U.S. patent application number 11/326950 was filed with the patent office on 2006-06-01 for system and method for automated payment and adjustment processing.
This patent application is currently assigned to Old World Industries, Inc.. Invention is credited to Xiang Kong, Stacy A. Leavitt, Stephen Louis Malloy, Robert Rogoff, Brian R. Schweigel, William M. Steiner, Alan J. Walters.
Application Number | 20060116956 11/326950 |
Document ID | / |
Family ID | 34465079 |
Filed Date | 2006-06-01 |
United States Patent
Application |
20060116956 |
Kind Code |
A1 |
Leavitt; Stacy A. ; et
al. |
June 1, 2006 |
System and method for automated payment and adjustment
processing
Abstract
A system and method for automated adjustment processing using
pre-configured sets of business rules is provided. The seller
pre-configures a set of business rules for use in processing an
adjustment for a specific buyer. The set of business rules may be
variable for each buyer and/or globally set. When a payment is
received from a seller and an adjustment is required, an adjustment
management application retrieves the buyer's set of business rules
from the seller. The set of business rules are then applied to
attempt to match the received payment to one of the buyer's
outstanding invoices. If the match is successful, the buyer's
payment is processed.
Inventors: |
Leavitt; Stacy A.;
(Grayslake, IL) ; Malloy; Stephen Louis; (San
Francisco, CA) ; Rogoff; Robert; (Willmette, IL)
; Walters; Alan J.; (Chicago, IL) ; Schweigel;
Brian R.; (Antioch, IL) ; Steiner; William M.;
(Park Ridge, IL) ; Kong; Xiang; (Lakezurich,
IL) |
Correspondence
Address: |
MCANDREWS HELD & MALLOY, LTD
500 WEST MADISON STREET
SUITE 3400
CHICAGO
IL
60661
US
|
Assignee: |
Old World Industries, Inc.
|
Family ID: |
34465079 |
Appl. No.: |
11/326950 |
Filed: |
January 6, 2006 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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10865076 |
Jun 10, 2004 |
|
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11326950 |
Jan 6, 2006 |
|
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60508221 |
Oct 2, 2003 |
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Current U.S.
Class: |
705/40 |
Current CPC
Class: |
G06Q 20/00 20130101;
G06Q 20/12 20130101; G07F 9/04 20130101; G06Q 30/04 20130101; G07G
1/06 20130101; G07F 17/42 20130101; G06Q 20/102 20130101; G06Q
20/0457 20130101; G07G 5/00 20130101; G06Q 20/14 20130101; G06Q
20/04 20130101; G06Q 40/00 20130101 |
Class at
Publication: |
705/040 |
International
Class: |
G06Q 40/00 20060101
G06Q040/00 |
Claims
1. A method for automated adjustment processing, said method
including: receiving a payment from a buyer at a seller; retrieving
buyer-specific information for said buyer from said seller, said
buyer-specific information including at least one outstanding
invoice for said seller and at least one business rule; applying
said business rule of a comparison of said payment and said at
least one invoice; processing said payment when said payment
matches said at least one outstanding invoice within the criteria
of said business rule.
Description
CROSS-REFERENCE TO RELATED APPLICATIONS
[0001] This application is a divisional of U.S. application Ser.
No. 10/865,076 filed Jun. 10, 2004, which claims the benefit of
U.S. Provisional Application No. 60/508,221 filed Oct. 2, 2003,
entitled "Adjustment Management System and Method." This
application is related to U.S. patent application Ser. No.
10/866,015 filed Jun. 10, 2004, entitled "System And Method For
Automated Incoming Payment and Invoice Reconciliation" and U.S.
patent application Ser. No. 10/865,997 filed Jun. 10, 2004,
entitled "System And Method For Seller-Assisted Automated Payment
Processing and Exception Management."
BACKGROUND OF THE INVENTION
[0002] The present application generally relates to systems and
methods for the management of exceptions such as adjustments or
deductions taken by buyers with regard to payments sent to a
seller. More specifically, the present application presents an
automated system and method for processing adjustments such as
deductions taken by a buyer or credits to a buyer with regard to
payments sent to a seller, processing the transaction at the
seller's side, closing out the transaction and updating the
seller's accounting system.
