Posted by Tom Tipps
When Foodservice manufacturers first join our ContractPro® Community, they are typically settling a huge number of claims via distributor deduction. The manufacturer cannot process the distributors’ claims within payment terms, so the distributors just deduct.
In other words, the manufacturers are allowing their distributors to deduct claims from invoice payments…in essence, allowing the distributor to make the audit and payment decision. Bet the auditors love that!
The problem here is that distributor claims are typically overstated by at least 20%. Not suggesting that the distributor is doing this on purpose…it’s all about the huge number of errors in the distributors pricing system…errors that have not been caught and corrected by the manufacturer.
So, let’s say the manufacturers are discounting their prices to large restaurant chains 20%. If they then allow the distributor to take another 20% via overstated claims…hello CFO!
Manufacturers have given in to this practice out of frustration. So, they end up “rubber-stamping” approval of the deductions…and the game goes on.
Answers Systems’ Community includes every broadline distributor in the US and Canada, and we are able to pay about 75% of these distributor’s claims via check – within the distributors’ payment terms. We also audit every claim, identify errors in the distributors’ pricing systems and help get those errors corrected.
Contact Answers Systems today to learn more about how to increase your checks-to-deductions ratio.
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