Ship and debit is a claim against your contract. Validate it like one.
The person searching for this runs distribution finance at a component, semiconductor, or hardware manufacturer — or reconciles the debits on the distributor side. The mechanism is standard; the special-pricing-agreement sprawl underneath it is not. Aurgus is the calculation and eligibility layer for ship-and-debit claims: every claim line resolved against the SPA that governed it as of the resale date, the authorized delta computed deterministically, every accepted or rejected line traceable to why. We do not parse EDI or POS feeds natively today, and we do not ship a partner-facing dispute portal — both deliberate, both stated here rather than discovered in the demo. Aurgus is in design-partner stage.
How ship and debit actually works.
The pattern is standard across technology and electronic-component distribution. If you know the GPO chargeback from healthcare, this is the same economic shape with a special pricing agreement in place of a membership roster. There is also a shorter glossary definition if you just need the term. Accounting-wise, the funded delta is a reduction of your revenue — variable consideration under ASC 606 — which is why the validation layer has to produce numbers your close can actually carry.
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The distributor buys from you at book cost.
Standard distribution price, into distributor inventory. At this point nobody knows which end customer the units will reach, so nobody knows whether a special price will apply.
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You authorize a special price for a specific deal — the SPA.
A special pricing agreement names the end customer, the parts, the authorized resale price, the validity window, and usually a quantity cap. It is your commitment to fund the gap between book cost and the deal price, for that deal and only that deal.
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The distributor sells below cost and debits you the difference.
Book cost minus authorized price, times units shipped — claimed transaction by transaction, usually in a periodic claim file with thousands of lines: which end customer, which part, which date, under which SPA.
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You validate every line before you credit it.
Three questions per line: was the SPA in effect on the resale date, was the buyer the authorized end customer, and does the claimed delta match the authorized price and remaining quantity? Get any of the three wrong at volume and you are funding discounts your contracts never authorized.
Where ship and debit falls apart in practice.
The arithmetic on any single line is trivial. The failure is the inputs — and the number of lines. If you want a quick read on how controlled your own flow is, the Off-Invoice Control Index takes about three minutes.
- SPA sprawl. Hundreds of active authorizations, amended mid-quarter, renewed by email, each with its own parts list, price, window, and cap. The claim file cites SPA numbers; whether the cited terms are the current terms is the actual question.
- Claims against expired or exhausted authorizations. A SPA that ended in March keeps appearing on April claim lines. A quantity cap quietly overruns because nobody is tracking cumulative claimed units against the authorization.
- End-customer mismatches. The SPA authorizes one end customer; the resale line shows an affiliate, a new legal entity after an acquisition, or a broker. Each is a judgment call — but only if someone catches it per line.
- Duplicate and resubmitted lines. A line rejected in one cycle returns in the next, sometimes corrected, sometimes identical. Without per-line identity and history, you re-adjudicate from scratch — or credit it twice.
- Price protection tangles with ship and debit on the same units. When list price drops, the distributor claims protection on inventory — some of which was already sold under a SPA and claimed as ship and debit. Netting the two mechanisms on the same units is where quarter-end arguments live.
What Aurgus does for ship and debit today — and what it deliberately doesn’t.
Aurgus ships the calculation and eligibility layer on the same substrate as our rebate management software. The transport and workflow layers around it are honestly scoped below.
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SPAs as date-effective agreements with explicit scope.
The end customer, the parts, the authorized price, the validity window — modeled as a governed agreement, versioned when amended. The terms a claim is validated against are your terms as of the transaction date, not whichever copy is newest.
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Per-line eligibility, with the outcome recorded.
Each claim line is resolved against the authorization as of the resale date. Qualified lines say under which agreement; excluded lines say why — expired window, wrong end customer, over-cap. A rejection that carries its reason settles the conversation; one that doesn’t starts one.
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The authorized delta computed deterministically, with lineage.
Same line, same agreement, same answer every run — and every computed amount drills to the source row, the rate, and the agreement clause that produced it, the same bar we hold on the rebate audit trail.
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Totals that reconcile on screen.
What was claimed, what qualified, what was excluded, and proof the pieces sum to the whole — a check the system performs in front of you, not a spreadsheet exercise it leaves you.
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A human approval gate on every settlement.
Validated claims become settlement events only when a named human approves, and the approval is part of the record. Claim data arrives as workbook or CSV today.
Your claim validation is VLOOKUPs against a SPA spreadsheet.
If authorization, price, and cap checks are manual per cycle, the calculation layer is your bottleneck and your audit exposure — and that is precisely the layer Aurgus ships.
You can’t defend a rejected line without a reconstruction project.
Per-line lineage — the SPA, the price, the window that applied on the resale date — is the shipped core of the product, and it is exactly what a debit dispute turns on.
You need native EDI or POS-feed parsing.
Aurgus does not parse EDI ship-and-debit transactions or distributor POS feeds natively today. Claim data arrives as workbook or CSV. If your flow cannot export to a flat file, we are not your tool yet.
You need a partner-facing dispute portal.
The claim-and-response workflow your distributors log into is deliberately not built. A dispute workflow on an untrusted calculation layer automates arguments; get the number right first. Aurgus is in design-partner stage, which matters for procurement too.
Ship and debit, honestly answered.
- What is ship and debit?Ship and debit is the settlement mechanism in technology and electronic-component distribution where a distributor buys at book cost, sells to a specific end customer at a lower price the manufacturer authorized for that deal, and then debits the manufacturer for the difference. The authorization is usually a special pricing agreement (SPA). Every claim line is validated against three questions: was the SPA in effect on the resale date, was the buyer the authorized end customer, and does the claimed delta match the authorized price.
- What is a special pricing agreement (SPA)?The manufacturer’s authorization for a distributor to sell specific parts to a specific end customer below book cost, with the manufacturer funding the difference. SPAs carry the terms every claim is validated against: parts, end customer, authorized price, validity dates, and often a quantity cap. Most validation failures trace to SPA sprawl — hundreds of active SPAs, amended mid-quarter, with expiry dates and caps the claim file quietly ignores.
- How is ship and debit different from a rebate?A rebate accrues on the manufacturer’s own sales data and pays out after the fact, typically against period volume. Ship and debit runs the other way: the distributor already funded the price concession at resale and claims it back, transaction by transaction. Rebates need accrual and projection tooling; ship and debit needs per-line authorization and price validation. The healthcare sibling is the GPO chargeback; the cost-recovery sibling is billback.
- What is price protection?Compensation to a distributor for the loss on inventory it already owns when you lower list price: on-hand and in-transit quantity as of the effective date, times the price drop. The dispute is rarely the arithmetic — it is the inventory position: what the distributor actually held at the effective moment, net of units already sold or already claimed under a SPA.
- Can ship-and-debit validation be automated?The calculation and eligibility side can be: each line resolved against the governing SPA as of the resale date, the delta computed deterministically, every outcome carrying its reason, totals that reconcile. That is the layer Aurgus ships today, with claims arriving as workbook or CSV. Native EDI/POS parsing and a partner dispute portal are deliberately not built yet. To pressure-test your specific flow, talk to one of our experts.
Every field a claim will be validated against — as a checklist.
Ten fields, why each one matters, and the netting rule most SPAs forget. Written for whoever authors your special pricing agreements.
No list, no reselling; at most one follow-up about the working session. Aurgus is in design-partner stage.
The adjacent mechanisms you’re probably also running.
Bring one real claim file and your SPA list.
Thirty minutes. No pitch. Walk through how your ship-and-debit claims are validated today — the authorizations, the caps, the rejects — and we’ll tell you honestly whether Aurgus fits, including where it doesn’t yet.