Take Charge of Chargebacks

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As a distributor, dealing with chargebacks from big box retailers can be a daunting task. With the increased pressure to meet sales goals and maintain customer satisfaction, chargebacks can have a significant impact on your bottom line.

However, by understanding the causes of chargebacks and implementing effective strategies for managing them, you can minimize their impact on your business. In this blog, we'll explore the common causes of chargebacks, primarily from big box retailers, and share tips and best practices for reducing the risk of chargebacks and effectively managing them when they do occur.

The “what” and “why” of chargebacks

Let’s start by defining what a chargeback is so we’re all on the same page.

As a distributor, a chargeback refers to a process in which a retailer disputes a charge on their account and takes a credit from the distributor without prior authorization.

If you're a wholesaler/distributor you know chargebacks happen for a number of reasons and you need to comply with your customer's requirements. It’s inevitable; chargebacks are a way of business.

Why chargebacks

Retail chains define many business requirements that their suppliers must follow in order to do business with them. These requirements can directly affect whether an invoice is paid in full or is short-paid due to non-compliance.

These deductions (often referred to as chargebacks) appear on the payment remittance and represent adjustments for damages, short shipments, advertising co-op, delivery, or labeling errors – just to name a few.

The manual way

Most of the time distributors have a manual process in place to handle these chargebacks.

Manually handling chargebacks can be time-consuming and error prone. It also lacks transparency and can be difficult to track and report on for analysis later. Automating the chargeback process can help mitigate these issues by streamlining the process, providing real-time tracking and reporting, and reducing the risk of human error. Additionally, automating the process can also help to ensure compliance with industry regulations and standards, and help bring internal issues to light faster.

You can’t avoid them

So, if you’re a distributor or wholesaler, you need to ensure chargebacks are properly managed to avoid confusion and profit loss.

Does this sound familiar?

Let’s say you ship $10,000 worth of goods to a large retailer. Because of non-compliance with a particular requirement – perhaps you missed the shipping window – that 1% to 5% range means they deduct between $100 and $500 from their payment to you. It is annoying but it happens all the time. With various numbers floating around pertaining to your financials, it can be confusing if a proper solution is not in place.

There's an easier way

Imagine having visibility into those various types of retail chargebacks and being able to allow and disallow them by customer or by type of deduction.

We can help

You can process cash receipts after entering the adjustments, automatically create accounts receivable documents for those adjustments, and finally analyze the adjustments with powerful inquiry features.

By streamlining these processes, the user can research and even dispute a chargeback successfully, since all of the information will be captured and tracked within your ERP system. The complexity of managing this tedious process is significantly reduced, while the ability to collect on unallowed chargebacks is increased.

What are the benefits of having a solution to manage chargebacks in your ERP?

There are several benefits to having a solution that manages chargebacks within your ERP:

  1. An ERP-integrated chargeback solution can automate the chargeback process, reducing the need for manual intervention and minimizing the risk of errors.
  2. The ERP system can provide real-time tracking and reporting on chargebacks, helping to identify and resolve issues more quickly.
  3. Automating the chargeback process within the ERP system can improve efficiency by reducing the time and resources required to manage chargebacks.
  4. By automating the chargeback process, reducing errors, and increasing efficiency, it can also improve the financials of the company by avoiding unnecessary chargebacks and disputes.

Take Charge of Retail Customer ChargeBacks

ChargeBack Processing adds deductions management capabilities to your Dynamics GP and now Business Central.

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