Deductions Management

Deduction Resolution for Big Box Retailers: 5 Ways to Automate Dispute Management and Reduce Write-Offs

An actionable deep dive on how technology can automate dispute resolution and help your teams keep with dispute resolution windows

CHAPTER 01

Executive Summary

Introduction

Handling 100s of deductions every month is something A/R leaders across the world have accepted as the cost of doing business. However, managing big box retailers’ deductions?  That’s another ball game altogether.

Here is a survey by iNymbus and Attain Consulting that highlights key pain points of processing these deductions:

introduction

As a result of this, deduction analysts don’t have the bandwidth to focus on deductions research impacts the metrics. According to surveys by iNymbus and Attain consulting,

Resolve a Deduction

 

This e-book is for you if

You or your team are exploring scalable options that could help you resolve deductions faster and more accurately to avoid write-offs while keeping your analysts sane.

Here is what we are going to address in this e-book:

  • Automating disputes in retailer portals
  • Scaling better with increasing deductions
  • Improving visibility of the process

Like any law/crime series you must have seen, the burden of proof or in this case the proof of the deductions’ invalidity  lies on the vendor.

Irrespective of the manual hours involved, bottom-line revenue leaks or time taken to resolve deductions, vendors NEED to dispute all deductions.

The question is can technology help you?

The answer is a resounding YES!

But, how?

Turn the page to find out more on how you could leverage technologies such as robot process automation and artificial intelligence for automating deductions.

 

CHAPTER 02

How Difficult is it to Raise A Dispute on Retailer Portals

Retailer Portal Shortcomings

 

Highly manual processes for disputing in Retailer Portals

Disputing claims on retailer portals such as the Big box retailers’ Vendor Central is a challenge because of a largely manual-driven process coupled with a non-intuitive interface. Some of the key issues associated with disputing on portals are:

1.Claims download
This process involves dispute analysts to login multiple times in the system throughout the day just to check for claims. Every claim has to be manually downloaded from the portal as it cannot be fetched in bulk.

2.Document upload
Documents such as claims, remittance, proof of delivery, bill of lading have to manually collected by analysts from multiple sources and upload individually into the portal for every single claim.

3.Information key-in
Information related to each dispute has to be painstakingly keyed into the portal. Given the large claim volumes, this could delay raising disputes significantly.

4.Manual correspondence
Every time there is an invalid dispute, analysts have to manually type and send the denial correspondence with relevant documents attached, such as claims, POD, BOL, to big-box retailers.

5.Non-standardized cross team collaboration
Given that disputes involve teams from multiple departments, including cash allocation, collections (if handled separately), logistics, sales and supply chain, analysts often end up wasting time in coordination instead of actual dispute research.

As a result, dispute resolution:

  • Turns Highly Manual
  • Adds little value
  • Turns Time consuming
  • Misfires on Metrics

Why not let robots do these clerical tasks that just delay the deduction resolution process?

CHAPTER 03

How Do Robots Fare Against Retailer Portals

1.Claims and POD Aggregation

Claims and POD Aggregation

“As a result, all claim/dispute information are exported from retailer portals in one single batch eliminating the need for manual download”

2.Auto-coding Deductions

Auto-coding Deductions

“Time spent on dispute identification and coding is now saved and they are directly assigned to analysts who directly start working on them.”

3.Web Push

Web Push Portal

“For invalid claims, denial package is uploaded to retailer portals with all the related deductions backup including, proof of delivery and bill of lading.”

