Commerce Budgets
Part of Commerce advertising budgets
Separating media costs from trade marketing commitments
Classify retailer charges by what they buy, split mixed packages and keep trade commitments visible beside media costs.
Separate a retailer agreement into three categories: changes to the supplier–retailer commercial transaction, payments for planned advertising, and items whose terms combine or obscure both. Record each before approving spend. Classify a payment by what the agreement requires and delivers, not by the team that proposed it.
Read the obligation
Read the obligation
Trade commitments alter the economics of supplying a retailer—for instance, via a temporary reduction in selling terms or a funded offer. Media buys are planned activities aimed at shoppers, such as a sponsored listing or specified display placement. Some packages combine price support, advertising and services.
For each charge, determine what triggers it, what is delivered, which products and dates it covers, whether its parts can change independently, and what invoice and delivery evidence will follow. Ask for a breakdown of package prices. Until its terms are clear, record it as mixed.
| Agreement line | Initial treatment | Detail to obtain |
|---|---|---|
| Temporary reduction in supplier selling terms | Trade commitment | Products, dates, unit economics and settlement basis. |
| Sponsored product clicks | Media cost | Eligible items, billing event, budget control and click report. |
| Branded space booked for a term | Media commitment | Exact space, period, included services and cancellation terms. |
| Package with price support and advertising | Mixed until separated | Commercial funding, media inventory and shared charges. |
These prompts are for reviewing an agreement, not accounting rulings. Finance and the commercial owner should decide how each actual item is recorded and reconciled.
Classifying Retailer Charges: Trade Commitments vs. Media Costs
- Trade Commitment
- Alters supplier–retailer economics (e.g., temporary price reduction, funded offer)
- Media Cost
- Planned advertising for shoppers (e.g., sponsored listings, branded display space)
- Mixed Package
- Combines trade and media elements; must be split before classification
Count each cost once
Count each cost once
Maintain a register containing agreement reference, owner, retailer, product set, period, amount or calculation method, invoice route and budget category. Link a media order to the trading agreement when they are interdependent.
If a promotional allowance already reduces the supplier’s net receipts, do not deduct it again as a media fee. Likewise, include a media invoice in the budget even if the trading team negotiated it. Show a documented credit separately from the components it offsets so a later change remains visible.
Steps to Separate and Record Media and Trade Costs
- Identify the agreement lineDetermine whether it is a trade commitment, media cost, or mixed package
- Obtain detailed termsRequest triggers, delivery scope, product coverage, dates, and evidence requirements
- Record in a central registerInclude agreement reference, owner, retailer, period, amount, invoice route, and budget category
- Avoid double-countingDo not deduct promotional allowances twice; show credits separately from offsets
- Reconcile at close-outMatch each item to its agreement and invoice; verify media delivery and commercial terms
Check UK grocery terms where the Code applies
Check UK grocery terms where the Code applies
The Groceries Supply Code of Practice regulates relationships between designated UK grocery retailers and their direct suppliers of covered products.
If a proposed payment appears to be required as a condition of supply or better shelf positioning, ask the responsible commercial and legal teams to examine the actual term and the Code’s provisions. The parties, products and agreement determine whether the Code applies and what it requires; a budget label cannot settle that question.
Key UK Grocery Code Requirements
- Applies to
- Designated UK grocery retailers and their direct suppliers of covered products
- Regulator
- Groceries Code Adjudicator (GCA)
- Prohibited practice
- Payments required as condition of supply or better shelf positioning
Reconcile the two records
Reconcile the two records
At approval, show media, trade and unresolved mixed commitments as separate subtotals. At close-out, reconcile each item to its agreement and invoice. Compare media delivery against the media booking, and assess promotional funding against the product’s commercial terms. Keeping both records connected prevents an advertising return figure from concealing a discount or other commitment that reduced contribution.