[0003] FIG. 1 illustrates a typical transaction 100 for the
purchase of goods according to the prior art. As shown in FIG. 1,
the transaction involves a buyer 110, a seller 130, and a financial
institution 120. Typically, the buyer 110 sends a purchase request
102 or purchase order to the seller 130. The purchase request 102
identifies the goods the buyer 110 desires. The seller 130 receives
the buyer's purchase request and then ships the goods to the buyer
110.
[0004] Along with or separate from the goods, the seller 130 may
send a statement or an invoice 105. The invoice 105 typically lists
the goods being shipped and may include other information such as
price, quantity, a seller coding or identification such as a SKU
number and/or other order information. Alternatively, instead of a
single invoice for a single shipment, a statement reflecting
multiple shipments may be employed in situations where multiple
shipments are sent to the same buyer.
[0005] Once the buyer 110 has received the seller's goods and
invoice 105, the buyer 110 must pay for the goods at that time or
at some time thereafter. Presently, in many cases, buyers pay for
goods using any of a variety of methods including cash, checks,
credit cards, Automated Clearing House (ACH) or other
electronic/wire transfer. Regardless of the method of payment, the
buyer's payment and/or information is remitted to the financial
institution 120 as remittance information 115. In some cases the
payment and/or information is sent initially to the seller 130, who
then passes it along to the financial institution 120.
[0006] The financial institution 120 receives the buyer's payment
and remittance 115 and deposits the funds in seller's account at
the financial institution 120. The financial institution 120 then
alerts the seller 130 that a payment has been received by sending
payment data 125 to the seller 130.
[0007] The payment data 125 may take the form of a monthly, weekly,
or typically a daily account summary. In the most preferable
configuration, the account summary is updated several times a day.
The payment data may also be electronically sent to the seller 130
or may be provided to the seller 130 by allowing the seller to
electronically access the financial institution's records or
photocopies may be mailed to the seller 130.
[0008] Additionally, as mentioned above, the buyer's payment may be
received in any of a variety of methods. However, regardless of the
type of payment received, the payment is typically converted to an
electronic expression by the financial institution. For example, a
paper check that is received by the financial institution may be
scanned or imaged and the payment data on the face of the check may
be converted into an electronic expression by a data entry person
at the financial institution 120. ACH or wire transfers are already
in an electronic form, but the financial institution's record of
the transaction may also reflect the originator of the ACH and the
date of the ACH, for example. Typically, most of the bank's
electronic data is sent to the seller 130 as the payment data
125.
[0009] Once the payment data 125 has been received by the seller
130, the seller 130 must then begin the laborious task of matching
each received payment with the corresponding invoice. That is, in
order to confirm that the buyer 110 has paid for the goods that
were shipped, the seller 130 matches the payment data 125 received
from the financial institution 120 to the invoice data 105 that was
sent to the buyer 110. Once the seller 130 has matched the invoice
data 105 to the payment data 125, the transaction is said to be
closed-out, provided that the invoice data matches the payment data
exactly. For a seller with a large number of invoices, this process
may be very time consuming.
[0010] Additionally, until the payment data 125 has been
successfully matched to the invoice data 105 by closing out the
transaction, the seller 130 does not know whether the correct
payment has been received from the buyer 110. The buyer 110 may
have over or underpaid, for example. Consequently, until the
transaction has been closed out, the seller 130 can not be sure
whether the current balance reflected in the seller's account at
the financial institution 120 represents available cash or whether
some amount is due back to the buyer 110 as an overpayment, for
example.
[0011] As may be expected, matching payment data to invoice
information may be quite time consuming, especially when the seller
130 is shipping goods to a large number of buyers 110.
Additionally, matching payment data to invoice information may be
further complicated by the time lag between the time the invoice
105 was sent to the buyer 110 and the time the payment data 125 was
received by the seller. Additionally, matching payment data to
invoice information may be further complicated because the received
payment data 125 may not match the invoice 105.
[0012] That is, the buyer may submit a payment that differs from
the invoiced amount. The payment submitted by the buyer may be less
than or greater than the invoiced amount. For example, the payment
submitted by the buyer may be less than the invoiced amount when
the buyer's payment is not for all of the goods, for example, such
as when some of the goods are not received or are damaged.
Additionally, the buyer's payment may be less than the invoiced
amount due to a disagreement as to price or quantity of goods or of
a discount received by the buyer. Conversely, the payment submitted
by the buyer may be greater than the invoiced amount due to errors
by the buyer such as typographical errors or billing discrepancies
or when the buyer pre-pays or over pays.
