This means that companies with the most efficient distribution and collection systems still are unable to collect approximately two per cent of total invoice amounts. And, with the most optimistic retail analysts suggesting that the 1990s will pose great tests and challenges, you and your clients can count on a further erosion of receivables consistent with a recessionary environment. Some preliminary steps CPAs can take or advise clients to take to reduce the number and dollar volume of contested billings or unilateral store deductions are no more complicated than adopting simple, internal management controls. Document all transactions in writing. To understand why this is necessary, consider that oral agreements cost you and your clients money.
Companies are often reluctant to take any step that interferes with the selling relationship.
If you follow this principle you won't have to debate whether junior's tax return is included in the fee. If you clients do not adopt and enforce this simple policy, they will leave themselves open to chargebacks and penalties for shipping the wrong merchandise and for violations of other policies, as well as for administrative, traffic and handling fees. If you clients allow no exceptions to this policy, they will train their customers to accept that they must mail or fax confirmation of order changes if they want to receive the merchandise they need. Conduct a thorough analysis of payment practices. You may also find that your client's distribution center is the cause of many deductions, especially when deductions of the same type are incurred from a number of different customers.