FIELD GUIDE. The Modern Accounts Receivable. Learn About

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Griffin Bradford
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1 The Modern Accounts Receivable FIELD GUIDE Learn About Chargebacks and Dilution // Missing Documentation // AR Automation // Increasing Cash Flow // Reducing DSO // Simplifying Reconciliation // Deduction Management

ABOUT THIS GUIDE A technology inspired field guide With such an extensive paper trail and so many invoices to apply cash, it can be quite time consuming and tough for today s Accounts Receivable

2 ABOUT THIS GUIDE A technology inspired field guide With such an extensive paper trail and so many invoices to apply cash, it can be quite time consuming and tough for today s Accounts Receivable professionals to find their way through it all. That s why we created this technology-inspired field guide. It helps you explore the world of modern A/R best practices and identify tools that reduce the daily friction points, increase productivity and save money. Manual paper-based processes are inefficient and cost more money. Not only do businesses incur great expense in paying for reams of paper, but employees waste valuable man hours each day tracking down invoices, pick tickets and packing lists, bills of lading, proof of deliveries, and other invoice-related paper documents. When a business operates for years under the same processes, they are bogged down by these outdated methods, making it more likely that the business will be left behind by competitors. IN THIS GUIDE, YOU LL LEARN ABOUT Chargebacks and Dilution Missing Documentation Outdated Paper Processing Cloud-Based Systems AR Automation Increasing Cash Flow Reducing DSO Simplifying Reconciliation Deduction Management

3 CHARGEBACKS AND DILUTION Accurate documentation helps to dispute chargebacks and decrease dilution This last decade s changes to the economic landscape has put the retail industry under a lot of pressure. This means vendors are encountering an increased number of chargebacks as retailers are looking for ways to increase their profitability. Unfortunately, the manufacturing and distribution industries are feeling the backlash from the retailer s push for profitability and sometimes survival, as dealing with chargebacks are becoming an ever growing source of dilution. As the marketplace becomes even more competitive, manufacturers are desperately seeking solutions to both dispute unauthorized/erroneous chargebacks and improve collections. Chargebacks happen when a retailer initiates a deduction for an order that they feel was not fulfilled, processed incorrectly, or in non-compliance with a billing/shipping requirement, or for a host of other reasons. Whether they claim they did not receive a full shipment or that the shipment wasn t what was agreed upon, chargebacks negatively affect a supplier s dilution rate and profitability. Dilution is the difference between the face amount of an invoice or a group of invoices and what the account debtor actually pays. Chargebacks directly affect your dilution rate, your cash flow and profitability. DILUTION INVOICES AMOUNT PAID IS A PRODUCT OF API OUTSOURCING 2015

The chargeback investigatory process is complex and time consuming, and vendors often lack the proper documentation, or the ability to gather the proper documentation, to prove their side of the

4 The chargeback investigatory process is complex and time consuming, and vendors often lack the proper documentation, or the ability to gather the proper documentation, to prove their side of the story and push back on the retailers. Without accurate and proper documentation in hand, vendors are unable to dispute the chargeback claims of retailers, culminating in significant losses to their bottom lines. HOW CENTREVIEWS RECEIVABLES SOLUTION HELPS With Centreviews Receivables Solution system, all supporting documents are captured from the systems where they are created or scanned into the system and indexed. This makes finding accurate documentation simple. BOL PO INV PO

5 MISSING DOCUMENTATION IS A PROBLEM Scattered paperwork can t easily be searched When a business relies on paper to support its accounting operations, that business sees a dramatic lag in productivity. Whenever a retailer questions or disputes an order, invoice, etc., a supplier spends needless and wasteful time going through stacks of files to correctly answer the inquiry. Even the best organized paper-based system can be problematic, since important documents can be lost. $120 $250 According to the National Association of Paper Organizers (NAPO), executives waste six weeks per year searching for lost documents. Of the eight hours per week people waste on paper document management, one hour is spent searching for documents, one hour troubleshooting issues with sharing documents, one hour in distribution and storage, and half an hour on archiving and retrieval. It costs $120 in labor to track down a misplaced document or $250 in labor to recreate it. HOW CENTREVIEWS RECEIVABLES SOLUTION HELPS Centreviews Receivables Solution gives retailers the ability to quickly search for important documents. Whether you re searching by invoice number, bill of lading number or keyword, get instant access to all of the associated documents you ll need to provide proper documentation. IS A PRODUCT OF API OUTSOURCING 2015

OUTDATED PAPER PROCESSING Paper decreases efficiency When a business relies on outdated workflows to accomplish tasks, work takes much longer to accomplish.