[0013] When a payment received from a buyer does not match the
seller's invoice, an adjustment to the invoice is typically made.
When the adjustment results in a lessening of the invoice amount,
the adjustment is referred to as a deduction (also known as a
chargeback or dispute). Typically, the customer demands an
adjustment. This demand for an adjustment is commonly referred to
as an adjustment request. Though a deduction doesn't necessarily
have to reference a specific seller's invoice, adjustment requests
are typically in the form of a deduction in the invoice amount. For
example, when a customer receives damaged goods, he or she demands
that the invoice amount be reduced to reflect that the good had
been damaged, and therefore demands an adjustment request in the
form of a deduction in the invoice amount. Additionally, the
buyer's payment may not match the seller's invoice if the seller's
invoice was in error from the start. Alternatively, a buyer's
invoice may be given an adjustment such as a buyer-specific
discount, for example.
[0014] An adjustment request may be in several forms. For example,
the adjustment request may be a phone call from the buyer to the
seller requesting an adjustment. Also, the adjustment request may
be a letter or email from the customer to the seller. In addition,
the adjustment request may be the invoice with the demand for a
refund of overpayment or deduction in the invoice amount written on
the invoice. Alternatively, the adjustment request may also be any
form of electronic communication such as electronic data from a
website.
[0015] Once the adjustment request has been received by the seller,
the adjustment request is typically passed to a human for review.
The reviewers are individuals who review the adjustment request and
the relevant documents in order to approve or deny the adjustment
request. The consent of more than one reviewer may be necessary to
allow a particular customer to make an adjustment. Once all of the
reviewers have reviewed the adjustment request and all the relevant
documents, the adjustment request is either approved or denied.
[0016] If the seller approves the adjustment request, the seller
either issues a credit to the customer. Re-invoicing the buyer
typically has a similar effect on the seller's accounting system as
issuing a credit to the customer. Conversely, if the customer
requests an adjustment in the form of a deduction in the invoice
amount, and the adjustment request is approved by the seller, the
seller reduces the invoice amount and accepts a lower payment from
the buyer.
[0017] FIG. 2 illustrates a typical work flow 200 for a processing
a transaction for selling goods. First, at step 210, the sell side
201 sends an invoice to the buy side 202. Next, at step 220, the
invoice is initially reviewed by the buyer. Any disputes are
handled in step 230, for example by making an adjustment. Also at
step 230, any dispute or adjustment is reviewed and approved by the
buyer. As discussed further below and indicated in FIG. 2, the
dispute and adjustment process may be quite time and labor
consuming for the seller. Finally, at step 240, payment is sent
from the buyer to the seller.
[0018] Note that in step 240, the payment received from the buyer
is often manually matched to an invoice at the seller, which is
quite time consuming. Even if some data is electronically provided,
the buyer's payment systems are typically not equipped to process
the received data without substantial human interaction.
Additionally, at step 230, the adjustment or dispute process is
identified as labor intensive and lengthy for both the buyer and
the seller.
[0019] Thus, current systems for resolving adjustments are overly
costly for a number of reasons. First, there is an abundance of
information to monitor. This information includes customer
information, invoice information, the cause for the adjustment
request (i.e., whether a deduction or overpayment refund is being
sought), past invoices of the customer, past adjustment requests
from the customer, and the customer's credit line with the seller,
and may include other information.
[0020] Second, in large businesses, there is often an inability to
ensure that all of the relevant departments of the seller (for
example, the accounting department, shipping department, and credit
department, among others) are able to review, edit, and approve or
deny the adjustment request. This inability to ensure that all of
the relevant departments of the seller review the adjustment
request stems from the manual coupling of the adjustment request
and the relevant documentation, as discussed above. Undoubtedly,
errors occur on a frequent basis where, for example, a reviewer
does not receive all of the documentation that he requires to
properly review the adjustment request.
