Trade Credit Exposures

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Non-investment grade (“junk”) bonds are our canary in the economic coal mine. They took a beating last year, but prices have stabilized with investors of all stripes chasing return, and where else but  in “junk” can you earn a few percentage points of interest. Today, when stellar credit government bonds and even a few top-notch corporates… Read more »

Calculating Bad Debt Reserves

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In most companies, calculating Bad Debt Reserves is not a super-complex affair, but should be approached with a consistent methodology from period to period. Generally Accepted Accounting Procedures (GAAP) requires that a Bad Debt Allowance (BDA), which is a forecast – an estimate of future bad debt write-offs, vs just directly writing off bad debts as… Read more »

Best Practices: Post Audit Deductions  

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  Post audit claims are usually generated by third party auditors that are usually paid a commission to capture your money. Post Audits are a billion dollar business. Perhaps not surprisingly, our experience is that up to 50%of post audits can be wrong, errors that can be attributed to auditor zeal or perhaps misinterpretation of… Read more »

Pre-Deduction Notices Save Labor and Improve Recoveries

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Many retailers issue pre-deduction notifications that inform a supplier of violations or other charges to allow the supplier to research and dispute (or issue credit for) a deduction before it is taken off a remittance. Some allow you only 90 days for research to prove they’re wrong. Not only do you have a better chance… Read more »

Ship and Debit Best Practices

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Ship-and-Debit rebate programs are off-invoice allowances used by electronics and technology original equipment manufacturers (OEMs) to protect their channel distributor margins to reduce the distributor risk of carrying the OEMs’ inventory when the distributor must sell at less than the original in-stock price. A rebate may be appropriate when the OEM reduces its product prices,… Read more »

Deduction Types and Strategies

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Defined by us back in the 1980s, but still accurate today, deductions can be categorized as follows: Agreed Business Practices, where deductions are the chosen settlement and reimbursement vehicle such as promotional pricing allowances, co-op advertising, markdowns, coupons, and the like. Preventable Deductions, such as poorly communicated price data, slow credit memo issuance, misinterpreted promotions,… Read more »

Late Payments and Delinquencies

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Late Invoice Payments Are Often Built in Suppliers and their customers have conflicting cash flow pressures. While the customer is always alert to opportunities to extend payments, many late payments are embedded in business processes: For example: Orders are accepted and shipped even though they bear conflicting terms, conditions or wrong pricing. Most suppliers base… Read more »

Sales Tax Certificate Administration

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Our Carixa™ Credit-to-Cash platform includes a labor saving compliance solution that takes the burden of Reseller Sales Tax Certificate Management off the shoulders of financial and tax departments while reducing the possibility of non-compliance penalties. This is offered as a turnkey SaaS internet application supported by the our USA administrative staff. Because managing sales tax certificates… Read more »

Chargebacks

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Accounts receivable chargebacks are a frustrating reality in the world of retail sales. A chargeback is the deduction taken by a retailer when a supplier fails to comply with their guidelines. For example, if a label doesn’t scan properly, a label isn’t coordinated with the advance ship notice, the barcode on a price ticket isn’t… Read more »

Deductions in Consumer Goods

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Customer Deductions- A Plague on Profits   The impact of deductions varies considerably by industry, with the most basic industries having the lowest percentage of deductions, and those having the most promotions or complex supply chains the highest percentage.  The high dilution businesses often “plan” to incur deductions in excess of 10% or even more… Read more »