What is Supplier Chargeback?
Chargeback is the term most often used in the healthcare industry, and ship and debit is used mostly in all other sectors. It is a contractual agreement between suppliers and customers (mostly first-level distributors) where specific products are shipped and invoiced to end customers (end users) at a lower price than usual. The price difference is then claimed from the supplier to protect distributor margins. This enables suppliers to negotiate prices directly with end customers based on market conditions while covering distributor profit margin. The supplier side of the chargeback or ship and debit is called Supplier Chargeback in IMA360. Use our modern Vendor Chargeback Software to prevent chargeback disputes.
There are three main types of contracts:
Setup your most complex rebates fast with the most common rebate scenarios already pre-configured, including Flat rate (% or $), Fixed Fee, Price Protection, Target Achievement, Volume Tier, and Growth Tier. Flexibility to include/exclude attributes and choice of multiple rebate basis.
Complete automation from setup to calculation, accrual to payment and reporting and analytics. Automatically post accruals and payments to the relevant General ledger accounts and clear the accruals on payment, reducing reconciliation needs. Any retroactive contract changes automatically calculate the prior period adjustments and appear in the approval workflow.
Configurable Approval workflows for Contract, Accrual and Payment. Easily configure multiple levels of approvals and provide alerts and notifications for specific scenarios to the users.
Common Supplier Chargeback Issues
Managing this process is quite challenging for distributors carrying thousands of products, and servicing thousands of customers with different types of contracts. Some of the main challenges are listed below:
Contracts are not accurately and/or timely captured by all the parties involved in the process leading to the incorrect end customer billing and/or claim disputes between distributor and supplier.
Retroactive Contract 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.
Reconciliation of Sale
Distributors needs to provide the end customer sale to suppliers with all the required information so supplier can validate the amount on their side and provide the approval. This is the most critical step and delays in this process can lead to undesirable cash flow situation for the distributor. Key here is to provide the accurate information first time to the suppliers, so it leads to fast approvals.
Without proper analytics this can lead to profit erosion for suppliers and it’s critical that proper price controls are in place which can analyze the contracts to makes sure deal is profitable.
Chargeback contracts continues to grow, and complexity is continuing to increase. Suppliers needs to assess their current systems to make sure they can keep up the pace and are truly automated from end to end.
How IMA360 Can Help
If you’re concerned about calculating your royalty payments, our software can be an excellent solution for you. Our software includes powerful payment management tools that can help you get track of your royalty payments quickly. Let’s see what our royalty management software offers.
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