Object documentationChargebacks

 

A chargeback operation is performed by a consumer products company in order to recover money from a customer in the event the customer deducted too much from a claim.

The over deducted amount could be for costs related to:

  • non-performed services

  • insufficient proof of services

  • a trade promotion that was not executed

There are two types of chargebacks:

  • funds-based — used to recover the validated portion of a deduction

  • project-based — used to recover the validated portion of deduction by means of a carried-over prepayment that will be applied to a future trade promotion

In either case, a chargeback produces one of three possible results:

  • payment: the chargeback amount is recovered from the customer

  • carried-over pre-prepayment: the amount is applied to the customer's account for use in future trade promotions. In this case the chargeback amount is considered recovered.

  • write-off

Example Example

Funds-based chargeback

A customer receives an invoice from the consumer products company for $10,000 for shipped goods but pays only $9,000 because $1,000 was deducted for a trade promotion.

Upon receipt of the deduction the consumer products company's ERP system creates a dispute case for $1,000 which is transferred to CRM where an associated claim submission is created. The CRM claims analyst examines the claim and determines that the deduction is invalid because there was no trade promotion agreement. As a result a chargeback is created to recover $1,000 from the customer.

Project-based chargeback

A customer receives an invoice from the consumer products company for $10,000 for shipped goods but pays only $8000 because $2,000 was deducted for promotion expenses according to the terms of an existing agreement between the two parties.

Upon receipt of the deduction the consumer products company's ERP system creates a dispute case which is transferred to CRM where an associated claim submission is created. The CRM claims analyst examines the claim and determines that only $1,000 of the claimed $2,000 is valid. As a result a claim settlement is created for the valid portion and a chargeback requesting $1,000 is sent to the customer.

End of the example.

 

When a customer sends an invoice payment to ERP that is less than the expected amount, the system automatically creates a dispute case which is then transferred to CRM where it becomes a claim submission. The claims analyst determines which portion of the disputed amount is valid and creates a chargeback to recover the invalid portion of the claimed deduction.

If it is determined that the amount cannot be recovered the chargeback status is set to Proposed uncollectible. Upon approval, the status is reset to Uncollectible and the settlement process is triggered. When the settlement process is completed the chargeback status is automatically set to Written-off.

Integration

Chargeback operations impact claim submission and dispute case documents. The chargeback also impacts funds management as the chargeback balance is updated in the funds checkbook.