[0021] In a related problem, third, it may be very difficult to
ensure that all relevant departments of the seller perform their
reviews in a timely manner, especially when several departments are
involved. For example, delay in ensuring that a first reviewer
receives all of the documentation required for his review of the
adjustment request will cause further delay for subsequent
reviewers. In this way, when other reviewers are waiting for the
first reviewer to complete his review of the adjustment document
and relevant documentation, delay in the processing of the
adjustment request ensues. This delay becomes even more troublesome
when multiple levels of review (that is, one reviewer must wait and
review a first reviewer's resolution of the adjustment request) are
required by the seller. For example, where a seller requires that
all initial reviews of an adjustment request be reviewed by a
manager of reviewers, any delay in routing the information to, and
receiving a resolution from, one or more of the reviewers will only
cause additional delay.
[0022] Finally, any delay in ensuring that all relevant departments
review the adjustment request will cause additional delays in
pursuing collection of a debt owed by a customer or in issuing a
refund owed to a customer. This can cause business losses due to
lengthy collection delays and a loss of customer goodwill. In
addition, current systems and methods do not provide for
integration between the adjustment management system and method and
the bank of the seller. This, in turn, causes additional delay in
the final resolution of adjustment requests. This delay will be
because the seller will have to notify the customer, who will then
have to send payment to the seller. In a similar manner, any
posting of money owed to the customer will also be delayed.
[0023] Thus, a need has long been felt for a sales adjustment
management solution that eliminates or minimizes many of the
problems associated with current systems. A need has especially
been felt for such a system that is capable of handling a large
number of adjustment requests in order to reduce unnecessary
write-offs by a seller. Also, a need has long been felt for a
system to reduce the labor and time investment for processing the
adjustments. Additionally, a need has long been felt for a flexible
system that may be used to process a wide variety of adjustment
requests. Finally, a need has long been felt for an adjustment
system that is directly integrated with the seller's financial
institution.
BRIEF SUMMARY OF THE INVENTION
[0024] The embodiments of the present invention provide a system
and method for automating the processing of adjustments for a
payment received from a buyer by using a pre-configured set of
business rules selected by the seller for that buyer. That is, the
seller pre-configures a set of business rules for use in processing
adjustments for a specific buyer. Each buyer may have its own
individually configured set of business rules. When a payment is
received at a seller from a buyer that does not exactly match any
of the outstanding invoices for the buyer, an adjustment management
application at the seller applies the set of business rules for the
buyer. The adjustment management application then attempts to match
the received payment to one of the buyer's outstanding invoices
using the buyer's set of business rules. If the adjustment
management application is successful in finding a match, the
buyer's payment is automatically posted. If the adjustment
management application is not successful in finding a match, the
buyer's payment is selected for further processing, for example,
the payment may be routed to a human reviewer.
BRIEF DESCRIPTION OF SEVERAL VIEWS OF THE DRAWINGS
[0025] FIG. 1 illustrates a typical transaction for the purchase of
goods according to the prior art.
[0026] FIG. 2 illustrates a typical work flow for a processing a
transaction for selling goods.
[0027] FIG. 3 illustrates an automated adjustment management system
according to an embodiment of the present invention.
[0028] FIG. 4 illustrates an embodiment of the adjustment
management application of FIG. 3 in greater detail.
[0029] FIG. 5 illustrates an example of some of the types of
informational sources that may be included in the payment data.
[0030] FIG. 6 illustrates a flowchart of the operation of the
business data filter according to one embodiment of the present
invention
DETAILED DESCRIPTION OF THE INVENTION
[0031] FIG. 3 illustrates an automated payment processing and
exception management system 300 according to an embodiment of the
present invention. The payment processing and exception management
system 300 includes a buyer 310, a financial institution 320, a
seller 330, an adjustment processing application 340, and a payment
and adjustment management application 350. The payment and
adjustment management application 350 includes the financial
institution 320 and the adjustment processing application 340.
[0032] As further described below, a purchase request 302 travels
from buyer 310 to the seller 330. Invoice information 305 travels
from the seller 330 to buyer 310. The invoice information 305 may
travel separate from the goods and/or services provided by the
seller 330, or may travel along with the goods and/or services.
Payment information 315 is sent from buyer 310 to the seller's
financial institution 320. Payment and remittance data 325 is sent
from the financial institution 320 to the adjustment processing
application 340. Order data 335 is sent from the seller to the
adjustment processing application 340. The order data 335 may be
sent to the adjustment processing application 340 when the
underlying goods are invoiced to the buyer, or may be sent to the
adjustment processing application 340 at some later time. The
posting data 345 is sent from the adjustment processing application
340 to the seller 330.