6 OUTDATED PAPER PROCESSING Paper decreases efficiency When a business relies on outdated workflows to accomplish tasks, work takes much longer to accomplish. A piece of paper can be passed from desk to desk, lingering in an inbox for days before someone finally signs off on it and sends it to the next person on the approvals list. Along the way, a document can easily be lost, leading to compromised buyer/seller relationships. Yet these long-defunct processes still exist. In a study hosted by Canon Business Process Services, one-third of respondents admitted to regularly extracting content from paper-based workflows, with another 22 percent stating that they manually extract content from digital content. The top problem in business today, Canon says, is requiring workflows and rerouting to complete complex business transactions. HOW CENTREVIEWS RECEIVABLES SOLUTION HELPS The Centreviews solution receives files from disparate systems, such as warehouse management systems, transportation providers systems, bank lockbox, customer portals, and captures and links them all in one place. Centreviews has the ability to store this information for several years. If there is a mistake and issues a post-audit deduction, retailers can pull the documentation necessary to negate many of the post-audit chargebacks

7 ACCESSIBLE FROM MULTIPLE LOCATIONS Enables collaboration and a remote workforce Paper-based documents can only be accessed in one location, which can be problematic for today s mobile, decentralized or remote workforce. Team members can be challenged to collaborate on a file that must be copied and distributed before it can be discussed. To get around this issue, businesses will often scan documents and share them through or a cloud-based collaboration tool, the latter of which offers the option of accessing remotely using a PC or mobile device. Workers today expect instant access to the information they need. When processes are outdated, it can inhibit a team s ability to collaborate and share information, impacting both productivity and efficiency. 64% 82% 64% of those surveyed 82% of leaders say that cloud-based collaboration tools speed up a business s ability to manage tasks and improve efficiency HOW CENTREVIEWS RECEIVABLES SOLUTION HELPS Since Centreviews Accounts Receivables Solution is cloud-based, it can be accessed from any compatible device, which frees employees to access documents from home or while traveling. For companies with multiple locations, all offices can now access the same documents instantly, reducing the need to fax or mail files from one office to another. Invoices can be automatically assigned to different locations and user roles, making it easier for each user to filter out the information that relates to his specific needs. IS A PRODUCT OF API OUTSOURCING 2015

8 AR AUTOMATION Save time and money Some accounting departments might be hesitant to embrace automation because it seems too complicated, and they feel that it will result in a lack of control. But really, AR automation is an easy way to save time and free up employees to be more productive on the job. With the additional time, employees can work on the exceptions that arise, the important part of cash application and other receivables issues. HOW CENTREVIEWS RECEIVABLES SOLUTION HELPS Centreviews Accounts Receivable solution provides instant access to all critical information related to an invoice or group of invoices. Whether it s a bill of lading, a purchase order, or proof of delivery, all important documents are captured, matched and linked together in a cloud-based centralized repository. This means that when an invoice gets disputed, your team can quickly and easily pull up all the related documents that provide a clear picture to remediate the dispute instantly. The Centreviews AR Solution also offers the ability to restrict access to specific documents based on the user s requirements and authorization

9 INCREASE CASH FLOW AND REDUCE DSO Let s look at a typical dilution case US Hoodie Manufacturing US Hoodie Manufacturing invoices Southland Department Store $60,000 for merchandise they ordered. Southland receives the shipment and, upon inspection, finds that some of the hoodies are damaged. Instead of returning the damaged goods to US Hoodie to be replaced, US Hoodie authorizes Southland Department Store to deduct the value of the damaged hoodies from its payment to US Hoodie. The deduction from the damaged goods totals $5,600 so Southland Department Store pays US Hoodie $54,400. The $5,600 deduction that Southland takes is dilution. Now let s change the case slightly What happens when the deduction from the damaged goods totals $5,600 but Southland Department Store pays US Hoodie $50,000? There is still $4,400 missing from the total amount due. Now if US Hoodie wants to go after the money owed, they need to compile all of the documentation to refute the unauthorized chargeback, and they need to do it in a timely manner. $54,400 $50,000 $4,400 Missing amount The longer it takes to provide the documentation to refute the unauthorized deduction greatly reduces the probability of collecting the money owed. HOW DOES US HOODIE GO AFTER THE MONIES OWED? Resolving chargebacks is tedious and time consuming. It usually goes something like this: At the end of the process, the vendor needs to provide documentation that proves the chargeback was unauthorized or deducted in error and, with so much paper and disconnected processes, this is difficult to do. However, if the documentation provided is satisfactory, the disputed chargeback amount will be paid back to the vendor. IS A PRODUCT OF API OUTSOURCING 2015

