"Certainly, we'll rectify that for you right now."
Guideline: Own Policy
Description:
This term refers to those costs that must be borne by the Sales Department that cannot be reclaimed or charged on to warranty or any other Department.
This KPI is usually shown separately for new and used vehicles as they both deliver very different results. As you can well imagine, Rectification for used vehicles is generally much higher. (Not to be confused with Reconditioning Costs)
Example:
A) Rectification = R53,760 B) Vehicles Sold = 960 C) Rectification per Unit = R56 (A รท B)
Discussion:
Just imagine that you sold a vehicle a couple of weeks ago and the customer has returned to you because there is a problem. You agree to rectify the problem for the customer, and the question is who pays the bill? If the answer is the Sales Department, then this is known as Rectification and is usually shown as a cost per unit sold.
You can usually find your Rectification within the Semi-Fixed Expenses of your management accounts.
Related Terminology:
This term is also known as Policy Adjustments, Goodwill or Policy Costs.