WHAT ARE DEDUCTIONS?
Deductions, also known as chargebacks, happen when retailers or distributors don't pay their invoices in full to CPGs and manufacturers — and the $ can add up fast! That’s why it’s so important to assess them quickly, see if they’re actually valid, and determine if you should push to get that money back.
THERE ARE TWO MAIN TYPES OF DEDUCTIONS, TRADE AND NON-TRADE.
Trade deductions cover allowances, advertisements, rebates, etc. They’re typically set up by sales teams, and covered by the trade budget. While trade deductions are often anticipated, they still need to be evaluated to make sure the amounts are correct (and not too high).
Non-trade deductions include shortages, damages, returns, spoils, etc. By their very nature, these aren’t anticipated. They provide important insights into your business operations — what’s working, what’s not, and what can be improved.
NON-TRADE DEDUCTIONS SHOULD ALWAYS BE INVESTIGATED.
While some non-trade deductions are valid, others aren’t — and that’s money you could be adding to your bottom line. However, to prove they’re invalid, your accounts receivable team must research the deductions and present evidence to the retailer or distributor.
MANUAL DEDUCTIONS MANAGEMENT IS TEDIOUS AND TIME-CONSUMING.
From the moment retailers and distributors provide a remittance, until you can determine the validity of a deduction, there are many steps — and people — involved. It’s a labor-intensive, back-and-forth process that can be extremely time-consuming yet has to be done quickly. Why? Many retailers and distributors have specific dispute windows. Miss that window, and you lose the ability to dispute a deduction even if it’s proven invalid.
AUTOMATION CAN SAVE FRUSTRATION, TIME AND MONEY.
Deductions management software leverages automation to save analysts time — so they can focus on high-value tasks that help recover more money and prevent deductions from recurring.
How does it work? The software accesses various retailer and distributor portals and auto-extracts, aggregates the data, and puts it in a single solution for AR teams to analyze.
Some deductions management software solutions can even help prioritize deductions based on the degree of recoverability — and include streamlined workflows, reporting tools, and more.
DEDUCTIONSLINK™ SOLUTION MAKES IT EASY.
The right automated deductions management software solution can improve internal processes, increase recovery rates, optimize retailer/distributor relations, and more!
DeductionsLink puts automation and analytics to work in an easy-to-use SaaS platform. For more information book your demo today.