What Does Deductible Mean and Why Should It Be Automated? An Overview
Did you know that online sales in the second quarter of 2020 increased by forty percent compared with the same quarter in 2019?
If your business has been doing a lot more online sales this year, you know how much the work adds up. From processing to fulfilling to shipping orders, there’s a lot on your plate to make sure that these orders get completed well and on time.
This extra sales traffic means that you also are likely experiencing higher than normal rates of standard deductions.
But what does deductible mean exactly? And how can automating your deduction management process help you and your business?
Keep reading to learn the basic deductible definition and how automating the deductible process can help you.
What Does Deductible Mean?
Even if you’re asking the question, “What is a deductible?” you’ve probably come across them at least once if you’ve been in business any length of time.
Sometimes, you receive less money than you expect from the sales of goods and services from your business. Sometimes you know the reason, such as damaged products or errors in the billing process. Other times, you don’t know the reason.
In either case, the difference in amount between the expected income and the money you actually receive is known as the deductible.
Following up on these deductible amounts is called the deduction management process. While this process varies from company to company, the overall process is fairly standard.
First, disputes about payment get brought to the attention of a staff member, often a deductions analyst. These disputes can come directly from a customer, or the accounting team may notify them of an outstanding deductible. Then, they organize the disputes in order of importance (generally by the amount owed).
The analyst then follows up on each dispute and figures out whether it is justified or not. They work with their company to gather information about the transaction. If necessary, they then follow up with the client to collect any outstanding payment amount.
Why Should Deductible Management Be Automated?
As you can tell, the deduction process listed above is lengthy and resource-intensive. Automating your deduction management saves you money and time.
Low deduction amounts may not be worth the cost of staff time and energy to manually investigate and follow up on the outstanding amount. Over time, those small amounts add up to a significant loss in revenue for your business.
With automated deductions, you can collect these small deduction amounts without spending any extra money to do so.
Automating this process also decreases your likelihood of errors. When completing repetitive processes, humans sometimes make mistakes that a computer won’t.
Finally, automating deduction management allows you to focus on other aspects of your business. For example, automating Amazon deductions allows you to devote more of your energy to other processes. You’ll have more time for things like communicating with customers and creating new products.
Automate Your Deductions Today
Now you know the answer to the question, “What does deductible mean?” You also know why your deduction management should be automated.
By automating your standard deduction process, you are setting yourself up for fewer errors. You’re also giving yourself more time to focus on other aspects of your business.
Looking for more advice on how to manage sales? Check out the other articles in our Business section.