The Deduction Isn't the Problem

I know.... crazy right?!?!

How can I say the deduction isn't the problem when there are companies all over the world that can pull an AR aging, look at it and tell me - "well, Laurie, that's bullshit".

Good - let's start there! Those pesky small balances, those same dollar values hitting your books over and over - they have meaning. To some it means nothing more than a pain in the ass item to adjust through infinity and to others it's a slow bleed that doesn't show up as cute as that $10K promo investment.

And after seeing that $5.00, tiny balance 452,767 times - when does it hit someone's radar to look at it? Or does it even make it in front of a human set of eyeballs at all?

Your organization may have made a grounded business decision to adjust off small balances under $10.00 - fine. Materiality matters. But if no one is looking into the whys of it - well, there goes $2mil and I find that offensive.

Your deductions are the evidence the business needs to go and fix its face.

That deduction could be a chargemaster set up error, it could have been a freight issue that was recoverable, a contractual allowance that triggered an invalid offset until someone says - "wait, what is this and why is it here" and until that happens, the business is blissfully unaware of those $5.00 deductions through INFINITY!

Did that dollar figure raise your eyebrows.... good. We're getting somewhere.

Materiality tells you whether an individual transaction deserves attention but guess what - pattern recognition tells you if the business does. And if you have baby deductions taking over your business, maybe it's time to ask the whys - there could be nothing there or you could find the next thing screaming for your attention.

Now - go grab your aging. Look at your auto write-off policies. Maybe nothing's there, but what if there is...

Look again.