Most ERP software packages have features to manage accounts receivable (AR) for customers, but when it comes to managing vendor accounts receivable, few platforms offer any help.

A new breed of ERP software, designed specifically for the wholesale distribution industry, offers accounts receivable applications designed to help distributors keep track of the chargebacks promised to them by vendors.

Vendor accounts receivable come into play when suppliers offer special pricing or rebate incentives to distributors. To keep track of how much is owed in chargebacks, the AR component of your ERP system must record and administer accounting data for suppliers. Although most AR applications have tools to track these open items, they do little to ensure the accuracy of those items or to speed their recovery.

Such applications often rely on spreadsheets, e-mails, faxes, and phone calls for collection, meaning incorrect rebate and chargeback expectations for distributors and lengthy turnaround times from suppliers. Some distributors monitor purchase-based Days Rebates Outstanding (DRO) and sales-based Days Chargebacks Outstanding (DCO) to measure vendor accounts receivable, but lack the technology to identify and correct the root causes of poor performance.

Today's rebate and chargeback management applications can help increase cost recovery and reduce open vendor AR balances. Rebate and chargeback management applications, as part of an ERP suite, are integrated components designed exclusively for the wholesale distribution industry. The applications allow distributors to create a variety of purchase and/or sales-based rebate and chargeback agreements, validate and settle business transactions against those agreements, reconcile and resolve disputes, produce management reports, and establish a full audit trail.

By streamlining and automating the supplier rebates and chargeback claims process, this technology can improve distributors' vendor accounts receivables. Manual and/or non–integrated systems often result in discrepancies between what distributors and suppliers think is owed. The lack of an integrated solution makes it difficult for distributors to ensure thoroughness and accuracy when managing this complex cost–recovery process. Reducing open vendor AR balances is contingent on distributors' ability to monitor purchase volumes and sales transactions associated with claims activity throughout the entire cost recovery process, from calculation and submission to settlement and reconciliation.

And the benefits of integrating your rebate and chargeback management solutions reach beyond improving AR balances. Your operating margins increase because your cost of goods sold and administrative expenses are lower, and the technology authenticates transactions, improves accuracy, reduces discrepancies, disputes, overlooked recovery opportunities and duplications, considers product returns, and allows for cost recovery consideration based on eligibility and pricing rules.

ERP solutions tailored for wholesale distribution offer pre-configured functions to manage the cost–recovery processes unique to distributors. Using these solutions, distributors can improve their vendor accounts receivable, and thereby improve their bottom lines.