Deduction Losses = Profit Leakage
We automate and manage Deduction operations to optimize, streamline, and accelerate customer deduction resolution. In addition to recapturing excessive deductions, we identify the root causes to reduce future accounts receivable deductions, delivering continuing bottom-line impact. Our best-practices deduction programs begin with root cause analysis and research.
- A large number of deductions are improper or excessive. “Post Audit” deductions, for example, often have a 50%+ error rate.
- Many deductions are due to vendor compliance and process errors which, if not corrected, will continue to cost you profits year after year. This would include the On Time - In Full (OTIF) penalties from Walmart And other chain retailewrs which eat up your net profits.
- Even the small-dollar “below threshold” deductions you write off automatically add up to large repetitive, systemic losses.
- Administrative costs are high relative to the cash return from deductions.
Smyyth Deduction Management Options
There are several ways to work with us to keep customer deductions under control, save administrative costs, and prevent profit leakage by recovering invalid or excessive deductions. The Carixa™ Cloud Deductions deduction management software module has large-scale deduction processing capability, including AI-driven workflow, write-off controls, management rules, dashboards, metrics, root cause reporting, etc. Carixa deduction dispute software always keeps you in the loop, with management dashboards down to detail.
- Outsource the deduction function from point of cash application through recovery or credit.
- Outsource deductions at day 30, 60 or 90 to keep your staff focused on the current activity.
- Outsource the problem categories: for example trade promotions, pricing, ship and debit, or cash discounts.
- Outsource a one-time backlog cleanup, to recoup maximum cash while cleaning up your books, even write-offs.
- Deduction Audit & Recovery program to recapture lost profits. Clickto read more.
- As your "post-audit" defense, if your customers engage A/P auditors to charge you back.
Benefits of Smyyth Deduction Services
- Identify the root causes of preventable deductions.
- Increase dollar recoveries dramatically.
- Reverse credits to the P&L.
- Accelerate deduction time-frames.
- Clean up A/R backlogs.
- Fees contingent on success.
Major Deduction Categories
There are hundreds of customer deduction classes, but the majority fall into these four general groupings.
- Planned include valid trade promotions, distributor volume rebates, ship and debit, markdowns, and RMA returns.
- Preventable include errors in vendor compliance, shipping, billing, EDI, split shipments, and hard-to-understand trade promotions.
- Customer Errors, include receiving, returns, pricing, SKU, or quantity errors, inapplicable pricing or trade promotions, unearned discounts, and excessive compliance penalties.
- Post-Audit charges include inapplicable trade deals and discounts, double deductions for credits already taken, incorrect freight or discount terms, and unauthorized data sharing between auditors.