[0033] In operation, the payment processing and exception
management system 300 proceeds generally as follows. First, the
buyer 310 may decide to purchase goods, for example, from the
seller 330. Typically, the buyer 310 then notifies the seller 330
that the buyer 310 wishes to make a purchase by sending a purchase
request 302 to the seller 330. The seller 330 then receives the
buyer's purchase request 302. The seller 330 then ships the desired
goods to the buyer 310 and also sends invoice information 305 to
the buyer 310.
[0034] The invoice information 305 preferably includes information
relating to the goods that were shipped from the seller 330 to the
buyer 310. For example, the invoice information 305 preferably
includes a seller coding identifying the goods being shipped, the
price, quantity, and/or other order information.
[0035] As mentioned above, the invoice information 305 and the
goods are received by the buyer 310. The buyer 310 then reviews the
received goods. The buyer 310 preferably then pays for the received
goods. However, the amount of the buyer's payment may differ from
the payment amount invoiced by the seller 330 for a variety of
reasons.
[0036] For example, if the received goods do not match the goods
identified in the invoice information 305, the buyer's payment may
differ from the invoice. Additionally, for example, some of the
goods may be damaged or destroyed. Alternatively, the agreed price
or quantity of the actual goods received may not match the price or
quantity of the goods appearing in the invoice information.
Additionally, the seller may have shipped goods other then the
goods desired by the buyer. These are merely a few examples of the
myriad difficulties that may be encountered in shipping the goods
to the buyer that may result in a departure from the invoice
information 305.
[0037] Returning to FIG. 3, once the goods have been received by
the buyer 310, the buyer then pays for the goods by transmitting
payment information 315 to the financial institution 320. That is,
the buyer 310 submits payment information 315 including a payment
to the seller's financial institution 320. However, as shown in
FIG. 3, the present embodiment operates to transform the financial
institution 320 into a payment and adjustment management
application 350 by integrating the financial institution 320 with
the adjustment processing application 340.
[0038] That is, once the goods have been received by the buyer 310
or in accordance with the terms of the accompanying invoice, the
buyer then pays for the goods. However, if one or more of the
above-mentioned difficulties with the goods has occurred, the
amount that the buyer may submit as payment may differ from the
amount included in the invoice information 305. When the payment
amount submitted by the buyer 310 differs from and is less than the
payment amount included in the invoice information 305, the
difference in the payment amounts is referred to as a
deduction.
[0039] As mentioned in the background section above, when a buyer
310 takes a deduction in the typical fashion, the taking of the
deduction necessitates a great deal of work for the seller.
Typically, the seller must reconcile the payment amount received
from the buyer with the goods and invoice information that were
sent to the buyer, which may be a complicated and time-consuming
process.
[0040] In a few of the previous systems, in order to reduce the
amount of time spent reconciling the invoice information, the
seller may request that the buyer submit a debit memo in order to
allow the buyer to take a deduction, either manually or through a
web site. Managing deductions by using such a form may assist a
seller in its internal accounting, but may entail additional delay
in approval by the seller and disbursement or credit to the buyer.
Consequently, such a system is often viewed as onerous by both
buyer and seller. In other previous systems, buyers may refuse to
pay an invoice unless it is accurate, that is, unless a final
revised invoice showing all adjustments has been received by the
buyer, or a credit memo issued to offset the incorrect invoice, or
a deduction is authorized prior to payment. However, such a system
is typically viewed unfavorably by the seller because it typically
involves an additional delay for payment.
[0041] Conversely, as shown in FIG. 3, the buyer 310 submits
payment information 315 including a payment to the seller's
financial institution 320. However, as shown in FIG. 3, the present
embodiment operates to transform the financial institution 320 into
a payment and adjustment management application 350 by integrating
the financial institution 320 with the adjustment processing
application 340.
[0042] That is, the buyer's payment and remittance information 315
is sent to the financial institution 320. The payment 315 may be
any of a variety of forms ranging from cash or check to electronic
fund transfers such as Electronic Data Interchange (EDI), for
example. The financial institution 320 receives the payment and
remittance information 315 and generates the payment and remittance
data 325. The payment and remittance data 325 preferably includes
all of the payment and remittance information and may include
additional remittance data such as scanned images of received
checks, received remittance advices, and/or debit memos. The
payment and remittance data 325 is then sent to the adjustment
processing application 340.
