Credit memo plugged at posting so cash clears, reason never checked
Track every dollar left on the table
Retailers and distributors short-pay for shortages, damages, compliance penalties, freight, co-op, rebates, and unearned discounts. Most AR teams plug a credit memo so cash clears the same day. The reason goes uninvestigated. Monk catches the deduction at posting, pulls the backup from the portal, codes the reason and routes it to its owner.
What is a deduction in accounts receivable?
A deduction, also called a short pay or a chargeback, is when a customer pays less than the invoice and keeps the difference. The usual reasons are shortages, damages, compliance penalties, freight, co-op advertising, rebates and unearned discounts. Some are contractual and already agreed. The rest are money worth pursuing and telling the two apart is the job.
Retailer deductions cost the CPG sector more than $62 billion a year and 40 to 60% of them are invalid
How to handle short pays and deductions
Four stages run from your cash application feed. Your team reviews and decides. Monk does the research.
01
Detect at posting
Monk reads your bank and lockbox feed against open invoices. Any short pay is flagged as a deduction the moment cash is applied, not in a month-end report. Bulk remittances, payment-by-PO, and deductions taken weeks after the invoice was paid are all handled.
02
Pull the evidence
Browser agents and API connections log into your customers' portals and pull the remittance, the reason code and the supporting documents. More than 100 portals, including Walmart, Target, Home Depot, Amazon Vendor Central, Lowe's, Coupa, Ariba and Tipalti. Monk also reads remittance sent to your AR inbox.
03
Code the reason
Every deduction is classified against your reason codes and split into contractual, non-contractual, or shortage and quality. Contractual items clear to the right GL account. Custom rules cover predictable cases, such as 2% off every payment from one retailer.
04
Route and resolve
Assign an owner, notify them by email and track stage and age. Write off to the GL, generate a credit memo, or pursue the balance with the portal backup attached. Approval thresholds run by deduction type. Sales, supply chain, and customer service see only what they own.
Root cause, by customer and by code
Open deductions by customer, by reason code and by age, with resolution time per owner. A customer with no chargeback history suddenly running high on damages is a flag, not a line item you find at year end.
Nothing is written off silently
Every deduction carries the remittance, the portal documents, the internal thread and the approval on the record. When a rep or a controller asks why $18,000 went out the door, the answer is one click away, with the portal document that justified it.
Three pieces
01
Portal automation
Credentialed access to retailer and AP portals. Monk pulls remittance and claim backup and submits disputes and invoices back through the same portal.
02
Deduction work
Owner assignment, internal routing and approvals, comment threads, status and aging per deduction, write-off to GL or credit memo creation posted back to your ERP.
03
Recovery and reporting
Dispute packets assembled from the evidence Monk already collected. Trend reporting on avoidable against contractual allowances by customer and code.
Before and after
| Before Monk | After Monk |
|---|---|
Short pay flagged at posting, reason and backup already attached | |
Portal backup screenshotted into a shared drive, nothing in the ERP | Portal and email evidence pulled and stored on the deduction |
No owner, no age, no status. It lives in an inbox | Owner assigned, aging and stage tracked, escalation when it sits |
Month-end totals only, weeks past the window to dispute | Contractual clears to GL, non-contractual queued with evidence |
Only the largest items ever get a second look | Root cause visible by customer and code, in time to act on it |
+122%
cash on hand, month 1
5x
aging reduction
3
headcount saved
If you're in a finance at a fast growing start-up, you should absolutely be using Monk.
Frequently asked questions
What is the difference between a deduction and a dispute?
A dispute is a stated disagreement. A deduction is the customer acting on it, paying less and leaving you to work out why. Monk flags the short pay at the moment cash is applied, without waiting for an explanation.
What is the difference between a contractual and a non-contractual deduction?
Contractual deductions are the agreed ones: rebates, co-op advertising, early-payment discounts already in the contract. Non-contractual deductions are everything the customer decided to take on its own: shortages, damages, compliance penalties, freight claims. The second kind is where the recovery is, because many are invalid and winnable.
Which portals does Monk pull deduction backup from?
The retailer and distributor portals where the customer posts the remittance, claim, or proof of delivery. Monk pulls the backup document out of the portal and attaches it to the deduction, so the evidence arrives with the flag.
Does Monk create the credit memo?
Yes, when you approve one. Monk drafts the credit memo with the coded reason and syncs it back to your ERP. The decision to write it off stays with your team.
Can Monk handle bulk remittances and payment-by-PO?
Yes. Monk breaks bulk remittances into their invoice-level lines, matches payment-by-PO to the right invoices, and flags each short-paid line as its own deduction.
Who sees a deduction once it is routed?
Whoever owns that reason. Deduction codes route to the person or team responsible (sales, warehouse, compliance) with the remittance, portal backup, and internal thread attached, so they decide with the evidence in front of them.
How do I find out why deductions are rising?
The Deduction Command Center aggregates every deduction by reason, customer, and outcome, so you can see which accounts or claim types are driving the increase instead of piecing it together from credit memos.
Stop plugging credit memos to clear cash
Every deduction with its reason, its evidence and its owner