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5 Years Later

Five years ago, I wrote an article entitled “Twenty-Five Tips on Deduction Management.”  This article resulted in several speaking engagements for me.  I ran across this article quite recently, and I was amazed by what I read and by what I didn’t read.  Only 1 of the 25 tips addressed credit automation and more specifically deduction management software.  That 1 tip was exactly 25 words long.  It read:  “Develop your own, or purchase commercially available software that allows you to track the status and the actions taken to address and resolve customer deductions.”

If I were going to write this article again, the main focus would be the effectiveness of deduction management software.  I would focus on how deduction management software has matured and is now a ‘need to have’ rather than a ‘nice to have’ tool for many credit departments — especially those whose customers routinely and aggressively take deductions.

I have said before that the ‘worst thing’ that can happen when a customer takes a deduction is they may eventually have to repay a deduction taken in error.  However, in the mean time, the customer gets what amounts to an interest-free loan from your company.  The key question is how long that interest-free loan will remain outstanding.

Without a tool that enables your team to systematically address customer deductions, managing customer deductions is like trying to hold back the incoming tide with a mop and a bucket.  What is the solution?  In my opinion, one strong candidate for a solution to the problem is deduction management software.  I think you will be impressed by its capabilities, its ease of use, and how effective it is in helping the creditor to resolve deductions quickly and efficiently.  That’s my opinion anyway.  What’s yours

Michael Dennis’ Covering Credit Commentary. Michael’s website is  www.coveringcredit.com

The opinions presented are those of the author.  The opinions and recommendations do not necessarily reflect the views of CMA, or their Officers and Directors.  Readers are encouraged to evaluate any suggestions or recommendations made, and accept and adopt only those concepts that make sense to them

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2 Responses to “Credit Automation – 5 Years Later – Michael Dennis, CBF”

  1. F. Scott Wilson says:

    Deduction management software is a good thing to have, but it needs to fit your company’s needs. Software that is too cumbersome, or has additional data required that doesn’t automatically populate the fields, winds up being a burden instead of a useful tool.

    I’ve used a couple that didn’t address my employers’ needs, and one that did, and the difference was night and day. The two that didn’t work weren’t bad software, but they were bad fits for the industry.

    Deduction management software can be very helpful, but it helps to make sure management doesn’t buy screwdrivers when it really needs a socket set.

  2. Dorothy Siegel says:

    I agree with Scott. Finding the right software can be like finding the proverbail needle in a haystack – well maybe not quite that difficult. However, in my experience having a systematic way to track and clear retail account deductions is worth the time to find the best software available. The alternative is to do nothing in the way of office automation and hope the problem becomes less severe – which as we know is very very unlikely.

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