DEFINITION

Discount Leakage

Discount leakage is margin lost when discounts are granted beyond approved policy, applied without authorisation, or accumulated across multiple mechanisms. Unlike pricing error, the list price is correct — the deduction from it is not.

Leakage arises where commercial discount policy lives outside the transactional system, so nothing enforces the approved band at the point of invoicing.

Analytics test invoiced discount against approved policy by customer, product, and channel; identify discounts lacking authorisation; and aggregate stacked discounts, rebates, and credits to show effective realised margin.

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