6 Steps—Including Automation—to Rein In Unauthorized Deductions

Imagine being told your AR department could achieve savings in deduction processing costs like the following:

  • 50 percent reduction in overall cash application costs with an increase in auto-match hit rates;
  • 40 percent increase in speed of deduction processing; and
  • 50 percent to 75 percent reduction in time required to manually retrieve documents and attach them to specific deduction records.

Sound like a fantasy? However, those are exactly the opportunities presented as entirely realizable at a recent AR&O2C Network webinar, “Improve Profitability By Reducing and Controlling Deductions.”

Deductions Challenges

“Since deductions can account for up to 10 percent of sales and processing costs can run between $200 and $300 per deduction,” asked webinar presenter Jessica Butler Butler, Principal at Attain Consulting (http://attainconsultinggroup.com), “why don’t more companies focus on reducing unauthorized deduction and processing costs?”

Because, she answered, of common obstacles like the following:

  • Management lack of awareness of “total cost” of deductions;
  • Challenge of cross-functional coordination between departments “touched” by the issue (AR, sales, customer service, IT, compliance, warehouse, production).
  • ERP systems that lack deductions functionality, and ...
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