Deduction Management - turning those deductions back into profits

Deduction Management – How can you turn deductions back into Profits


In this blog we will talk about the path your business should take to manage and reduce deductions received from your retailers and distributors. The goal is to turn deductions from an expense back into a profit.




BEST PRACITICES:

For all chargebacks received that have not been previously approved by your sales team the following best practices should be considered. Please feel free to contact CAS Worldwide to discuss how your firm could put these practices into your business process:

  1. Any chargeback that has not been approved in advance should be contested, as many times retailers/distributors use chargebacks as a profit center.

  2. Most chargeback disputes are winnable as long as your accounting and sales team stays on top of them and is vigilant in keeping on the retailer/distributor to provide the proper backup documentation. Many times there is no backup documentation to be shared and therefore they will have little choice but to drop your claim and refund you the money. the trick is to be persistent with your requests.

  3. Your company should have a clear-cut policies on how you will accept a claim. These policies should outline to your retailer/distributor what they should in order to submit a claim to your organization. It should spell out communication protocols they you require in order for a claim to be submitted. These policies should be made available on your website so they can be easily accessed. You could then use these written policies to mitigate any unauthorized deductions.

  4. As a last-ditch effort do not be afraid to use some muscle and let your buyer know that if the claim is not reversed that you may have to put future purchases on hold. Even if it is an idle threat the buyer does not want to interrupt their business and most times will help you recover unsubstantiated claims.


ACTION PLAN FOR DISPUTING CLAIMS:

We can break down unapproved charges into six different types of disputable claims that will require an action plan to ensure that each claim can be disputed timely and properly. The claim types are as follows:

  • POD claims

  • Damages – in transit

  • Damages – in store

  • Shortages

  • Reclamation

  • Unsalable or discontinued product

  • Cash Discounts – taken after the agreed upon date

For each of the above categories we will provide a simple action plan that could be enacted in order to help mitigate and fight disputed chargebacks.

Below are a set of actionable tasks that could be put into your business process and allow your accounting and sales team to recoup lost revenue.

POD Claims – most of these type claims should be able to be processed quickly.

  • When a POD claim is received an Outlook task should be created, with a follow up action having a deadline of 7 days to complete, as most POD claims come with timeline from the retailer or distributor of when they could be acted upon

  • An email should be sent to the warehouse transportation manager requesting the Bills of Lading

  • If a response is not received in 5 business days from inception a reminder email should be sent out and a dispute should be sent off to the retailer or entered in the distributor’s portal to provide more time to complete the dispute.

  • Once a return email is received from the warehouse it should be noted in the task that was originally created and then forwarded via email to the retailer or to the distributors portal for dispute.

  • Once this is done the task could be closed.

  • All open tasks should be reviewed by the accounting manager weekly to ensure that the proper follow up is occurring.

Shortages – The types of claims are similar to the POD where you will need information from the warehouse in order to match up to what was presented from the retailer or distributor. The process related to these claims should be as follows:

  • Task should created for all shortages with a follow update of no longer then 14 days from the date of receipt.

  • An email should be sent to the warehouse transportation manager requesting all loaded pallets and pallet weights along with the Bill of Lading, similar to a POD request.

  • If a response is not received in 7 business days from inception a reminder email should be sent out and a dispute should be sent off to the retailer or entered in the distributor’s portal to provide more time to complete the dispute.

  • Once a return email is received from warehouse it should be reviewed to ensure it matches what was originally sent and logged against the task and then the email with supporting documentation should be forwarded to the retailer or put into the distributors portal for dispute.

  • The email must be strongly worded to let the retailer/distributor know that it is not your policy to accept shortages without proper backup documentation and therefore you are requesting they reverse the claim based on the documentation attached.

  • Once this is done the task could be closed.

  • All open tasks should be reviewed by the accounting manager weekly to ensure that the proper follow up is occurring.

Damages in Transit - The types of claims are similar to the POD where you need information from the shipper to match up with what was presented from the retailer or distributor. The process related to these claims should be as follows:

  • Task are created for all shortages that have a follow update of no longer then 7 days as in-transit claims require a shorter window to make a claim against certain carrier types.

  • An email should be sent to the shipping company requesting information related to the shipment and providing information received from the retailer/distributor.

  • If a response is not received in 5 business days from creation of the task a reminder email should be sent out and a dispute should be sent off to the transportation carrier.

  • Once a return email is received from carrier it should be reviewed to ensure it matches what was originally sent and logged against the task and then forwarded via email to the retailer or put into the distributors portal for dispute asking them to reve