So many financial transactions take place daily in the foodservice industry across the country. It’s essential to manage and monitor them to avoid confusion and errors. If not followed closely, deductions may occur. Lack of attention can cause a snowball effect on your deduction balance, which can be difficult to get back under control. The use of a foodservice TPM (Trade Promotion Management) program plays a vital role in helping you to handle these transactions.
To assist you, here are ten steps to take when it comes to handling deduction management.
1. Obtain an Organized Contract Tool
It is vital that you keep close track of all deals that you negotiate with your customers. You should compare the terms of a deal you have negotiated and the subsequent implementation of the deal. By matching the terms in the contract and the way in which the contract is implemented, you will ensure you are both on the same page and eliminate confusion or disputes over the terms of the deal.
You can do this more efficiently using a foodservice trade promotion application. Close tracking of the deal will also assist in avoiding delays on claim settlements involving the contracts. By comparing claims against the contract terms, the program will identify discrepancies between what is permitted by the contract and what the customer has requested. So, you will ensure the correct payments are made and will enable you to settle any disputes that might arise before the time that payment is due.
2. Ask Customers to Invoice You Directly
Send a letter to customers asking them to send their invoices directly to you or a third-party claims processor. By doing so, you will avoid having to chase after the backup. In the letter, which can be prepared using a foodservice TPM, indicate that the invoices should clearly show the contract name or reference ID.
When you receive the invoices directly, you will be able to track them using foodservice trade promotion software more quickly and decrease delays in payment due to not receiving the invoices promptly.
3. Record Deductions
Make sure that you enter deductions in your enterprise resource planning (ERP) system. You will then be able to match the deductions with the billback and claims. This process eliminates duplications or confusion arising over which deductions need to be paid and when.
4. Compare Open Deductions with Claims
Using a deduction management system, compare claims against one another to avoid any duplication that might occur. The right solution will compare each one using the same information, such as the customer number, the invoice number and the dollar amount on the invoice. Having a process to identify duplicate submissions will ensure you do not pay an invoice twice or that you pay a different amount than was on the original transaction. In other words, you will be able to make sure that valid payments get processed.
5. Track Customers Not Submitting Billbacks to You
It is easy to lose track of billbacks when customers fail to submit them directly to you or a third party claims processor. Identify the offenders and work with the customer to provide them. Request they submit all future claims directly to the required location, so they do not face the possibility of becoming lost, leaving you unable to identify them and track them down.
6. Clear Authorized Deductions
Set up an automated process to clear those deductions that have been authorized. Use the application to match claims to deductions. In that way, you can verify whether the claim has already been paid through a deduction.
Once they are authorized, you should remove them from your books.
7. Build a Standard Repayment Letter
In some cases, deductions are incorrect. It might be that a customer deducted too much. In other cases, it is possible that the deduction was invalid. For example, the customer might have made the deductions using the wrong manufacturer or there was no contract in the first place. In these cases, you will need to request repayment from the customer.
Using your foodservice TPM, build a standard repayment letter that identifies what caused the deduction to be incorrect. Send the letter to the distributor to launch the reimbursement process. Make sure to be consistent, timely, and include details developing your standard rebill letter and process. Providing all of the needed information up front will result in a quicker turnaround. Your TPM software program should help you achieve this by tracking down incorrect and invalid deductions so you can quickly identify what rebills need to be sent out.
8. Track Rebillable Deductions
In cases in which the deductions were not fully validated, you should track them and request repayment. This process needs to be conducted as rapidly and efficiently as possible to make sure that the deductions are repaid within the correct timeframe. If you already have your standard rebill letter and process in place, this will be an easy task within your TPM solution.
9. Establish a Write-off Process
Should you have taken the actions outlined in steps 1 through 8, you should have few deductions that have not been corrected or not fully paid. But, for those deductions that could not be validated or that have not been paid, you should establish a write-off process.
Ensure that you have correctly recorded these instances so that you can identify those distributors who have caused you to write off the claims. In doing so, you will be able to take their action into account in dealing with them over time or when future claims arise.
10. Establish a Balance Limit
After examining those distributors whose actions have been unsatisfactory, you should set an upper limit on the deduction balance. Should such instances occur in the future, you will be alerted when the balance reaches or exceeds that limit. You can then take the appropriate actions to correct the situation.
Communication is Essential
Behind all these steps lies the importance of regular and repeated communication between the manufacturer, their customer and a third-party vendor settling the claims (if applicable). For assistance with your deduction management needs, check out GoSimple.me.