If you ship product to KeHE or UNFI, you have probably heard the term “Debit Balance”, but you may not know what that term entails. You could also be new to working with these distributors, and be wondering why you haven’t been paid for product you have shipped. In our experience, contacts at these distributors are not helpful in providing you the tools to figure out what a Debit Balance is or what you can do about it as a supplier. Fall Creek Accounting can help! Please read on to learn more about this situation. 

    A debit balance occurs when a supplier has more money in outstanding deductions than they do in outstanding invoices. As a rule, distributors will not issue payment to a supplier that owes them more for deductions than they owe for invoices. This can be concerning news to hear, especially if you are new to the distributor world and depend on payments to ensure consistent manufacturing runs and a prosperous business. The good news is that you can take action. 

    For any clients who come to us with a Debit Balance, we first like to take a look at your outstanding invoices. We want to make sure that your recent payments have all been reconciled correctly so that your Accounts Receivable Aging is accurate. From there, we will submit a pay inquiry to the distributor in question, so that we can verify that your aging matches theirs. As part of this inquiry, we will ask for a detailed AP statement, which will show all outstanding deductions. You can begin validating deductions before they are deducted, which is crucial to maintaining a consistent Deductions Management workflow. By beginning the validation process while deductions are still in progress, you can even help to tip the scales with the Debit Balance. 

    In a worst-case scenario, our team will work with you to identify future orders that are scheduled to ship. We will also  help you estimate when you can expect to receive payment. In a best-case scenario, we can help you clear up the Debit Balance, while also ensuring you maintain an efficient and cost-effective Deductions Management process. 

Please reach out to us to learn more about our capabilities and how we can support your needs by clicking here.