[0043] In addition to the payment and remittance data 325, the
adjustment processing application 340 also receives order data 335
from the seller 330. The order data 335 preferably includes three
types of information, invoice-related information, buyer-related
information and seller-related information and may include
additional information.
[0044] With regard to invoice-related information, the order data
335 preferably includes all of the information that was included in
the invoice information 305 that was sent to the buyer 310, and may
also include information relating to the transfer of the goods such
as a bill of lading or electronic images of the invoice information
305.
[0045] That is, one element of the payment and remittance data 325
preferably identifies the buyer making the payment. Preferably, the
outstanding invoices have been previously sent or pre-delivered to
the adjustment processing application 340, for example at the time
the invoice was originally sent to the buyer. If the adjustment
processing application 340 is unable to find a particular invoice
for a particular seller, then the adjustment processing application
340 may default to a standard deduction form, as further described
below. Alternatively, the adjustment processing application 340 may
then query the seller 330 and retrieve a listing of all outstanding
invoices for the indicated buyer as order data 335. If no buyer is
indicated in the payment data 325, the adjustment processing
application 340 may preferably retrieve all outstanding invoices
for all buyers. That is, the payment and remittance data 325
preferably indicates the buyer. The adjustment processing
application 340 may then query the seller 330 for any information
related to that buyer. Additionally, the adjustment processing
application 340 may retrieve the data from the seller 330 in any of
a variety of ways. For example, order data 335 may be received by
the adjustment processing application 340 as a batch of information
representing several invoices for one or more buyers as opposed to
information for a single invoice of a buyer. Additionally, the
payment information 315 received from the buyer 310 may represent a
batch of several invoices instead of a single invoice.
[0046] With regard to buyer-related information, the order data 335
also preferably includes information relating to the buyer itself,
such as the number of previous orders by the buyer, any negotiated
discounts that apply to the buyer or other incentives, for example,
as further described below.
[0047] With regard to the seller-related information, the order
data 335 may include information with regard to the seller such as
the salesperson that originated the order or internal routing
information for adjustment approval, for example, as further
described below.
[0048] Once the adjustment processing application 340 receives the
payment and remittance data 325 and the order data 335, the
adjustment processing application 340 then proceeds to attempt to
match the received payment and remittance data 325 to one or more
of the outstanding invoices retrieved from the order data 335.
[0049] As further described below with regard to FIG. 6, if the
payment data 325 is immediately matchable to one or more invoices,
the adjustment processing application 340 sends an indication of
the successful match to the seller 330 as posting data 345. The
posting data 345 preferably indicates which invoice or invoices are
being paid by the payment data. The seller 330 receives the posting
data 345 and the accounting system records at the seller 330 are
then updated to reflect that the invoices(s) have been paid in
order to close the transaction. Although the present discussion
focuses on the operation of the adjustment processing application
340 on an invoice-by-invoice basis, the adjustment processing
application may also operate on a batch basis. For example, a batch
of invoices may be processed at one time. The batch of invoices may
be sent to the seller at one time as batch after all invoices have
been matched and/or all exceptions to the invoiced handled as
further described below. For example, the adjustment processing
application 340 may process the batch of invoices, match the
invoices that it is able to match, and then concentrate on
classifying the exceptions in the remaining invoices before passing
the entire batch of invoices to the seller as further described
below. A reviewer at the seller may then further review, modify
and/or approve/reject the exceptions.
[0050] If the payment data 325 is not immediately matchable to one
or more invoices, then the seller may be claiming an adjustment or
an error has occurred and the adjustment processing application 340
may then flag the payment data for further processing as further
described below with regard to FIG. 6.
[0051] The adjustment processing application 340 may then attempt
to apply a set of seller-configurable business rules to the payment
data in order to attempt to automatically resolve and process the
adjustment, as further described below. For example, the adjustment
processing application 340 may be configured with a set of rules
for each buyer so that adjustments below a certain threshold or
less than a certain percentage of an invoice amount are
automatically granted.
[0052] If the adjustment management application 340 is unable to
automatically resolve the adjustment, after the application of the
business rules, the payment and remittance data may be referred to
the seller for further processing.
