by John Nicholas
If you do not want to know what happens for most foodservice manufacturers concerning ineligible deductions read no further.
Unless a manufacturer has a very quick way to validate, reconcile and process claims, in most cases a request for payment from a distributor will turn into a deduction. In fact, here at Answers Systems we find that an average new client is settling at least 80% of their claims by deduction and some 20% by check. Our Distributor Liaison Team and Settlement Group know the distributors’ deduction windows. We process claims very quickly. We make sure the distributor has the check before they deduct. As a result, we often times can flip that percentage to 80% settled by check and 20% by deduction. (If a manufacturer has a big part of their portfolio in U.S. Foodservice, which settles all claims by deduction, then obviously the percentage of claims settled by deduction with remain somewhat higher)
At Answers Systems we try to keep deductions at a minimum. Why? The reason being, if there is something ineligible in the claim, you can short pay the check and send it with the accompanying, needed back up to justify the short pay and you are done with it. Deductions have to be handled several times in processing. Then, if there is any part of the deduction that does not match the original agreement, there obviously has to be a rebill process for that ineligible part of the deduction. The ugly truth is that most manufacturers have little or no efficient system for that rebill to happen. Mistakes happen! There are errors in claims! That means that significant revenue is being lost because many manufacturers do not have a way to quickly identify ineligible deductions, let alone rebill for them. Just to let the reader of this know what is possible, we receive 95% of claims within 10 days of invoice date. Clean claims processed for payment ≤ 12 days.
Here is another thing. If a manufacturer is going to be successful in rebilling for ineligible deductions the key to actually getting the money back is once again, speed of processing. Distributors close their books to past claims relatively quickly. If a manufacturer is not rebilling within the first 30 to 45 days their chances of getting any money back is very slim. If, however, you can identify the ineligible deduction very quickly and rebill with proper back up, we have found that our more mature clients are recouping 75 to 80% of the deduction rebill.
Contact Answers Systems today for more information about our claim settlement and ContractPro trade promotion management solution.