Customer Chargeback

// IMA360 Features

Customer Chargeback
(Ship and Debit)

Chargeback is the term most often used in Health care industry and Ship and Debit Software is the term used mostly in all other industries. It is contractual agreement between suppliers and customer (mostly first level distributors) where specific products are shipped and invoiced to end customers (end users) at a lower price than usual. The difference in price is then claimed from the supplier to protect distributor margins. Distributor side of the chargeback or ship and debit is what we call Customer Chargeback in IMA360.

This enables suppliers to negotiate their prices directly with end customers based on market conditions while protecting distributor profit margin.

There are three main types of contracts:

End Customer

This typically happens when customer is big enough for supplier to negotiate directly. Supplier and end customer negotiate the contract and supplier communicate the pricing information to distributors to make sure end customer is billed at the contract price and distributor is eligible to claim the money back from supplier.

Buying Group

This is usually the case when end customer is part of bigger purchasing group. These could be GPO, Buying Groups, IDN etc. In this case Supplier and purchasing group negotiate the contract and distributor bill the end customer at the contracted price and claim the chargeback from supplier.

Distributor

This generally is to allow distributor more control to be able to react to market conditions. Supplier and distributor negotiate the contract giving the authority to the distributor to react to local market conditions by buying at uniform price but sell at different price and then claim the money from supplier.

Common problems with the Process

Managing this process is quite challenging for distributors carrying thousands of products, servicing thousands of customers with different types of contracts.

A few of the main challenges are listed below

Retro contracts approvals

Sometimes contracts negotiation takes time resulting in sales already in place without correct contract price which leads to credit and debit the end customer.

Complex Development

Chargeback contracts continues to grow, and complexity is continuing to increase. Distributors and Suppliers needs to assess their current systems to make sure they can keep up the pace and are truly automated from end to end.

Profitability Impact

Without proper analytics this can lead to profit erosion for both sides and it’s critical that proper price controls are in place which can analyze the contracts to makes sure deal is profitable.

Validation and Audit Trail

Validation controls established at each step of the process to ensure rebate are processed rapidly and accurately. Ability to route any contract change to approval process ensuing contract compliance. Provide audit trail for each rebate calculation by customer by product and up to the billing line level detail.

How IMA360 Can Help

Automate process from creating chargeback agreements through to tracking and claiming chargeback amount.
Trigger instant claim to the supplier to improve cash flow.
Complete online real time tracking and audit trail for all types of chargeback claims ensuring correct claim amount even though sell and cost price fluctuate through the month or quarter.
Forecast margin on the deal while deal is in negotiation stage.
Collaboration between Distributor and Supplier via Collaboration Portal.
Audit trail to match end customer invoicing with claim.
Accurate and automated management of chargeback accruals, chargeback claims and payment.
Forecasting, reporting and tools for increasing the information available when entering negotiations with suppliers.
Easy integration with any ERP or Financial Accounting software.