BPM for Deductions and Chargebacks
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RECEIVABLES
BPM FOR DEDUCTIONS AND CHARGEBACKS
BPM for Deductions and Chargebacks
RECEIVABLES
BPM FOR DEDUCTIONS AND CHARGEBACKS
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Business Process Management with Control and Auditing
BPM for Reductions and Chargebacks
Many corporations struggle with the complications and process workflows around managing deductions and chargebacks that occur in the order-to-cash cycle. When a deduction or chargeback takes place, the process that follows often involves many different points of contact across the supply chain including manufacturing, shipping, sales and customer service. Further, the routing process can also be incredibly complex and based on multiple decision points. Compounding these issues, the associated data is often poorly organized or difficult to find, and typically there is not a standard system or procedure in place to identify and route deductions and chargebacks for timely processing and resolution.
Business process management for complex deduction routing Deductions generally stem from customer product returns but can also include errors in price or discount, quantity, tax and freight charges—among others. Each of these situations often involves a complex routing scheme in order to resolve the dispute. The process often includes many decision points and variables such as: ●● Product Line ●● Amount of Deduction ●● Region ●● Sales Area ●● Type of Deduction ●● Approval Routing and Thresholds To minimize the costs associated with deductions, corporations need to institute a blend of best practices and technology, which can help mitigate the impact of deductions, optimize processes, lessen processing time and reduce associated costs.
BPM for Deductions and Chargebacks
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Business process management for complex chargeback routing
Many companies in industries such as consumer goods, transportation and medical devices experience a large number of complex deduction issues. This is particularly true when companies have large retail customers with a Vendor Compliance program in place. Adherence to this program (or any set of complex customer policies) can help reduce revenue leakage and improve customer satisfaction. In fact, these rules can be very difficult, and expensive, for a company to follow and the overhead of additional procedures, computer systems, and personnel around resolving the infractions increases the cost of goods sold. Catching problems early and expediting resolution can have a significant impact in customer profitability.
Similar to deductions, it is equally as important for corporations to have a plan in place for strategically managing chargebacks. There are three main types of chargebacks, which consist of: intentional chargebacks, or the deals, advertising and promotional allowances that occur between a vendor and a retail organization; preventable chargebacks, including those that involve operational and compliance issues, such as early or late shipments and missing goods; and unauthorized chargebacks, or those that arise from circumstances that are not planned and may not be preventable, such as an unexpected return of a good. Limiting the costs associated with varying types of chargebacks can be difficult. Key to this is for vendors to address chargebacks as early in the process as possible and keep track of them by the reason for return (reason code). Analyzing deductions by evaluating the customer and reason code can help with root cause analysis and continuous improvement initiatives such as Lean Six Sigma.
A true BPM solution can help mitigate costs by introducing more stringent workflows to deal with these complex deductions and chargebacks. Configurable functionality will help you to enhance the quality of your internal procedures, while also providing you the visibility to make operational adjustments as needed for improved compliance.
Tailor workflows to match your business processes The challenges described above have led many companies to adopt Business Process Management (BPM) solutions that are specifically configured to manage deductions and chargebacks. The BPM solution for Deductions & Chargebacks is specifically designed to address common types of process management that would occur during invoice settlement while allowing for additional workflows to be built.
KEY CHALLENGES
BENEFITS
●● High
●● Create
volume, low dollar deductions often seen in CPG/ FMCPG and transportation Industries
●● Complex ●● Major
deduction & chargeback process
accounts with high volume of deductions
●● Require
multiple decision process points across the resolution cycle
●● Lengthy
deduction resolution cycle
complex business processes to match to deduction workflow
●● Integrated
with core FIS Receivables solution (GETPAID) for streamlined collections
●● Consistent ●● Common
execution of business process
modeling environment
●● Pre-configured
Workflows
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The Following Workflows can be Tailored Within FIS’ BPM Solution to Meet Your Specific Requirements; and Additional Workflows can be Built. Promotions: Business Process that addresses Marketing and Coupon promotions claims. Some companies may also use this workflow to address a variety of promotion claims such as rebates and premiums. Using an extensive rules engine companies can determine owner assignment for each activity and to ensure requisite data was captured before advancing to next steps. Returned Merchandise Authorization (RMA): Poor support and slow returns processing lead to a dissatisfied customer base. For this reason, the pre-configured BPM platform offers a workflow that can be tailored to specifically match a company’s RMA policy. By introducing BPM, corporations can streamline the RMA process, helping to improve the overall customer experience. The flexible workflow will help you organize and consolidate all aspects of your RMA in one tool; including the ability to attach documentation and images. Using this configurable functionality will aid you in uncovering the hidden costs and untapped revenue streams in support of returns management. The tool will also facilitate faster returns processing, leading to enhanced customer satisfaction rates.
BPM for Reductions and Chargebacks
Delivery: This business process is used to validate valid delivery claims including and not limited to Damaged Goods and Proof of delivery. Activities are put into place to verify Return Orders and Credit Note creation. Pricing: This process is used to handle a broad range of pricing issues. For example, an extensive rules engine can be leveraged to determine owner assignment for each activity and to ensure requisite data was captured before advancing to next steps. The workflow can also initiate the credit memo process. Companies can use this process to enforce usage of Closure Codes that may be different from initial Reason Codes and to allow for extensive escalation notifications based on specific variables that are in place. Sales Tax: This business process is used to address the capture and validation of a sales tax certificate. The workflow allows for automatic correspondence to a customer based on approval or denial of issue. Complex Credit Memo Process with Authorization: Efficient and effective management of credit memos is integral to a company’s ability to manage the credit & collections process. To facilitate this process, FIS’ BPM automates the approval of credit memos electronically. The solution has the capabilities to configure hierarchical approval levels as a function of amount and reason-codes, and leverages built-in workflow for routing.
