If you're in the world of accounts receivable or work closely with retail partners, you've probably come across deductions. They can be a big part of doing business, but there's a lot of misinformation out there that can lead to missed opportunities and lost revenue. Today, we’re going to debunk some of the most common myths surrounding deductions and help you see why understanding these myths can make a big difference for your business.
Myth 1: Most Deductions Are Valid and Need Not Be Disputed
- Reality- It’s common to assume that if a retailer sends a deduction, it must be correct, but that's not always true. In fact, according to a survey among our clientele, we have found the majority of deductions to be invalid.
- Why it matters- If you accept all deductions at face value, you might be leaving money on the table. With already slim profit margins, this can severely impact the bottom line of the business.
- How to address it- Set up a systematic process to review each and every deduction and identify which ones can be disputed.
Myth 2: Deductions Are Always Small and Insignificant
- Reality- Sure, some deductions might seem minor at first glance. But if you handle a lot of transactions, these small deductions can add up to a huge amount over time.
- Why it matters- Dismissing small deductions could mean overlooking big opportunities for revenue recovery. Take the example of an electronics distributor who thought deductions under $50 weren’t worth the hassle. Over a year, those small deductions amounted to nearly $500,000.
- How to address it- Prioritize deductions! Sure our main focus should be to dispute the ones with large amounts. That being said, you should not ignore the smaller ones, instead, dispute them all.
Myth 3: Manual review is more accurate than automation
- Reality- It’s easy to think that a human touch is better when it comes to reviewing deductions. However, have you thought about what happens to the accuracy when there are tight deadlines and thousands of deductions pending?
- Why it matters- Relying only on manual reviews can be time-consuming and you might miss dispute deadlines, especially when dealing with a high volume of deductions.
- How to address it- Automate the routine parts of the review process so that your team can concentrate on more complex cases. Automation tools can help you manage large volumes of claims more quickly and with greater accuracy.
Myth 4: Automation is expensive and is feasible only for large businesses
- Reality- Automation might sound costly, but there are options for businesses of all sizes. With advancements in technology, automation solutions have become more affordable and scalable.
- Why it matters- Many small and mid-sized businesses shy away from automation because of cost concerns, missing out on the long-term benefits. With newer solutions available in the market, it's just about finding the fit for your company.
- How to address it- When considering automation, don’t just look at the upfront costs. Think about the long-term savings in labor, time, and the potential for recovered revenue.
Myth 5: Automation can’t handle complex disputes
- Reality- It’s a common belief that automation is only good for straightforward, simple tasks. But modern automation tools are equipped to manage complex deduction disputes too, thanks to features like RPA and integration with retailer systems.
- Why it matters- Suppliers might be working with numerous retailers, each requiring different things to dispute deductions. This should not discourage them from exploring automation as recent advancements have enabled new software to even automate such complex deductions.
- How to address it- Look for automated solutions that are built to handle such complex deductions. Not just that but they should also support all the retailers that you are working with, giving you a centralized platform to track deductions.
Myth 6: In-house management is better than outsourcing
- Reality- Managing deductions in-house might seem like the best way to stay in control, but it can be less efficient and more expensive compared to working with a specialized provider.
- Why it matters- By insisting on in-house management, businesses could be missing out on faster resolutions and better recovery rates. These agencies have years of experience in dealing with deductions from various retailers. They not only help you streamline the process but can also provide you with data that can be used to improve overall efficiency.
- How to address it- Consider the full picture when comparing in-house management to outsourcing. Factor in not just the direct costs, but also the speed, expertise, and efficiency gains that come from working with specialists.
Conclusion
Believing in these myths can cost your business time, money, and efficiency. But understanding the realities behind them can help you make better decisions and boost your bottom line. Deductions may be a challenging part of doing business, but with the right approach and the right tools, they don’t have to be a burden. If you’re ready to explore how automation can simplify your deduction process, reach out to iNymbus for a demo and see the difference for yourself.