In-House Deduction Management for Overlooked Vendor Credits
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Solution Overview
Problem
Businesses face challenges in identifying and recovering overlooked or forgotten credits from vendors, leading to potential loss of revenue due to costly audits by external asset recovery companies and post-facto error rectification.
Innovation Solution
Implementing an in-house step-by-step process for detecting, recording, and demanding credits or money owed, including returns of commodities, e-recycling, and warranty credits, to proactively manage and resolve these issues.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of energy
If external asset recovery companies are hired to perform audits, then credits can be recovered, but 25% of the recovered amount is lost as fees and continuous audits are required
Solution Approach 1:
The business performs credit recovery audits internally using its own staff and systems rather than hiring external asset recovery companies. This eliminates the 25% fee loss while maintaining the ability to identify and recover overlooked credits through in-house procurement and accounting personnel who understand the business operations.
Solution Approach 2:
The system performs credit recovery audits on a continuous basis rather than waiting for post-facto external audits. By continuously monitoring procurement transactions and vendor statements, the business identifies and recovers credits in real-time, preventing revenue loss before it occurs and eliminating the need for repeated external audits.
2Loss of information
If external audits are performed, then overlooked credits can be identified, but errors are only addressed after they have occurred
Solution Approach 1:
The system continuously monitors procurement transactions, vendor statements, and credit balances, providing real-time feedback when credits are overlooked or not properly applied. This ongoing feedback loop enables immediate identification and correction of errors, preventing them from recurring and ensuring timely recovery of credits.
Solution Approach 2:
Instead of performing periodic external audits, the business implements continuous internal monitoring of credit recovery opportunities. This ongoing process ensures that credits are identified and recovered promptly as they arise, eliminating time delays associated with scheduling and executing external audits.
3Productivity
If in-house credit recovery process is implemented, then profitability increases and external audit fees are eliminated, but process complexity must be managed internally
Solution Approach 1:
The credit recovery process is integrated into existing procurement and accounting systems, allowing the same personnel and platforms to handle multiple functions including vendor management, transaction processing, and credit recovery. This eliminates the need for separate dedicated credit recovery systems and reduces overall process complexity.
Solution Approach 2:
Business personnel are trained and empowered to perform credit recovery tasks as part of their regular duties, eliminating the need to hire specialized external auditors. This self-service approach improves profitability by retaining 100% of recovered credits while managing process complexity through existing staff capabilities.
Data Source
AI summary
Simple step-by-step methods for business management to implement in-house to detect overlooked or forgotten assets and demand for credits or money rightfully owed to it, resulting in increased profitability. Instead of hiring a costly outside asset recovery company to perform an audit, who typically charge around 25% of the recovered amount, businesses can keep all that is recovered. By following the easy steps, businesses can stay ahead of not getting paid or credited for overlooked or forgotten credits, including from the return of previously purchased commodities, the disposal of electronic commodities via e-recycler for credits and credits obtained from warranty claims.