Are you concerned about recent increases in deductions from your accounts receivable? Are you worried about the impact these deductions are having on your bottom line?
Optimizing the analysis of these deductions includes finding ways to support your team. You might use automated systems to speed up the process.
The value of the global AI market was $62.35 billion in 2020. Data analysis of deductions will be one area where this transformation will occur.
Here’s a guide to improving deduction management in your organization.
What Deductions Need Management?
Loyal customers may earn a discount for volume or other reasons. That’s an earned deduction or standard deduction.
When a customer receives an invoice and they have a problem with it, they may dispute it. Sometimes they take a deduction from the amount owed and pay the part they feel is correct.
Deductions for goods that arrive damaged need flagging. Businesses need to record valid tax deductions in the right filing period. Managing all these types of deductions helps find ways to improve collections.
What Is Deduction Management?
The deduction management process includes information gathering and verification. There are several purposes of deduction management.
Deductions earned through volume purchases provide useful information. Management can see how the company is returning value to its customers.
Deductions taken because of damaged goods need more research. Finding the source of the damage allows future prevention measures.
Disputed amounts are a problem from a revenue point of view. They are a concern because your customer isn’t happy. You need a solution that satisfies both parties.
How Can AI Improve the Deduction Management Process?
Automation can improve manual processes. Electronic identification and processing of claims is a benefit. Gradual implementation can build support for the changes.
Data analytics and reporting allow members of the team to focus on the root cause of a problem. That allows them to find solutions more quickly.
AI can automate the validation of claims. These systems can verify delivery times, contract terms, and discounts from existing data. They can send the validated dispute to the right person for quick approval or further action.
Machine learning can identify and auto-approve frequent scenarios. Automating approved credit memos speeds the process. These steps used to take a lot of time and cost money.
Streamlining communication gives customers and the sales team up-to-date information.
Maintain Good Customer Relationships
When a customer has a problem with your business, it’s best to resolve it as quickly as possible. They don’t want to wait weeks while you validate their claim and issue the credit invoice.
When you fix a delivery problem quickly, it improves your customer relationships.
Protect Your Bottom Line
Choosing a deduction management solution doesn’t have to break the bank. Do your research and you’ll find a process that works with your budget. Don’t hesitate to check with your accountant when evaluating solutions.
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