Chargebacks are among the leading contributors to small business failure in the United States. While there's no foolproof way to avoid them all, you can minimize them when you know the risks.
How This Costs You
A retailer-initiated chargeback costs you in several ways – from fees, time, and resources, to your reputation and customer satisfaction.
There are several fees associated with chargebacks, including:
- Improper labeling
- Incomplete documents (ASN, Invoices, etc.)
- Delayed shipments
- Shipments routed to the wrong address
Time and Resources
Disputing and dealing with chargebacks takes significant time and resources. You will need to:
- Gather all relevant documentation and information, including invoices, order forms, shipping records, etc.
- Send corrected documents
- Potentially re-ship goods back to the supplier
- Retrain staff to meet compliance requirements
Your reputation can be adversely affected by chargebacks. If you have excessive chargebacks, you may be considered a high-risk merchant, and eventually, people may stop doing business with you. Retailers keep scorecards and will know if you have consistent errors.
In any business, there are bound to be a few chargebacks. The top offenders typically involve mistakes on ASNs and data validation.
ASN Mistakes/Incomplete Documents
An ASN contains critical information about the shipment, such as item quantities and descriptions, how the items are packed, and carrier information. Retailers use the ASN to know when to expect the delivery and enter the products into their system upon arrival.
If an ASN is inaccurate or incomplete, it can cause disruptions in the receiving department that requires manual intervention, often resulting in a hefty chargeback. However, there are ways to avoid these kinds of issues.
One way is to use an EDI provider that offers built-in safeguards and validation checks. These checks help to ensure that the right information is included on the ASN and that no critical details are left out. This can save you both time and money by avoiding the need to correct and resend documents with errors and paying fines.
Another way to avoid chargebacks is to use an EDI provider that offers automation, ensuring your ASNs are sent on time and that they will arrive before the physical shipment.
Your EDI provider can help you avoid chargebacks from missing data through the implementation of validation checks. These checks ensure that the required fields are completed before the document can be sent, preventing many errors that could lead to a chargeback.
A good example of this is with eZCom's Lingo software, which has built-in validation checks to prevent the chargebacks that can occur when a document is sent with missing or incomplete information. These checks can be customized to a trading partner’s requirements, ensuring that all the data required for your documents is included. This makes it easier for you to ensure that your documents are complete before they are sent.
Validation checks are an essential part of an EDI solution, and Lingo's built-in checks can save you time and money.
How To Know If You Have a Problem
If you've been getting a high volume of chargebacks, it's crucial to take action to determine the cause and rectify the situation. Here are some steps you can take:
- Review your recent invoices and compare them to the chargebacks you've received. Look for any discrepancies between the two.
- Understand the issue that caused the chargeback (incorrect label placement, missing information in a document, short shipped, etc.) and then work to correct it (train employees on proper procedure, etc.)
- Look to your vendor guide or contact the retailer to explain the chargebacks.
- In the future, you can look for an EDI provider with excellent validation.
Once you assess this information, you can determine how the right EDI provider can make an impact on the number of chargebacks you receive.
Do You Need to Integrate EDI and NetSuite?
Another way to help minimize your chance for chargebacks is to integrate your internal system with your EDI solution. This will allow data to flow seamlessly, and minimize costly errors. Many suppliers are running NetSuite due to its robust, user-friendly platform. If you're one of them and want to optimize your EDI integration to NetSuite—or set up a new EDI platform with NetSuite—check out eZCom Software's Guide to NetSuite EDI Integration. Let us show you how to make order management seamless and provide you with best practices for allowing users to work in one system. Check out our guide to learn more!