BPM for Deductions and Chargebacks
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Developing a sound BPM model
Integrating BPM with cash application
Developing a sound BPM model depends on incorporating the right set of data, rules, workflow formulas and other relevant factors. FIS can help you establish a robust BPM by simplifying the creation and management of enterprise and business process solutions specific to your companies needs.
Deductions are often first detected during the cash application process. GETPAID capitalizes on this by integrating cash application with deduction management in order to minimize revenue leakage.
With out-of-the box functionality for process modeling, execution, analysis and integration, FIS is an industry leader in scalable, standards-based BPM. We provide a unified platform to help transform existing operations into consistently managed, enterprise processes. The platform’s automation, integration and monitoring that adhere to the proven J2EE, XML and BPM standards, help organizations reduce implementation costs and increase return on investment.
Integrating BPM with deduction and chargeback management By taking steps to identify deductions early in the process, corporations can save time and money. Integrating BPM with your GETPAID solution will help you gain real-time visibility into the source of deductions and chargebacks, and then providing automated routing functionality to bring these issues to resolution. Insight into deductions and chargebacks aids management in establishing process changes that can remedy recurring issues. By leveraging deduction information, corporations can also identify key customers and from there develop deduction recovery and prevention strategies. For example, strategies may include preparation of settlement meeting packages, negotiation training and standard methods for identifying and resolving key issues. Reporting can also become more meaningful when BPM is introduced. Enhanced reporting can provide management with visibility to root-cause information, which is necessary to understanding recurring issues, or tracking and evaluating deduction performance.
Using configurable rules, GETPAID automatically detects both deductions (shortpays) and chargebacks, and then directs these outstanding items directly through the BPM workflow. FIS will immediately assign ownership to evaluate the validity. From there, the BPM workflow will guide the relevant employees though the appropriate steps of resolving the issue in a timely manner.
Leveraging FIS’ infinity process platform The BPM for Deductions and Chargebacks leverages FIS’ Infinity Process Platform, which uses the industry standard J2EE frame-work for enterprise integration. J2EE facilities, such as JMS, JCA, Web Services, JAAS and others, are natively supported and accessed. The platform uses JAAS to work seamlessly in standards-based Single-Sign-On installations, while LDAP compliance helps the platform to access centralized user repositories and permissions. The Infinity Process Platform is built with a platform neutral philosophy. It supports a wide range of J2EE application servers, as well as SPRING, Relational Database Management Systems and Operating Systems. It also integrates with many popular user interface technologies, including JAVA, .NET and Windows® client.
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BPM for Reductions and Chargebacks
Event-Based monitoring agent framework
Process repository
The Infinity Process Platform’s process engine and agent framework can be used in combination to help discover, monitor and adapt native business processes within legacy systems or current technologies. Existing processes in the legacy system environment are graphically presented using the Process Definition Desktop, which serves as the basis for the software agent’s monitoring capabilities.
An XPDL repository helps support model versioning, where branches reflect both the evolution of the model and the private versions currently checked out by process designers. A difference analysis helps allow merging of the versions at check-in. Other BPM process formats can also be imported and exported using XSL.
The software agent reports event occurrences back to the process engine, thereby helping to provide a monitoring capability to verify structure, workflow accuracy and process progress status. Without changing the existing process execution, different systems may now be integrated and more cost effective solutions may be introduced to help perform process tasks more effectively.
Runtime Environment
BPM standards The Infinity Process Platform helps support BPM standards by offering capabilities for building enterprise solutions. It can interoperate with other BPM tools by exchanging complete process definitions, including people and systems, in XML Process Definition Language (XPDL). The combination of these BPM standards with J2EE integration features offers a unified view of process design including user workflows, application integration and systems orchestration.
Business processes modeled and deployed in Infinity Process Platform are executed in the process engine, which runs within an EJB container. Enterprise configurations for clustering and failover are supported for any size environment.
About FIS’ Corporate Solutions FIS offers a leading liquidity and risk management solution for corporations, insurance companies and the public sector. The solution suite includes credit risk modeling, collections management, treasury risk analysis, cash management, payments system integration, and payments execution delivered directly to corporations or via banking partners. The solutions help consolidate data from multiple in-house systems, drive workflow and provide connectivity to a broad range of trading partners including banks, SWIFT, credit data providers, FX platforms, money markets, and market data. The technology is supported by a full range of services delivered by domain experts, including managed cloud services, treasury operations management, SWIFT administration, managed bank connectivity, bank onboarding, and vendor enrollment. For more information, visit www.fisglobal.com
About FIS FIS is a global leader in financial services technology, with a focus on retail and institutional banking, payments, asset and wealth management, risk and compliance, consulting and outsourcing solutions. Through the depth and breadth of our solutions portfolio, global capabilities and domain expertise, FIS serves more than 20,000 clients in over 130 countries. Headquartered in Jacksonville, Florida, FIS employs more than 55,000 people worldwide and holds leadership positions in payment processing, financial software and banking solutions. Providing software, services and outsourcing of the technology that empowers the financial world, FIS is a Fortune 500 company and is a member of Standard & Poor’s 500® Index. For more information about FIS, visit www.fisglobal.com
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