Chargebacks Processing: Strategies To Reduce Chargebacks

Chargebacks processingChargebacks processing and reduction are a company-wide issue. Do not conduct research and chargebacks processing to play the “blame game” instead make sure that internal operations and computer systems are corrected and employees are trained.

The Credit Research Foundation (CSM Communications Co., Inc., 2003) conducted a customer-deduction survey of 280 companies across 22 industries. The finding was that 75% of those companies that used cross-functional teams to manage deductions and compliance violations have reduced the number of deductions received:

  • In addition to challenges of dealing with customers; many companies experience their toughest challenges within.
  • “Lack of cross-departmental” cooperation was their biggest internal challenge
  • Actions taken to prevent deductions were: Simplifying pricing strategies; providing education and training within the organization; conducting cross-functional meetings to address the root cause of the deduction; attending customer’s compliance training.

One of the easiest ways to gain cross-departmental cooperation is to give them a stake in decreasing deductions. Cooperation of almost all departments will be required in order to achieve success in reducing chargebacks. The actual personnel to be included on the committee may vary from company to company. This group should include managers of departments, but it should be flexible enough to include members who might not be classed as managerial. No one understands a give business procedure better than those who are doing it.

The chair of the committee should be the corporate Customer Compliance Coordinator (aka “Deductions Analyst”). This position may be full-time or it may also be a part-time duty of a manager, handling a variety of projects of which chargebacks is one. The person in this role will be responsible for the direction and coordination of all customer compliance issues.

The list of duties for chargebacks processing may be very general, but it should be seen that the Compliance Steering Committee has the responsibility of building and maintaining the customer compliance strategy. The compliance coordinator must review all of the existing customers’ routing guides and vendor manuals. All the other roles and departments should review their section of the routing guide and vendor manual. When the sales department wins a contract with a new customer the compliance steering committee must immediately react by mastering the routing guides and vendor manuals.

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