10 SIMPLIFY RECONCILIATION Increase efficiency Accounts receivable departments reconcile payments with invoices and remittance daily to complete cash application. Many transactions cannot be reconciled at receipt of payment due to lack of access to the remittance information and to deductions. This problem is being magnified with more electronic payments via ACH, card and wire. These payments and associated remittances are received through separate processes, with payments coming from the bank and the remittance information coming from the customer. This also compounds the end of month close. With paper-based processes, this means poring over ledgers and digging through invoices, payment and remittance information. This entire process can be grueling and time consuming, especially for businesses that deal with high volumes of transactions each month. HOW CENTREVIEWS RECEIVABLES SOLUTION HELPS The Centreviews Receivables Solution speeds up reconciliation because manual processes that used to take hours to complete are automated and easy

11 DEDUCTION MANAGEMENT Protect gross margins Each month, businesses deal with unexpected losses in the form of unauthorized deductions. Customers return products, employees make errors in pricing or processing payments, and there are unplanned overages in taxes and freight. Deductions cut into a business s monthly budget, eventually leading to long-term problems. Through deduction management, businesses can predict and prevent unauthorized deductions to protect as much of its monthly revenue and profits as possible, and to protect gross margins. Fast Facts The number one benefit to automation is reduction in unauthorized/erroneous deductions by having instant access to support documentation to dispute and resolve the issue. About 30% of deductions can be resolved in the manufacturer's favor. The number 2 benefit to automation is reduction in the amount of time that accounting departments spend looking for critical documents, thereby improving their bottom line. Why Modern Accounting Professionals Like It Saves tons of time. Allows them to find documents no matter what location they re working from. Reduces the amount of busy unproductive work. Accounting departments who implement automation report a 20% gain in productivity. IS A PRODUCT OF API OUTSOURCING 2015

AR SUCCESS STORY United Legwear Company As a global manufacturer of socks, tights, and underwear, United Legwear Company, LLC has established itself as a leader in the industry.

As ULC grew, it faced some of the same challenges that plague many businesses in the manufacturing and distribution industry.

12 AR SUCCESS STORY United Legwear Company As a global manufacturer of socks, tights, and underwear, United Legwear Company, LLC has established itself as a leader in the industry. People of all ages wear ULC s products, which can be found in stores around the world, through major retailers and ecommerce sites. As ULC grew, it faced some of the same challenges that plague many businesses in the manufacturing and distribution industry. ULC was experiencing issues with managing a large number of chargebacks and deductions. These incidents were cutting into the business profits and affecting cash flow. Profit Solutions Group, Inc. a chargeback recovery/deduction management outsource company was engaged by ULC to reduce its dilution rate as well as manage the A/R Department and implement best practice processes. One of the first actions that PSGI initiated was to bring the Centreviews Receivable Solutions to the project. United Legwear Company, LLC (ULC) is equipped with Receivables Solution, a component of the Centreviews Business Intelligence Suite, to organize and link documentation in order to manage chargebacks and deductions. Centreviews Receivables Solution gives our staff the tool they need to cost-effectively research and manage chargebacks. Using Centreviews Receivables Solution has resulted in lower dilution, increased recoveries, and improved cash flow and profitability. Our management and lender are both pleased with the results. Thank you API and PSGI! Alan Mandell ULC s Vice President and Group Financial Controller

Solution USING CENTREVIEWS RECEIVABLES SOLUTION Centreviews Receivables Solution is an ideal solution for ULC, allowing the company to automate its

13 Solution USING CENTREVIEWS RECEIVABLES SOLUTION Centreviews Receivables Solution is an ideal solution for ULC, allowing the company to automate its accounts receivables process and create a centralized archive of all receivables information with all documents associated with a transaction linked together.

14 ABOUT CENTREVIEWS The Centreviews Suite is a unified cloud-based solution to fulfill your back office technology needs for AP, AR and document management Centreviews is a business intelligence suite dedicated to providing full support for a business s back-end operations. Specialists work directly with businesses to transform outdated processes into fully-automated procedures that save time and increase accuracy. Centreviews helps businesses automate their accounts payable, accounts receivable, and document management processes as needed. With its secure, easy-to-use interface, Centreviews has become popular with business across the globe. Businesses interested in automating all or part of their back-end operations can contact Centreviews to learn how we can help. This free video demonstration can help your business decide if Centreviews is the right choice for you

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