4.Dispute Correspondence

Dispute Corresponding

“Analysts don’t have to separately write emails, attach documents for each customer”

5.Audit Trail

Audit Trail

“Disputing timely with proper backup documentation results in faster resolution”

 

CHAPTER 04

Robots and Real World Amazon Dispute Cases

1.Shortage Deductions

Storage Automation

 

Why do they happen

“86% of companies said that shortage deductions have increased in the past 6 months – Big box retailers’ Deduction Issues/Findings, Attain Consulting Group”

How they are currently resolved

  1. Analysts login to the retailer portals and download each claim manually
  2. The unique number in the claim is manually matched with the invoice number in the ERP. Disputing the claim on retailer portals keeps changing and could get complicated
  3. Analysts go through the claims individually and identify the shortage disputes
  4. Analysts collect backup documents from carrier portals, emails, paper
  5. Analysts open each dispute separately and upload the relevant documents such as POD, BOL, claim
  6. Analysts key-in the relevant information for each dispute

 

How does Automation help

Help Automation

 

2.Pricing Deductions

Why do they happen

Pricing-Portal

“65% of vendors said that they experience pricing challenges with Big box retailers – Big box retailers’ Deduction Issues/Findings, Attain Consulting Group”

How they are currently resolved

  1. Analysts login and download each claim manually
  2. The unique id number in the claim is manually matched with the invoice number in the ERP
  3. Analysts go through the claims individually and identify the pricing disputes
  4. Analysts login and download negotiated pricing document
  5. Analysts upload the pricing documents relevant to that particular pricing dispute
  6. Analysts key-in the relevant information for each dispute

 

How does Automation help

Pricing Auto Help

 

3.Co-op Deductions

Why do they happen

Co op deductions Portal

How they are currently resolved

  1. Analysts login and download each claim manually
  2. The unique id number in the claim is manually matched with the invoice number in the ERP
  3. Analysts go through the claims individually and identify the co-op disputes
  4. Analysts check product catalog and pricing agreement
  5. Analysts go back-and-forth across Sales and Credit teams for deal sheets and trade documentation
  6. Analysts key-in the relevant information for each dispute

How does Automation help

Co-op Deductions Portal

4.Vendor Chargebacks

Why do they happen

Vendor Chargebacks Portal

Some retailers review performance every six weeks and issue vendor chargeback fees based on the following criteria:

  • 2% cost of product: if the shipment details submitted have less than 100% compliance but greater than 95% from the trailing six weeks.
  • 4% cost of product: if the shipment details submitted have between 70% – 95% compliance from the prior six weeks
  • 6% cost of product: if the shipment details submitted have less than 70% compliance from the prior six weeks

How does Automation help

Audit trail

Robot
Robots track all forms of communication and store all backup documents in one source for effortless disputing in case of invalid chargebacks


Auto- compliance

Robot
  • Attaches all relevant documents for disputing
  • Eliminates errors due to manual keying in
  • Disputes as soon as claim is raised

 

5.1 Bonus: Dispute Validity Predictor

Why auto-resolve disputes?

 

Dispute Validity Predictor Portal

 

What Robots can do?

What can robots do

 

5.2 Bonus: Drill-down Capability

Additional visibility with Reports

Robot
Robots provide real-time out-of-the-box and custom reports for end-to-end managerial view


What Robots can do?

Robot

“It allows drilling down on inefficient sub-processes and applying speedy corrective measure”

  • Reports provide view on the number of deductions and the type of deductions happening periodically for different geographies, warehouses, vendors and customers
  • Reports provide C-level Executives with visibility on cash flow and working capital metrics such as Deductions Day Outstanding, write-offs, volume of deductions, deduction values and more
  • Reports allow managers to track productivity of analysts and take instant corrective actions on identifying process inefficiencies
CHAPTER 05

Summary

Before

  • Each claim was manually downloaded for resolving resulting in delayed dispute resolution
  • Vendors wait for 30 days for repayment and then raise dispute, if not paid
  • No option to batch-process deductions
  • All data elements needed to be manually keyed in when disputing
  • Piling up of unresolved disputes results in more write-offs
  • Insufficient time dedicated to research and resolution of disputes
  • High Days Deduction Outstanding and low invalid deduction recovery

After

  • All claims are pulled from VC in a single batch, along with BOD, POD from portals
  • Dispute raised with proper backup as soon as invalid claim is raised
  • Deductions can be processed en masse
  • Data elements automatically entered into the system with high accuracy
  • Automated resolution results in lower write-offs
  • With automation analysts have additional bandwidth to research and resolve disputes
  • Less DDO and high invalid deduction recovery