof Toolkit (build it once; reuse all year)

Create one shared folder structure and a one-page checklist. Then make it someone’s job—not everyone’s problem.

Minimum proof set:

• Promo approval and terms (rate, dates, items)

• Execution evidence (screenshots, portal confirmations, ad references)

• Invoice list for the promo window

• A short narrative template: “what happened, what we’re disputing, what we’re requesting”

You’ll be shocked how often this turns “we can’t fight it” into a clean recovery.

Price-file lag: your early warning system

Do not wait for the first “cost difference” deduction.

Instead:

• Spot-check invoices weekly for unit cost drift (sample your top movers)

• Track changes by effective date (your date vs. retailer date)

• Escalate quickly when you see repeated variance—every day of lag is a tax on shipments

The uncomfortable truth

If you don’t reconcile promos and pricing tightly in Q1, the rest of the year gets harder.

Teams get trained to accept debits as “the cost of doing business.” And that mindset is expensive.

Many suppliers already face meaningful leakage from chargebacks and deductions—often measured in multiple percentage points of revenue.

So the goal isn’t perfection. It’s control:

• Control of proof

• Control of linkage

• Control of prioritization (win where you can win)

That’s what strong deduction recovery looks like. Not arguing. Accounting, evidence, and process.

And when the workload outpaces the team, HRG steps in to do the unglamorous work: validate, package, dispute, recover—and feed the insights back so fewer debits happen next quarter.