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According to a recent survey, the overwhelming majority of companies already have a policy in place under which small dollar "nuisance" deductions are written off by cash application - rather than being charged back. The reason that companies have such a policy in place is that in a cost/benefit analysis creditor companies are often far better of writing off small deductions than taking the time to research and resolve them. There are a number of reasons why this is true, including:
Other factors to consider when trying to decide if writing off deductions is appropriate include:
Once all of these factors have been evaluated, the credit manager should be able to make a recommendation to senior management relating to the question of whether writing off deductions can be justified. Of the companies that write off nuisance deductions, the median write off allowed is between $30 and $40. This dollar figure is not right for every company, but some dollar amount is right for most creditor companies Michael C. Dennis is a business consultant and the author of "Credit and Collection Handbook" available at www.aspenpublishers.com If you have questions or comments, please contact him at mcdennis@coveringcredit.com |
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