November

E-Credit News

“How To Become A More Successful Collector “ 


November 15, 2023

9:00 – 10:00 AM CDT

In this interactive program, we will discuss the do's and don't of Debt Collection; the Ideas for accelerating cash inflows; how to handle belligerent customers and antagonistic salespeople; how to prioritize the collection process to maximize your return on investment; and Tips to Becoming a Proactive rather than Reactive Debt Collector. 

Learn More

New Contacts & Members 

New Association Representative

Priscilla Coe, CPA ~ Inland Label & Market Services LLC


New Industry Group Representative

International Credit Executives (ICE) Group

Priscilla Coe, CPA ~ Inland Label & Market Services LLC

If you have something you would like us to announce please send an email to

admin@wcacredit.org

A Strategy to Reduce Post-Audit Deductions

By: Shyarsh Desai, Carixa

Post-audit deductions are the missed discounts, trade deals, double payments, and incorrect pricing that contingency (commission) post-auditors discover when they review old payment transactions. Post Audits are a multi-billion-dollar business, and manufacturers pay this tab.


Audits are frequently up to three years old, so your records may not be easily accessible, and a post-audit claim may consist of 100 or more line items, individually small but adding up to a large amount of money. Because of the large number of line items and their age, they frequently end up as write-offs because the manufacturer has neither the software nor the staff to address them.


Post-audit deductions are significant because fifty percent or more of post-audits can be wrong or excessive, costing hundreds of thousands or even millions of dollars annually. Post-audit errors result from auditor eagerness to profit, misinterpretation of promotional deals, or double- or triple-dipping. Post-audits can include deductions for allowances that were deducted previously or found invalid; even those repaid to you in the past can be deducted again.


In any event, it’s up to the manufacturer to disprove a post-audit claim. If you don’t get to it quickly, it’s deducted. 


Post-Audit Deductions: A 12-Step Action Plan

Establish and Communicate a Post-Audit Policy: Create a clear and comprehensive policy that outlines your stance on post-audit deductions. Have your CEO sign it and share it with customers and auditors to have your policies on record. Set limits on the timeframe for accepting audit claims and require proper documentation and evidence to support deductions.


Integrated Trade Promotion/Deduction Software: Consider a bolt-on to your ERP to manage the deduction and chargeback, timelines, workflows, resolution, and documentation with audit histories. This will enable you to quickly reconcile, validate, respond, and deny erroneous claims. 


Safeguard Trade Secrets: Inform auditors that your marketing plans, pricing strategies, and operational policies are confidential. Emphasize the importance of keeping this information confidential to prevent potential misuse or sharing with other auditors working for different clients.


Streamline Trade Promotion Deal Formats: Simplify and standardize the templates for trade promotion deals to minimize ambiguity and misinterpretation. Involve your sales and marketing teams to ensure clarity and consistency in sales agreements. Avoid gray areas leading to misunderstandings, such as promotions based on confusing dates.


Respond Promptly to Deduction Claims: Act swiftly when you receive post-audit deduction claims to avoid missing the investigation grace period. Send a letter to auditors emphasizing your policy and requesting that they refrain from deducting until the investigation is complete. Assign a dedicated team to handle post-audit claims, establish research procedures and workflows, and track deduction key performance indicators (KPIs).


Enhance Document Systems: Improve your document management system to efficiently access invoices, pricing information, and promotional deal sheets, even for transactions that occurred years ago. Use automation and tracking tools to strengthen the audit trail and identify any double or triple deductions.


Utilize Trade Promotion and Deduction Management Software: Invest in software specifically designed for trade promotion and deduction management. This software should allow you to access all relevant information and documents associated with each transaction, such as invoices, sales data, deal sheets, and prior deductions. This integrated approach reduces the need to search through multiple systems and files when researching deductions. 


Maintain a Post-Audit Contact Database: Create a contact database that includes relevant information about post-auditors, avoid isolating communications to auditors alone, and involve customer management if necessary.


Identify Root Causes: Analyze patterns and common root causes for post-audit deductions. If certain types of trade deals are consistently misinterpreted, review the clarity of your deal sheets. Review purchase agreements to ensure they align with your policies, especially when discrepancies like freight charges arise.


Challenge Invalid Deductions: Only settle or write off deductions with proper documentation and research. Insist on repayment for invalid deductions and demand evidence to support each claim. Taking the easy way out may encourage more deductions in gray areas prone to misinterpretation. Remember, these auditors talk with one another, so what you do in one case will impact other customer audits.


Enforce Policies Timely and Consistently: Be firm and consistent in enforcing your policies regarding post-audit deductions. Develop a reputation as a principled and well-managed company that does not tolerate excessive or incorrect deductions. Timely and consistent enforcement will deter auditors from taking advantage of your business.


Third-Party Help: Consider a third-party expert to reconcile and combat post-audit deductions on your behalf. An organization (like the author’s company) offering advanced software and expert audit services can help stop the deduction profit drain. Being proactive will help protect your success and profits from being diluted by these deductions year after year.


Conclusion

In conclusion, post-audit deductions pose a significant challenge for manufacturers, often resulting in excessive or incorrect claims that can cost hundreds of thousands or even millions of dollars annually. By taking proactive measures and leveraging advanced software and services, manufacturers can mitigate the impact of post-audit and other problem deductions and safeguard their success and profits in the long run.


