STRATEGIES & SAFETY NETS

IAB Solutions LLC IAB SOLUTIONS LLC

• 33 years industry experience • Client centered approach • Personalized and customized service • Transparent and confidential • Flexibility to meet changing objectives

• On Site and Off Site Options • Protecting YOUR bottom line

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“Deductions are growing worse all the time. In fact, at many companies, deductions are more significant risks than bad debts.”

DEDUCTIONS TODAY

“Deductions are growing. Even if deductions are “budgeted” or considered a “cost of doing business”, they nevertheless cost millions of dollars of profit every year.”

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DEDUCTIONS TODAY

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“Deductions are the bane of finance and sales, and costs your company more than bad debts. The balancing act between timely processing against the need to carefully audit for systemic problems and customer errors is challenging.”

DEDUCTIONS TODAY

QUESTIONS

• Is your deduction team resolving the deductions as they are taken?

• Is your company collecting more unauthorized deductions each year to keep pace with your customer’s more aggressive deduction practices?

• Can you quickly determine where each deduction file is at any given time?

Source: Article “Are Your Customer Deductions Growing out of Control?” The Credit Dept. Inc.

QUESTIONS

• Do you have a tracking system to note where bottlenecks exist in the clearing process?

• Do you have a clearly-defined process for solving each type of deduction issue?

• Are your “tolerance levels” (auto write-offs) small enough to catch chronic offenders paying invoices short?

• Are my challenges more suited to a software or service solution or combination of both?

Source: Article “Are Your Customer Deductions Growing out of Control?” The Credit Dept. Inc.

WHAT DO I NEED?

Time

Money

Strategy

WHAT DO I NEED? Developing effective strategies will help create more time in the future and/or

solidify for your case for additional budget dollars for necessary solutions.

*Selling the C-Suite*

WHAT DO I NEED?

WHAT DO I NEED? *Selling the C-Suite*

Explain why the problem is costing the company

money (be specific)

Stress the value of how the solution will improve the profit margin

Connect dots between lost revenue and sales (e.g. 5% margin, $1MM reduction in deductions = $20 million in sales)

WHAT DO I NEED?

CHALLENGES

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Cross-DeptCoop

InefficientProcesses

Access toInformation

Lack ofResources

Sr MgmtBuy-In

Other

Biggest Internal Challenges

2012 2015

CHALLENGES

THE PROBLEM

“You can’t manage it, if you don’t measure it!” Peter Drucker

DEDUCTION METRICS Measurements should be meaningful and answer questions like: How well are deductions identified, researched and

resolved? Is resolution improving over time? How well are you meeting customer requirements? Are your invalid deductions being recovered?

BEST PRACTICES

Identify Quantify Analyze Strategize

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ANALYZE

Step 1 Code Deductions

for Proper Identification

Step 2 Sort, group and

report to discover trouble

areas

Step 3 Percent of Sales Analysis – Find Top Offenders

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Preventable Painful Planned Typically

budgeted, preauthorized

Agreed upon discounts Co-op Advertising Mark-down allowances Rebates

Generally compliance violations

Wrong/No UPC EDI/ASN Wrong SKU Late Delivery Freight/Handling

*PRICING*

Combo of violation and “games” retailers play

Shortages (full & concealed) “Concealed” shortages Many post audits (1/3) Unearned Cash Discounts Courtesy of Jessica Butler, Attain Consulting Group

STRATEGIZE

Planned: Indirect impact on profit OBJECTIVE – SPEED!

Preventable: Direct impact on profit

OBJECTIVE – PREVENTION

Painful: Direct & Indirect Impact OBJECTIVE – QUICK RESOLUTION

STRATEGIZE

Planned Deductions

• Be as proactive as possible BEFORE it gets to the payment phase.

• Eliminate gray areas and increase clarity in your contracts.

• Monitor post audits carefully – DON’T become a target for abuse!

• Address claims as quickly as possible.

STRATEGIZE

Preventable Deductions “If you don’t have a policy…then your

customer’s policy IS your policy.”

Negotiations are difficult, if not impossible, without documentation and communication with your customers.

STRATEGIZE

PREVENTABLE DEDUCTIONS

Start with consensus Outline your position Look for the win-win Know what your walk-away alternative is Keep calm If you compromise…get agreement for change going

forward • Document, Document, Document!

STRATEGIZE

Painful Deductions

Address claims quickly Avoid “Because we said so…” arguments Focus on the trading partnership Consistent and on-going follow-up Stack the deck in your favor (internal

support) Always have a safety net

STRATEGIZE

IAB Shared Services Safety Net IAB SHARED SERVICES SAFETY NET

Off Shore (Internal or Outsourced) Shared Service Center

IAB SHARED SERVICES SAFETY NET

US Based (Internal or Outsourced) Shared Service Center

IAB SHARED SERVICES SAFETY NET

IDENTIFY EDUCATE PROTECT

How It Works

Company CPG Shared Service Center

Audit Review / Recovery

HOW IT WORKS

TRANSITIONAL SUPPORT

Transitional support is a critical component to the safety net for coverage while converting to a Shared Services Center

Experienced resources to ensure consistent work flow prior

to the conversion and avoid significant backlogs Works with internal teams and management to ensure

smooth transition Provides safety net for existing/remaining management

staff with regards to productivity and results

YOUR SAFETY NET SHOULD…

Complement existing and future policies and processes – no change required Protect you in your role as a fiduciary

Offer performance based pricing – ONLY pay for results

Ensure maximum return for shareholders as net

recovered money goes right to your bottom line

• Client ($8B CPG Manufacturer) outsourced A/R processing to Global BPO Provider

• BPO processing yielded positive results through reducing DDO, but did not focus on identifying and recovering invalid deductions

• IAB conducted safety net review to identify invalid items and pursued recovery

CASE STUDY - OUTSOURCING

RESULTS Status Amount % Count % Pending 533,154 10% 311 15% Validated 3,303,191 63% 1241 61% Repaid 1,373,906 27% 495 24%

Grand Total: 5,210,250 100% 2,047 100% Less Pending: 533,154 Review Completed: 4,677,097

FEES: 320,183 7% of $ completed

ROI: $ 1,053,723 CASH IN BANK AFTER FEES

• If it were easy… • To make the most of your limited time

and resources… • Work your way up…build on success • Build relationships

THE BOTTOM LINE…

QUESTIONS? PLEASE CONTACT:

Diana Crowe Manager Business Development Office 630 537 0840 Cell 630 854 4329 dcrowe@iabllc.com

Peggy Artz VP Operations Office 920 405 0316 Cell 715 460 0252 partz@iabllc.com