[0053] The operation of the initial invoice and payment matching is
further described in U.S. patent application Ser. No. ______ filed
XXXX, entitled "System And Method For Automated Incoming Payment
and Invoice Reconciliation", which is incorporated herein by
reference in its entirety. Additionally, the operation of the
automated adjustment processing is further described in U.S. patent
application Ser. No. ______ filed XXXX, entitled "System And Method
For Automated Adjustment Processing", which is incorporated herein
by reference in its entirety.
[0054] Once the adjustment processing application 340 has processed
the payment and remittance data 325 and order data 335 and the
buyer's adjustment has been resolved, the adjustment processing
application 340 sends posting data 345 to the seller 330. As
further described below, the posting data 345 may take any of
several forms such as an instruction to create a credit memo, an
adjustment to inventory, or an instruction to forward the deduction
to collections.
[0055] As mentioned above, the invoice information 305 may take any
of several forms. For example, the invoice information 305 may be a
paper document or an electronic document such as an e-mail,
web-enabled form, or other EDI information exchange.
[0056] Although the present embodiment is discussed above in
relation to the buyer ordering goods, the buyer may instead be
interested in securing services. Similar considerations arise in
the context of procuring services with regard to adjustment
management. Although the current description focuses on goods, the
present payment processing and exception management system applies
equally well to services and is not limited to goods.
[0057] As mentioned above, the invoice information may include a
great deal of information as further described below. However, not
all of the items of information listed below need be present in the
invoice information. The inclusion of an item as part of the
invoice information may be configured by the seller. For example,
the invoice information may include information concerning the
quantity and price of goods and/or services sold by the seller 330
to buyer 310. The invoice information 305 may also include
information such as the ship date, buyer's 310 name and address,
the seller's 330 name and address, any amount of money that is past
due from buyer 310 to the seller 330, or any available credit buyer
310 has with the seller 330. In addition, the invoice information
305 may include an invoice number to be used by the seller 330 for
identification and tracking purposes. For example, the invoice
information 305 may include an invoice number so that the seller
330 may be able to track which goods and/or services have been
delivered or provided to buyer 310. In addition, the invoice
information 305 may also include a bill of lading and/or other
documentation such as the freight bill, proof of delivery, and/or
price quote.
[0058] Similar to the invoice information above, the payment
information may take any of a wide number of forms as chosen by the
buyer. For example, the payment information 315 may therefore
include a check, a financial institution draft, a cashier's check,
a money order, an order to charge a credit line, a promissory note,
or any other document that shows payment for goods and/or services
received. In addition, the payment information 315 may also include
an electronic image of the form of payment. For example, the
payment information 315 may include an electronic image of a check
used to pay for the goods and/or services.
[0059] Further to the discussion above, the payment and remittance
data are preferably constructed by the financial institution 320 to
the extent that the payment data and/or remittance information is
not already available from the buyer in electronic form. That is,
the financial institution 320 may review incoming payment
information, such as a check for example, and then develop a set of
data relating to the check. For example, the financial institution
320 may electronically note the date of receipt, amount, payer,
payee, and any account, MICR, or invoice numbers on the check. The
financial institution may also electronically image the received
check. The notations made by the financial institution 320 may then
be passed to the adjustment management application as part of the
payment and remittance data 325.
[0060] Alternatively, if the payment information is electronically
delivered to the financial institution 320, the payment information
may take any of a wide variety of forms. The financial institution
320 typically processes the received payment information and
re-expresses or re-formats the payment information to be in
accordance with the financial institution's internal processing
desires. The reprocessed electronically received payment
information may then be passed to the adjustment processing
application 340 as part of the payment and remittance data.
[0061] The payment and remittance data itself may take any of a
wide variety of forms as selected by the financial institution 320.
For example, the payment and remittance data 325 may alternatively
be comprised of XML documents, EDI documents, information from
internet-based financial services, or any other form of electronic
data relating to the payment of goods or services.
[0062] The order data 335 and posting data 345 may also take any of
wide variety of forms such as e-mail, XML documents, HTML
documents, or EDI, for example.
[0063] Additionally, the adjustment processing application 340 may
be implemented, for example, as a package software application or
installed at a financial institution or other third party as an
application service provider (ASP). As an ASP, the adjustment
processing application 340 may be directly hosted by the financial
institution 320, the seller 330 or a third party. The actual
physical location of the adjustment processing application 340 is
not relevant as long as it remains in communication with the
financial institution 320 and the seller 330. For example, the
adjustment processing application 340 may be hosted or installed at
a third party or may be otherwise outsourced.
