Consumer durables · Trading and distribution
The margin on each appliance after finance offers, exchange and brand support
A consumer-durables sale is settled by several parties: the customer, a finance company, the brand and sometimes a buyer for the old appliance. We reconcile each of them to the bill and cost exchange and finance offers against the margin they consume. Seasonal stock is planned so the summer and festive peaks do not leave the business holding last year's models.
In one paragraph
In a consumer-durables business a large share of sales is made on consumer finance with no-cost offers. Distributors and multi-store retail chains selling televisions, air-conditioners, refrigerators, washing machines, kitchen appliances and mobile phones usually turn over ₹20–1,500 crore, with an owner or finance head running the numbers. The true margin depends on subvention, brand support and exchange value that settle after the customer has left.
Owner or managing director, often with the finance head and the purchase head
The economics
How the money moves in this trade
A large share of appliance sales is financed through consumer-finance companies and card issuers. Where a no-cost offer is made, the interest is borne as a subvention by the brand, the retailer or both. The finance company then remits the loan amount net of subvention and processing charges. Brands add price support, display and promoter support, sell-out incentives and festive schemes, each claimed and settled separately.
Exchange offers take old appliances at a stated value and resell them to scrap or refurbishment buyers at a different one. Demand peaks sharply, with air-conditioners and coolers in summer and televisions and appliances around festivals. Stock bought for a peak that does not arrive ages fast as models change. Installation, extended warranties and delivery add further income and cost that are rarely matched to the sale.
The problem
Where the numbers usually break down
Finance-company payouts are not matched to bills
Remittances arrive in bulk net of subvention and charges, and individual sales are never confirmed as fully settled.
Subvention cost is hidden in discounts
The retailer's share of no-cost finance is booked as a general discount, so the cost of each finance offer is unknown.
Brand support claims are filed late
Price support, sell-out incentives and promoter reimbursements are claimed at quarter end with incomplete evidence, and part of them lapses.
Exchange stock is not valued
Old appliances taken in exchange are not recorded as stock, so the gap between the exchange value given and the resale value is invisible.
Seasonal stock is bought on hope
Purchases for summer and festive peaks are not set against a sales plan, and unsold models are carried at cost into the next season.
What we do
The work, and the result each part produces
Consumer-finance reconciliation
Each financed sale matched to the finance company's remittance, with subvention, processing charges and short payments separated.
Every financed bill is confirmed as settled.
Offer and subvention costing
Cost of each finance offer, cashback and bundle calculated per sale and set against the margin on the product.
Offers are chosen for the margin they leave.
Brand claims register
Price support, sell-out incentives, display and promoter reimbursements recorded when earned, with evidence, and tracked to the brand's credit notes.
Brand support is claimed in full and on time.
Exchange stock accounting
Old appliances recorded at the exchange value given and tracked to resale, with the difference reported by store and category.
Exchange offers are costed, not guessed.
Store and category profitability
Contribution by store and category after finance cost, brand support, exchange, installation and staff cost.
Each store is judged on what it keeps.
Seasonal stock planning
Peak-season purchases set against a sales plan by category and store, with ageing reviewed weekly through the peak.
The season ends with less unsold stock to carry.
Where we start
The first steps of an engagement
Finance, brand and exchange records
We ask for the finance companies' disbursement and remittance statements, brand scheme circulars and claim statements, the exchange register, and store-wise sales and stock.
Financed bills against remittances
Recent financed sales are matched bill by bill to remittances, separating subvention, processing charges and short or missing payments.
Brand claims and exchange registers
Brand support is recorded when earned with its evidence, and old appliances taken in exchange are entered as stock at the value given.
Store and category contribution
Contribution by store and category after finance-offer cost, brand support, exchange loss, installation and staff, with open finance items listed.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Financed sales reconciled to remittances, with open items listed
- Subvention and offer cost as a share of sales, by brand and category
- Brand claims accrued, filed and settled
- Exchange value given against resale value realised
- Contribution by store and category
- Stock ageing by model, before and after each peak
Who it suits
Written for, and not the right fit for
- You distribute IT hardware or components to resellers; the electronics distribution page fits better.
- You sell mainly through online marketplaces; the retail and e-commerce industry page fits better.
- Multi-store consumer-durables and electronics retail chains.
- Distributors of appliances and televisions supplying dealers in a state or region.
- Retailers where consumer finance accounts for a large share of sales.
Cities where this trade concentrates
Services
Services this work draws on
Outsourced accounting
Your books kept current and reconciled, closed to a published calendar.
Explore service ↗Costing and profitability
What each product, line and customer really contributes.
Explore service ↗MIS and financial planning
Reporting built around the questions you actually need answered.
Explore service ↗Finance technology and automation
Systems configured around your process, not the other way round.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
The finance company's statement shows what they paid. Why reconcile each bill?
Because the statement is in their terms, not yours. Matching each bill is how you find loans that were disbursed short, charges you didn't agree to and sales that were never funded. In bulk, those differences don't show.
How should the retailer's share of a no-cost offer be shown?
As a cost of the sale it relates to, separately from ordinary discounts. That's what lets you compare a finance offer with a straight price cut.
How should we plan purchases for the summer season?
Against a category and store sales plan built from prior seasons and current trends. Purchases and stock ageing are then set against it, so the buying decision has a number behind it.
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