Processing receivables in today’s environment is complex and the landscape is rapidly changing. Companies are switching from checks to ACH for payment and are now increasingly sending remittance information and debit memos electronically. Yet despite the progress towards a more automated environment, many inefficiencies and issues are continuing to impact the speed, accuracy and efficiency of electronic processing, including:

• Payments not matching invoiced amounts

• Truncated electronic information

• Missing remittance advice

• Remittance detail sent through multiple channels

• Customer deductions due to vendor compliance issues and disagreements

Add on the complexities and disparities arising from the use of multiple ERP applications and the tracking of deductions by nothing more than a spreadsheet and it is easy to see how much this process can be improved.

The impact is significant. Deductions often range from 1% to 8% of sales, so resolving them quickly is critical to any business. And resolving deductions adds headcount. It takes extra people to:

• Post cash when as much as 40% of payments do not match

• Write up deduction forms and attach supporting documents

• Route and track deductions

And deductions eat into a company’s liquidity:

• High deductions mean high dilution

• Excess dilution can cost you 5% or more on your A/R collateral

Finally, many of the deductions are due to disagreements with your customers. Speed is the key to recovery and many companies just do not process deductions fast enough to be able to collect the cash.