Assessing the True Costs of Retailer Chargebacks and Deductions
Frustrated by aging chargebacks and deductions, we often speak with A/R and Finance teams attempting to keep up with AI-powered retailer portals and systems.
In our blog this week, we will look at how org leaders can assess the true cost of retailer chargebacks to determine if automation is right for your company.
Any retailer supplier knows that deductions are issued at lightning speeds, as larger retailers like Amazon and Walmart have advanced AI-powered systems that spot and issue deductions on a massive scale. Unfortunately, these systems are not perfect and the retailers’ own faulty inventory management processes are often to blame for invalid chargebacks.
Portals and short-paid remittances are often the primary way A/R and Credit teams are notified of incoming claims, resulting in a reactive claim workflow. Sometimes suppliers are set up with EDI and notified accordingly. Automation on the supplier's side is key to a proactive system that will consistently dispute invalid shortages, compliance, and pricing claims.
How Much Does a Chargeback Actually Cost?
The value of the chargebacks themselves paired with the expenses of manually disputing each claim can eat away at a business’ profits over time. A study done on Warner Brothers found that the time and money involved in manually disputing chargebacks are generally significant. It takes a highly trained and motivated team between 5 and 8 minutes to organize a single claim, and another 5 to 7 minutes to upload each claim to the correct vendor portal. That’s a total of 10 to 15 minutes spent per claim. Sustaining this pace while balancing employee fulfillment and company goals is the challenge many clients look to face.
In another study done on an apparel distributor for Walmart, we calculated that each chargeback took between 8 and 15 minutes to resolve manually. This specific distributor received in excess of 3,000 deductions per quarter, which meant they were spending a whopping 400+ manpower hours simply working old claims with new claims coming everyday.
The average cost to dispute a claim manually is widely accepted to lie somewhere between $5 and $7 per claim based on FTE. However, the true cost may be significantly higher for a number of key reasons. Firstly, many suppliers are not able to capture and dispute 100% of their chargebacks manually. This lack of visibility is a clear pain point across the variety of suppliers that iNymbus works with.
While many suppliers end up hiring temps, working overtime, and restructuring internally, the challenge of consistently working claims around the clock goes unresolved. The claims continue to pile as the older ones do not get attention they need to be successfully resolved until they are no longer recoverable. Staying current with proactive and intelligent automation is the key to reducing the impact of deductions to your people and bottom line.
How iNymbus Can Reduce Chargeback Cost
iNymbus’ DeductionsXchange platform harnesses the power of robotic process automation (RPA) and artificial intelligence to drastically reduce the time and resources needed to validate and dispute chargebacks. Our system’s processing speeds are 30x faster than those of a human team, and the speed increases over time which improves your ability to collect documentation and submit disputes.
The cost reductions associated with using AI-powered solutions are also enormous. We typically manage to reduce our clients’ chargeback and deduction-related costs by over 80%, reducing the expenses of processing each chargeback from $5 to $7 to less than $1. DeductionsXchange also produces excelent results in terms of time savings, streamlining workflows, and ultimately helping recover more.
Our solution silently scales up and down with your business’ volumes seamlessly as they fluctuate without human intervention. Thanks to our bots, there is little to no increase in manual work when claims fluctuate with seasonality in sales.
This ensures that you won’t need to hire additional staff or outsource chargeback processing functions to a costly third party during times of peak demand. In fact, iNymbus eliminates the need for additional staffing, the outsourcing of labor, and expensive software purchases and upgrades entirely.
The functionality of DeductionsXchange will free up your collections team to work on exceptions and pressing business demands rather than managing vast amounts of paperwork from your retailers. This alone is enough to boost your staff satisfaction considerably, which may reduce staff turnover and the costs associated with it as well. A happy team is a productive one, and most teams are thrilled to learn that the tedious manual labor of processing deductions can be automated using iNymbus’ advanced technologies.
How DeductionsXchange Works
DeductionsXchange begins its work by automatically gathering documents and data such as invoices, PODs, claims, orders, and accounts receivable records from the correct websites and portals. The system’s intelligent bots then organize these documents by vendor, reason code, and document type to create complete claim packages for each individual claim.
These claims are automatically uploaded to the appropriate vendor portals or emailed to specific destinations in order to be processed by your vendors. Our auto-resolve algorithms are also capable of tracking the approval, denial, and resolution of claims and displaying status changes on the iNymbus dashboard so that you can assess the status of each submitted dispute as it is processed.
Solve Your Chargeback Challenges with iNymbus
We offer a paid pilot program that gives you 30 days to see our range of deduction and chargeback solutions in action. Contact us today to learn more about our services and to reduce your chargeback processing costs for good.
