My company has put a lot of energy into researching opportunities to help our clients improve the efficiency of their incentive spend. One massive opportunity that so many companies are still missing the boat on is in the area of invalid and fraudulent claim reduction. There is no greater waste in channel spend than the waste that comes from paying invalid claims or, even worse, giving your money to fraudsters.
In this article we are going to have a look at how to leverage invoice capturing as a powerful weapon in this ongoing battle. All of these tips are designed to help you mitigate invalid claim payments using tools you likely already have access to.
Start By Collecting A Copy Of The Invoice
Many companies currently do not require their submitted claims to include a copy of the original store invoice. The store invoice is an incredibly valuable piece to help with fraud detection. So valuable, in fact, that we actually think it is best to capture and index all data off all invoices from all transactions. Recognizing that some folks might only be working within the confines of a random audit process, let’s have a look at which data is the most helpful if you have a need to keep it a bit simpler.
Monitor The Store Invoice Number
Store invoice numbers can actually be indexed in a variety of simple ways, including just using the basic spreadsheet software you may already have on your computer. Keep an eye on these and sort them according to their alphanumeric order. Invoices that vary from the store’s format of assigning ordering codes or invoice numbers that appear out of sequence with the rest of the claimed invoices being submitted are reason enough to flag a claim for an audit or least some degree of further investigation.
Customer Zip Code/Postal Code
Does the store capture the mailing address data of its customers when they do their invoicing? If so, it is worth having a look at the customer’s zip/postal code when viewing claims. Does the customer live reasonably close to the store submitting the claim? Is it reasonable to assume that someone purchasing the item(s) on the invoice would be doing so from a store that is located this distance from their home? Obviously, life happens and sometimes people do end up doing business with retailers who are located curiously far from the consumer’s home but it is certainly worth having a closer look at these transactions. If you are dealing with a smallish number of claims, you may be able to invest some time investigating variances. In order to audit high volumes (in the millions) of claims, we have built a Levenshtein Distance calculator into our software. Perhaps you can figure out something similar.
Most Important Data To Capture
The MVP of fraud detection for manufacturers is definitely the product serial number. Although this is not viable in the tire business, there is a solution: capturing DOT numbers. Again, these can be indexed and sorted using fairly basic means. Capturing the DOT number of each piece sold delivers a very clear and powerful benefit: out of date or otherwise invalid DOT numbers on any claim should raise a massive red flag to whomever is handling your program auditing.
A Copy Of The Invoice Simply Isn’t Enough!
Here’s a final one to throw into the mix: Be sure to involve your company’s field sales representatives as much as possible too. A good sales rep has at least a decent idea who the top producers are at all of his or her retail accounts and this can be of enormous benefit when detecting fraud. Recently our system helped uncover an example of the power of having an FSA look over the claim reporting for a store. Naturally the names have been changed to protect all parties:
Spot The Top Producer
Trevor is the field sales representative for major manufacturer. He handles major retail accounts in three states and feels like he has a really good idea who the top producers are in each store since he travels to all stores regularly to keep tabs on the sales action on his product line. In one store, ACBD Widgets, for example he knows that their top seller of his products is a guy in his twenties named Bob.
In the recent course of running a $300K spiff campaign in Trevor’s territory, Trevor’s company was receiving an amazing volume of claims from ACBD Widgets. Wow! The campaign was working so well and they’d be through their allocation of goods in no time! Trevor was excited and looked over the reporting when he noticed something strange: Bob was not the top producer anymore. In fact, Bob was now not only in second place but a retail sales associate named Sue was outselling Bob by nearly 20%! Trevor had an idea who Sue was from his visits to the store, but she was not previously on his radar as much of a producer in terms of sales. Where did this dark horse contender come from out of the blue? Trevor thought it might make sense to shine some light on this dark horse…
Armed with reporting from all of Sue’s claims, Trevor visited ACBD to congratulate her sales manager on the great numbers Sue had been putting up lately. You know the rest of the story, right? Sue is currently looking for a new job, although she would prefer that you don’t contact ACBD for a reference check…
‘What Gets Measured Gets Managed’ – Peter Drucker
Everything you need to know is in the numbers and if something is being hidden, it will usually be revealed once you know what to look for. Just remember this: hoping to weed out invalid or fraudulent claims using a system of random audits is like hoping to win the lottery. If you are currently using a system of random audits, try incorporating the above tracking methods; it should remove some of the ‘randomness’ from the claims you actually choose to use your time and resources to investigate.
A lifelong technology entrepreneur, Jason Atkins is the founder and CEO of 360insights. 360insights is the world’s first Channel Success Platform, allowing brands to run spiffs, rebates, co-op/MDF, and sell-through allowances all processed and paid with 100% audit and powerful analytics to predict what to do next. For more information, visit: http://www.360insights.com.
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