44.2 specific discounts and checklists

Question 1

On a number of occasions, sales staff granted customer discounts in excess of authorised levels.

Answer 1

Excessive discounts

Consequences
Inconsistent pricing could lead to:
* customer dissatisfaction
* overpayment of sales staff if remuneration is target driven
* fraudulent acts by sales staff (for example, kickbacks from customers).
The above points will have an adverse impact on profits and cash flow.

Recommendations
* Any ‘extra’ discount (to clinch a sale) to be authorised by a manager
* Any bonuses to be linked to either margins or profits
* Discounts reviewed periodically
* Exceptions to be investigated

Question 2

Classy publically claims that each used car is assessed against a checklist of 100 items to ensure
that it is safe to drive. Workshop managers have stated that, because of insufficient time, some of
these checks are rarely performed.

Answer 2

100 item checklist

Consequences
Failure to complete the checks prior to the sale of cars could lead to:
* cars breaking down and/or accidents
* customers returning cars resulting in refunds and an increase in repair costs
* customers suing Classy resulting in compensation payments and legal fees
* customer dissatisfaction leading to a loss of reputation and a loss of future sales
* fines levied by regulators in respect of misleading claims and/or the selling of unsafe
cars
The above points will have an adverse impact on profits and cash flow. Ultimately going
concern issues may arise if, for example, the company loses its license to trade.

Recommendations
* Recruit more staff
* Reschedule existing staff workloads to allow checks to be completed
* Checklist to be reviewed and signed off by management prior to sale
* Remove 100 item claim until Classy complies

Question 3

General points applicable

Answer 3

Employees to be made aware of the importance of adhering to company policy
* Monitoring of procedures to ensure adherence
* Breaches to be investigated and staff disciplined…