Building A NextGen Revenue Recovery Team

Dwindling profits and overlooked opportunities can haunt any business, especially suppliers in the retail industry. For suppliers selling in retailers, revenue loss is common primarily due to supply chain performance and contractual charges. Issues ranging from shortages and late shipping to EDI-related fines contribute significantly to lost revenue.

This article provides insights into building a next-generation revenue recovery team that not only rectifies these situations but also works to avoid these problems in the first place, boosting your bottom line. Ready for the pathway towards minimized losses and maximized gains?

The Importance of Revenue Recovery

In the complex landscape of retail supply chains, revenue recovery is a crucial concept that carries substantial weight. It's an essential part of maintaining financial stability for retail suppliers. Every missed opportunity to resolve these discrepancies risks eroding profit margins.

Revenue recovery transcends simple debt collection; it involves a strategic approach that shifts from on-property management to above-property oversight. This shift signifies revenue recovery's transformational role in optimizing resources, improving operational efficiency, and driving profitability.

It becomes even more pertinent with the rise of retailer e-commerce, where generating more revenue from the retailer's website visitors and existing customers requires efficient strategies for managing user experience issues or master data discrepancies.

Balancing risk and compliance forms another vital component of robust revenue systems. In times of unprecedented challenges like the COVID-19 pandemic, implementing effective recovery plans can help organizations regain lost ground by tapping into quick investment recovery packages while adhering to fiscal rules and regulations.

Building an Effective Revenue Recovery Team: Proactive Versus Reactive Mindsets

Building a revenue recovery team that can work efficiently and effectively at a supplier requires cross-team functionality, and alignment across sales, supply chain, marketing, and accounting teams. Proactive organizations can stay ahead of revenue loss, but reactive recovery teams will get stuck fighting to win back revenue lost to invalid deductions/fines.

Proactive revenue loss recovery teams will have an approach that avoids deductions/fines (valid or otherwise) in the first place, skirting the revenue loss problem from the very beginning, whereas reactive revenue loss recovery teams will only focus on the issue once it has already become a financial problem for the organization.

Reactive teams will have a mindset that revenue loss is only the result of a retailer's unrealistic standards. Proactive teams will be able to use retailers' standards (unrealistic or otherwise) and the punishments for non-compliance as symptoms of supply chain inefficiencies, as an opportunity for growth.

Integral to forming a truly proactive revenue loss solution is--as alluded to earlier--a collaboration between and across teams. This can happen through a variety of forms but leadership involvement, the adoption of software, and meetings between teams at a regular cadence are three common ways of getting the process started.

Strategies for Revenue Recovery

Best-in-class revenue recovery teams do these four tasks and revisit and revise these practices regularly.

Identify key responsibilities for each member of your team

If possible, suppliers should consider rolling up revenue loss across retailers to evaluate the larger trends and patterns. Spreading out responsibility can help suppliers notice which compliance/deductions fines are most common and most costly. That way, supply chain problems can be isolated through root cause analysis much more effectively.

Having a 50/50 workload strategy is also ideal: spend 50% of time on disputing ("get paid") and 50% of time on root cause analysis ("get better").

Get Paid

Ideally, this process can be automated by software designed specifically for integration with your retailers. When these processes are automated, much less time will be spent on checking deductions for validity and gathering dispute documentation.

If a helpful automation software solution isn't possible, suppliers will have to establish a system of deductions triage. Validity checks will have to be done on the largest deductions first. Then the invalid deductions should be sorted by costliness, going after the most expensive first.

Get Better

The "getting better" aspect of revenue loss prevention is by far the more complicated of the two because it is connected to both valid and invalid deductions. It's best to set up weekly meetings with key counterparts across the organization. The goal of these meetings should be to:

• Identify pain points/supply chain disruptions/potential deductions/fees/fines.

• Maintain visibility into contractual deductions (i.e. pre-negotiated allowances, co-ops, payment terms, etc.).

• Be aligned with current state of deductions/compliance businesses as it relates to each retailer's business.

Similarly, weekly, monthly, quarterly, and yearly revenue loss (deductions/compliance) reporting should be shared with key cross-functional stakeholders and leadership by the retailer. Each retailer has different compliance/deductions programs. Since this reporting can be templatized and is helpful for higher-up leadership, but for teams leading individual retailers, the more retailer-specific the reporting can be, the better.

Another key component to the "get better" aspect of revenue loss prevention is budgeting and forecasting. Each retailer a supplier sells into should have a deductions/compliance budget their teams can attempt to beat each quarter. As these budgets are added up across retailers/platforms, a general revenue loss budget/forecast can be laid out for the supplier's business.

Hold collaborative cross-functional team meetings

As was already touched on above, cross-functional communication between teams in the supplier's organization is key to avoiding revenue loss. Knowing which members of your company directly or indirectly touch deductions/compliance and having people on those retailer teams communicating with each other is similarly important.

For example, Accounting, Finance, Logistics/Transportation, Distribution/Allocation, Sales, and Customer Service are all teams that touch an issue relating to valid/invalid returns deductions. Having the power to connect all of those teams, either at the executive level or cross-functionally, will give important insight into supply chain performance.

Assign project managers for root causation work streams

For each root cause, create a project plan and assign a project manager to hold accountable for:

• Proposed timeline

• Proposed $ impact

• Deduction category

• Stakeholders needed for the project

• Additional cost/resources needed

Create Key Performance Metrics (KPIs)

Strategize around key metrics and KPIs to track performance over time across the supplier's business and across each retailer as well. Keep an eye on the 50/50 strategy as well, making sure that one does not become a priority over the other. 

Conclusion

Building a NextGen Revenue Recovery Team is crucial for businesses to effectively recover debt revenue. Businesses can maximize their chances of successful revenue recovery by aligning teams, optimizing quality management and efficiency, and incorporating technology solutions.

With the right strategies and a dedicated team focused on this goal, businesses can build a strong foundation for future success in managing retail deductions and chargebacks. Schedule a meeting with a team member today to see if SupplyPike is right for your business.