About the author:

As the CEO of Carixa’s order-to-cash cloud technology business since 2021, Shyarsh is focused on scaling the business by deeply understanding client needs, growing the team and making smart investments in technology to back it all up. From 2012 to 2019, he was CEO of Credit2B, which was a leader in B2B credit decision automation until its sale to Billtrust, where he served as Group President.


Prior to this, he held management positions at Global Compliance (now Navex) and Dun and Bradstreet where he focused on strategy, growth and business development. In his early career, he worked at IBM in multiple roles across the enterprise, including leading key solutions for IBM in the financial services vertical and later in corporate development Shyarsh has degrees from the University of Bombay and an MBA from Kellogg School of Management at Northwestern University.

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As originally published in Perspective by CRF 2Q2023

Need a Credit Report?

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Every credit department relies on outside sources for credit and financial information on new and existing customers. Most orders to cash departments subscribe to one credit reporting service or another but, that may not work or be your best option. Are you aware you can be smart and have access to ten (10) different sources of credit information? We can provide that to you together with value and flexibility with our umbrella WCA Credit Report Subscriptions starting as low as $199. A WCA Report Subscription gives you access to all the above credit reporting sources. Companies do not need to subscribe to only one credit report provider. 

 

Consumer reports, international business credit reports, domestic trade reports, reports on small companies and their ownership we have them all.  If you are not sure what you are going to need, or which is best, why not elect to have access to them all? The Association created its WCA Report Subscription program that includes access to ten (10) databases including Experian, Coface, Equifax, Creditreform, Dun & Bradstreet, and others in one never expiring subscription for you. Sounds simple? It is! Our current subscribers enjoy that flexibility and can consult with us, on a case-by-case basis, to select which report may be best for a particular situation. Other benefits of our subscription are: no annual contracts, no premiums for supplements, no “use-em” or “lose-em” problems and we provide monthly usage reports showing your subscription status so you can determine if it’s time to purchase more now or later.

 

If interested in saving time and money by managing your order to cash team’s reporting costs, a WCA Credit Report Subscription may be your answer.  Call today for more information or for a personal consultation.

 

CLICK HERE TO LEARN MORE ABOUT THE DATABASE OPTIONS!



TO REQUEST A CREDIT REPORT ONLINE, CLICK HERE or send your email request to creditreports@wcacredit.org. If you have questions, please contact our Credit Reporting team, Gail or Chrys, at 888-546-2880.


An Excellent chance to attend a Webinar for free.

Opportunities abound for you and your staff to take advantage of scholarship grant dollars available to eligible members! The application and guidelines are available for download below. Wisconsin Credit Association would like to thank the volunteer committee members for maintaining the goals, objectives and health of the fund; Chairperson Diane Zancanaro CCP CPC, and Chaz Heckman


WCA Education Scholarship Application

WCA Education Scholarship Fund Guidelines

WCA Education Awards Committee Rules & Guidelines


If you have any questions, please feel free to contact us.


We will examine the most important financial ratios for conducting a comprehensive credit risk analysis and learn how to use them effectively. We will review a number of real-life examples and improve your skills.

 

In this 90-minute interactive program, Michael Dennis will discuss:

 

The common ratios used and why

  • Efficiency ratios, Profitability ratios, Liquidity ratios and Leverage ratios including:
  • Current ratio
  • Return on assets formula
  • Quick ratio
  • Return on equity
  • Gross profit margin
  • The debt to equity ratio
  • Operating profit margin
  • Inventory turnover ratio
  • The long term debt to equity ratio
  • After tax profit margin
  • Accounts receivable turnover ratio
  • Evaluating ratios – historical/comparative
  • Ways to avoid mistakes when using financial ratios

"Financial Ratios and Credit Risk Analysis”


December 20, 2023

9:00 – 10:30 AM CDT

Register Here
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Business Credit, Collection Accreditation & Credentials

that build success and careers...

Why should business credit and collection professionals apply for Credentialing Standards Board (CSB) accreditation as soon as the opportunity is available? The answer is this. By having accreditation in place, Certificate holders are more valuable to their employers. Because they have invested in their own professional development in order to strengthen specific skills needed on the job. Individuals with professional credentials are also more respected by their colleagues and peers in the industry.


To learn more and an application, click here.

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Credit Professional Alliance

Credit Management Association 

The Business Credit Management Association Wisconsin

Business Credit Intelligence

Mountain States Commercial

NACS Credit Services, Inc.

UPCOMING INDUSTRY CREDIT GROUP MEETINGS

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November 8, 2023

Plumbing & Heating Industry Credit Group

TBD

November 9, 2023

Metals & Industrial Suppliers Credit Group

Wauwatosa, WI


November 10, 2023

Electrical Suppliers Industry Credit Group

Menomonee Falls, WI


November 13, 2023

Western Electrical Suppliers Industry Credit Group

Madison, WI


November 14, 2023

Fine Paper/Graphic Arts Industry Credit Group

Book of Reports


November 15, 2023

Minnesota Electrical Suppliers Credit Group

 Brooklyn, MN



November 16, 2023

Construction Industries Credit Group

Teleconference Call

Building & Construction Materials Credit Group

Milwaukee, WI


November 17, 2023

IL Fine Paper Industry Credit Group

Teleconference Call


November 29, 2023

Food Service Supply Hospitality Industry Credit Group

TBD

___________________________________


Date to Be Determined

Minnesota Fine Paper Credit Group

NEXT MONTH

Regional Paper & Packaging Industry Credit Group



For more information, contact:

BCMA - Wisconsin Credit Association

(262) 827-2880

www.wcacredit.org

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