Free of Charge Goods
Table of Contents
Use Case:
Organizations need to monitor the distribution of free-of-charge goods to ensure they are supported by legitimate business purposes and appropriate approvals. While free goods may be provided for valid reasons, such as product sampling, resolving customer issues, or supporting promotional activities, unusually high levels of free goods may indicate control failures, favoritism, fraud, or improper benefits. For example, a distributor receiving significantly more free goods than comparable customers may warrant further review to confirm that the activity is reasonable\ and properly documented.
The Free of Charge Goods analytic identifies customers that receive a high value of free goods relative to their peers. By comparing customer activity over a historical period, the analytic highlights customers whose receipt of free goods is unusually high compared with similar customers. This helps organizations identify potentially inappropriate benefits, confirm that required business justifications and approvals are in place, and detect activity that may be associated with fraud, corruption, improper gifting, or the creation of unauthorized funds.
| Description | Identifies customers whose value of free-of-charge goods is unusually high compared with similar customers over a historical period. |
| Domain(s) | Customer Revenue |
| Analysis Type | Indicator |
| Focus Area | Favor |
| Score Methodology | The total value of free-of-charge goods is compared with peer customers over the configured historical period. |
Default Scoring Criteria
Importance: 4 (default)
Enabled: True (default)
| Risk Result | Default Value | Notation |
|---|---|---|
| Weak | .99 | Percentile |
| Moderate | .95 | |
| Strong | .99 | |
| Auto | Not set |
Unique Configuration
The Free of Charge Goods analytic calculates each customer's Free of Charge Ratio using one of the following measurement types:
- Value (default): compares the total cost of free-of-charge goods with the total cost of all eligible goods.
- Volume: compares the number of billing documents containing free-of-charge goods with the total number of eligible billing documents.
Only billing documents with line-item details are included in the calculation. Accounting documents without line-item details are excluded. Additionally, only Sale and Receivable Increase transaction types are considered.
Customers can be compared against:
- No comparison group
- Customer Classification 1 (Industry) (default)
- Customer Classification 2
- Customer Account Group
Because this is an Indicator analytic, any transaction containing a free-of-charge item is eligible to receive a risk result. Comparisons are based on the previous 365 days of transaction history, excluding transactions that are no longer valid.
Exclusions
You can exclude the following from comparison and/or scoring:
- Subject ID
- Subject Account Group
The following default thresholds also apply:
- Customers with 12 or fewer historical transactions are not evaluated.
- Customers with a free-of-charge ratio of 1% or less are excluded from scoring.
- Cohorts with 10 or fewer customers are automatically compared against the broader customer population to ensure a risk result can still be generated.