1.4 Deal Desk: Quote Approval & Margin Guardrails

Revenue does not equal profit. The Deal Desk exists to filter out "toxic revenue"—projects that consume capacity without generating sufficient yield or cash flow. This workflow forces a conscious decision: we either maintain margin discipline or we deliberately invest in a strategic loss. We do not accidentally lose money.

Margin Guardrails & Logic

Define the "Safe Operating Area" for commercial terms using the company standard thresholds (M1, M2, M3). Deviation triggers the escalation path.

Gross Margin Thresholds

• Standard Target (≥ M1): The ideal operating zone.
  • Action: Sales Representative auto-approves.
• Strategic Floor (M2 – M1): The negotiation zone for volume.
  • Action: Requires Sales Manager Review.
• Red Zone (< M2): Below minimum floor.
  • Action: Requires VP of Sales + Finance approval.
  • Justification: Must demonstrate tangible future ROI (e.g., "Loss Leader" for a Tier 1 account).

Payment Terms & Credit Risk

Cash flow kills manufacturing businesses faster than low margins.

• Standard Terms: Net 30 Days or 50% Deposit / 50% Before Ship.
• High Risk:
  • If Terms > Net 60 -> Finance Approval Required.
  • If Customer Credit Score < 600 (or unrated startup) -> Advance Payment Only.
• Currency Risk:
  • If contract is not in Base Currency -> Add 3% buffer or hedge clause.

Pro-Tip: Never concede Margin and Payment Terms simultaneously. If a customer demands Net 60 (slowing cash flow), defend the Margin (M1) strictly to cover the cost of capital.

Approval Matrix

Use this matrix to determine the required signatory. Authority is based on Total Contract Value (TCV) and Risk Profile.

Scenario	Margin	Terms	Approver
Standard Deal	≥ M1	Net 30 / Prepaid	Sales Rep
Volume Discount	M2 – M1	Net 30	Sales Manager
Extended Terms	≥ M1	Net 45 – 60	Finance Manager
Strategic Entry	< M2	Standard	VP Sales + Finance
High Exposure	Any	> Net 60	CFO / CEO

Exception Handling

Exceptions are not granted on feelings; they are granted on data. When requesting a deviation, you must quantify the trade-off.

1. The "Give-Get" Principle

If we concede margin/terms, we must extract value elsewhere.

• Bad: "Customer says price is too high."
• Good: "We grant discount to M2; Customer commits to 12-month blanket order (Volume lock)."

2. Exception Request Form Template

Do not use Slack/Teams for approvals. Use this structured format to log the business case.

Subject: DEAL DESK EXCEPTION – [Customer Name]

1. Request:

• Current Margin: [Value] (Target: M1)
• Requested Terms: Net 60 (Standard: Net 30)

2. Rationale (The "Why"):

• [ ] Competitor Price Match (Evidence attached)
• [ ] Strategic Entry (Top 10 Target Account)
• [ ] Distressed Inventory Liquidation

3. The "Give" (What we get back):

• Customer commits to [Volume] annual volume.
• Customer waives NRE charges.

4. Risk Assessment:

• Cash flow impact: -[Amount] for 30 days.

Decision Log

Audit trails protect the sales team. If a low-margin deal goes sour, the Decision Log proves the risk was calculated and authorized.

Log Format:

• Date: [YYYY-MM-DD]
• Deal ID: [RFQ-XXXX]
• Exception: Margin < M2
• Approver: [Name/Role]
• Condition: "Approved strictly for Batch 1. Pricing reverts to M1 for Batch 2."

Final Checklist

Review this table before submitting a deal for signature.

Check Item	Validation Criteria	Criticality
Margin Calculation	Includes burden (Freight, Packaging, Finance costs).	High
Credit Check	Recent D&B/Credit report attached for Net terms.	BLOCKER
Authority Level	Signatory matches the Approval Matrix.	High
NRE Payment	NRE is 100% Upfront (Never put NRE on Net terms).	Medium
Validity	Quote expires in ≤ 30 days (Materials volatility).	Medium
Terms Lock	Terms & Conditions (T&Cs) document is attached.	High