A structured audit for distributor pricing and margin leakage.
We analyze historical transaction data to identify pricing anomalies, margin erosion and unusual patterns that standard ERP reporting can miss.
15-minute conversation · No ERP integration required
Nobody decided to give away the margin.
Price gets set in a contract, adjusted by a rep, overridden at a branch, then quietly outdated by a supplier cost increase. Every step is defensible on its own.
The gap only appears when you line up what should have been charged against what was actually invoiced — one line at a time, across a year of orders.
A $5 gap on one transaction is noise. The same gap repeated across thousands of transactions, customers and SKUs is a pattern worth investigating.
The data exists. The problem is connecting the dots.
Realized margin is the product of decisions made in different places, at different times, by different people — each one reasonable on its own.
The challenge isn’t finding transactions. It’s determining which transactions deserve attention, why they are unusual, and whether the difference represents legitimate commercial behavior or potential leakage.
- Customer-specific pricingContract terms
- Supplier cost changesVendor updates
- Branch overridesLocal decisions
- Manual discountsOrder entry
- Historical transactionsERP export
Standard reporting shows the total. It rarely shows which combination of inputs produced it.
From anomaly to action.
Detect
Compare every line against the price that should have applied — contract, price file, quantity break or override — and isolate the ones that don't reconcile.
Quantify
Size each pattern in dollars and rank it, so you start with the finding worth six figures rather than the one with the most rows.
Investigate
Hand your team the exact invoices, customers and items behind each finding, so they can confirm or dismiss it in their own system.
Who this is for.
Likely a fit
- You run thousands of order lines a month across hundreds of active customers.
- Price varies by customer — contracts, price files, SPAs or negotiated discounts.
- Reps or branch managers can override price at the point of sale.
- Your ERP reports margin by branch or product line, but not by exception.
Probably not yet
- You already have an analyst reconciling pricing line by line every month.
- You sell from one published list with no customer-specific terms.
- You want a finished product to log into today.
What the audit looks for.
Pricing and margin leakage rarely shows up as one obvious error. It tends to appear as a set of smaller signals spread across customers, SKUs and branches.
Not every anomaly represents actual leakage — see what we don’t claim.
Signals we look for
- Supplier cost increases never passed through to price
- Contract and SPA pricing not applied at order entry
- Discounts granted below the customer's agreed floor
- Quantity breaks applied at the wrong tier
- The same item priced differently across branches
- Freight and handling charges not recovered
- Rebate-eligible purchases never claimed
- Margin drift on long-running repeat accounts
How the audit works.
- 01ExportYou pull 12–24 months of order and invoice history from your ERP. A flat file is fine.
- 02ReconstructWe rebuild what each line should have been priced at, from contract terms, price files, cost records and quantity breaks.
- 03CompareEvery invoiced line is measured against that expected price. Most will match — those are set aside.
- 04QuantifyRemaining gaps are grouped by cause, counted, and sized in dollars so the largest surface first.
- 05InvestigateYou get the underlying invoices for each finding, so your team can confirm or dismiss it against their own records.
- 06ImproveConfirmed findings point to the control that failed — a stale price file, an override with no approval, a contract never loaded.
Example of how an audit might quantify findings.
Every audit produces a ranked list of findings with the supporting transactions behind each one. The figures below are constructed to show the shape of that output — not a real engagement.
Illustrative potential impact
$427,300
Illustrative example only. This is not a client result. Potential impact requires customer investigation and validation.
| Finding | Transactions | Potential impact |
|---|---|---|
| Cost increase never passed through to price | 421 | $126.2K |
| Contract price not applied at order entry | 842 | $173.4K |
| Discounts below the customer's agreed floor | 317 | $74.6K |
| Same item priced differently across branches | 198 | $44.5K |
Supporting transactions
| Customer | SKU | Expected | Actual | Variance | Why flagged |
|---|---|---|---|---|---|
| Harlow Pipe & Supply | 50214 | $342.10 | $318.40 | -$23.70 | Cost +7% in March, price file unchanged |
| Kestrel Industrial | 88732 | $96.75 | $96.75 | — | Within contract terms — not flagged |
| Bridgeton Electric | 22109 | $154.60 | $138.90 | -$15.70 | Contract price not applied at order entry |
| Anchor Fastening Co. | 67450 | $41.20 | $34.85 | -$6.35 | Discount 15% below agreed floor |
An anomaly is not automatically an error. Findings are a starting point for investigation, not a conclusion about recoverable money.
Built for investigation, not magic.
An unusual transaction is not automatically an error. Legitimate commercial agreements and business decisions can create unusual patterns.
Probatus surfaces where the numbers deserve attention. Your team determines whether a finding represents actual leakage.
Common questions.
Is this a finished software product?
Not yet. The Distributor Margin Audit is a validation-stage offering. We work directly with distributors on historical data analysis while we test and refine the workflow, rather than selling access to a finished platform.
What data do I need to provide?
An order or invoice line export covering 12–24 months: customer, item, date, quantity, unit price, unit cost, discount, branch and salesperson where available. Contract or price-file data helps but isn't required to start. A CSV from your ERP is enough — no integration, no system access.
How is our data handled?
Data handling and confidentiality terms are agreed with each distributor before any data is shared. See our Privacy page for details on how information is used.
What does an audit cost?
Because this is an early-stage engagement, scope and cost are discussed directly based on your data and goals rather than a fixed published price.
How long does it take?
It depends on data availability and scope. We'll give you a specific estimate after an initial conversation about your transaction data.
Ready to see what's in your data?
Send us a note about your business and the transaction data you have available. We'll tell you honestly whether this is a fit.
15-minute conversation · No ERP integration required