Plugging the Black Hole of Deductions

Overview: The article asserts that although only a small percentage of deduction claims are illegitimate, failing to recover those sums dilutes profits over time. Good recordkeeping and efficient systems can help, but the key to recovering all payments. When customers dispute vendor invoices, they usually take advantage of the situation and deduct the amount in question from their payments. From a payables point of view, that is the easiest, least expensive way to settle accounts. But for the vendor, payment deductions are a black hole. The article unveils the other part of the story by asserting that that post-audit claims are probably the nastiest and fastest-growing type of deduction people are experiencing. Trade promotions are big contributors to post-audit claims. Creating fewer opportunities for deductions to occur is key to reducing short payments. Companies that enjoy upper management’s support for an invoice-accuracy initiative gain several advantages in the fight against deductions. Companies must address deduction scenarios from a tactical level, both to eliminate the root causes of the problems and to quickly process the deductions they cannot avoid. Companies can use the Internet in handling some of the paperwork that deductions create. Many companies fail to realize that deductions are a valuable source of customer feedback that management could use to spur process improvements and enhance customer satisfaction. So deduction information often gets buried in the credit-and-collection department.

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Format: HTML | Date: May 2000 | Pages: 6