An Essential Guide To Select The Right Deduction Partner

What you’ll learn

  • Learn how partnering in A/R space helps in boosting the deductions process
  • Get an insight into the 8 Step Guide to choose the right partner for your deductions process
  • Discover the 6 Best Practices for maximizing your partnership in deductions


In the B2B world, businesses lose a lot of money in the form of deductions. When clients don’t pay on time or make short pays, business owners feel the pinch in their cash flow. Even if sales are being won and the work is being done, without timely and correct payments from their customers, accounts receivables takes a blow. Moreover, deductions being a highly manual and time-consuming process affects efficiency and productivity. So, what can organizations do to resolve this?

“Managing deduction is often about preventing it in the first place”

But this is not always possible when it comes to B2B businesses. Moreover, manually shuffling through deduction documents could be time-consuming as there is a great deal of research involved, and results in high FTE costs, which makes DDO prediction impossible. One way to tackle deductions and to manage it efficiently is through outsourcing. The Deductions process in any company has always been a highly resource-demanding ordeal. Thus, companies often partner with the third party to fast-forward their deduction process and solve their deduction related disputes. The most significant advantage of this is - it results in better ROI on the deduction process and aids in faster recoveries. However, the main catch comes in when we need to answer what should be done to select the right partner for third party collaboration and how this could affect your deduction processes. So here are the 8 points that will help you select the right partner- 8 point partner select Dealing with a huge volume of deductions without any external assistance is a constant reminder that there needs to be a major change in the deductions process. Keeping that in mind, these are the six best practices for an effective deduction partnering:

    Centralized data:

    Have a centralized data repository that allows the outsourcing partner to fetch all requisite documents from a single point of reference and maintain a good understanding of the deduction process.

    Enhance external collaboration:

    Maintain a well-defined way of communication with your partner to ensure that they represent you well in terms of customer satisfaction.

    Streamline inter-team collaboration:

    Ensure a good rapport between the partner and the sales/customer team to support faster access to internal queries that leads to a quick resolution. Also, thereby refining the internal workflow.

    Ensure better visibility:

    Get better performance visibility with your partners, which is quite vital for reducing deduction root causes. It helps a company to have an eye over its working structure and track their progress.

    Engage in continues improvement:

    Leverage the pattern of support that comes from collaborating to bring in a productive development in the business model. A strong back up of resolution from your partner will certainly make a note of continuous improvement and optimization of the process.

    Negotiate Contracts:

    Have coordination with your deduction partner to support while dealing with the company’s third-party auditors and ensure to set up proper Service Level Agreement.
Collaborating with a Third-Party is not a piece of cake. Outsourcing indeed solves primary problems in dealing with deductions. However, it comes with its own by-product issues, which are vital concerns. It is not easy for the outsourcing team to work on deduction claims because of difficulty in learning. They lack domain expertise and industry knowledge required in the deductions pipeline. The use of proper process standardization acts as a catalyst and helps in transforming deductions prospects. Thumbnail

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HighRadius Deductions Software acts as a powerhouse for proactive deduction management to prevent bottom-line erosion. It provides automation, process standardization, and a platform for cross-departmental and customer collaboration. It supports deduction management by providing some key features like back-up document capture which captures deduction data from customers and supplies the information required for resolution; auto-capture proofs of delivery (PODs), bills of lading (BOLs) from carrier portals & emails; structured deduction resolution, collaboration & approval workflows to streamline the communication and approval process; along with automatic deduction correspondence, and automatic data push to customer portals. The result is a proactive deduction management operation that recovers revenue normally lost to invalid deductions.