[0064] FIG. 4 illustrates an embodiment of the adjustment
management application 340 of FIG. 3 in greater detail. As shown in
FIG. 4, the adjustment management application 340 includes a
business data filter 410 and an adjustment document creator 420. As
discussed above with regard to FIG. 3, the adjustment management
application 340 receives the payment and remittance data 325 from
the financial institution 320 and the order data 335 from the
seller 330. The payment and remittance data 325 and order data 335
are then passed to the business data filter 410 of the adjustment
management application 340.
[0065] In operation, the business data filter 410 receives the
order data 335 and the payment and remittance data 325 and attempts
to match the payment and remittance data 325 with one or more
invoices included in the order data. If the business data filter
410 is able to match the payment and remittance data 325 with one
or more invoices in the order data 335, the business data filter
sends posting data 345 to the seller 330 to close out the
transaction, as described above. If the business data filter 410 is
not able to match the payment and remittance data 325 with one or
more invoices in the order data 335, then the payment and
remittance data 325 is further processed by the business data
filter as described below with regard to FIG. 6.
[0066] For example, if the received order data matches an
outstanding invoice number for a certain buyer and the amount of
the received payment matches the invoiced amount, then posting data
345 is sent to the seller 330 to post the received payment to the
seller's accounting system.
[0067] However, if the amount of the received payment does not
match the invoiced amount, then the business data filter 410
applies a series of business rules in order to attempt to match the
order data 335 and the payment data 325, as further described below
with regard to FIG. 6. If the business data filter 410 is able to
find a match after the application of the business rules, then the
business data filter 410 sends posting data 345 to the seller 330.
Additionally, the business data filter 410 sends the payment data
325 to the adjustment document creator 420 so that an adjustment
document may be created. The adjustment document 425 is then also
sent to the seller 330. However, because the buyer's adjustment has
satisfied the business rules, the buyer's adjustment may be
automatically accepted by the seller without further human
interaction or approval.
[0068] If the order data and payment data still do not match after
the application of the business rules in the business data filter
410, then the payment data 325 is still sent to the adjustment
document creator 420 and an adjustment document is generated.
However, the adjustment document that is created may not be
automatically processed by the seller's accounting system because
the adjustment did not satisfy the business rules. Additionally,
the business rules applied by the business data filter may
preferably be configured to be buyer specific, as further described
below.
[0069] The structure of the adjustment approval forms and the
routing of the approval forms are further described in U.S. patent
application Ser. No. ______ filed XXXX, entitled "System And Method
For Seller-Assisted Automated Payment Processing and Exception
Management", which is incorporated herein by reference in its
entirety.
[0070] The adjustment document 425 preferably includes the payment
data as well as all relevant data with regard to the buyer. The
relevant data with regard to the buyer preferably includes the
buyer's previous purchasing and payment activity including any
credit rating, as well as seller-side information with regard to
the buyer such as the seller's account representative for the buyer
or any previous discounts given to the buyer.
[0071] The business data filter 410 may also seek to validate
payment data when the buyer's information is missing from the
transaction. For example, if the payment data does not include an
indication of the buyer, the business data filer 410 may attempt to
match the payment amount or any other available information to all
outstanding invoices for all buyers. If a match is discovered, the
business data filter 410 may automatically prompt the user to
confirm the attempted match from secondary criteria, for example,
non-invoice identification fields.
[0072] Preferably, the transaction verification provided by the
business rules includes the validation of the following aspects of
the transaction. Validation of the customer information of the
buyer 310. Validation of the delivery information of the goods
transferred to the buyer, preferably including, for example, the
invoice and/or bill of lading, and the dollar amounts. Validation
of the buyer's payment such as determining whether the buyer's
payment is a duplicate of an already received payment or if the
amount remitted by buyer differs from the invoiced amount by a sum
less than a predetermined threshold tolerance, or if the total
invoice amount is less then a predetermined amount.
[0073] FIG. 5 illustrates an example of some of the types of
informational sources that may be included in the payment data 325.
As discussed above, the payment data 325 may include data derived
from XML documents 510, EDI documents 520, electronic data 540,
and/or data from web services 530. The electronic data 540 may
include electronic images of the remittance information 315, as
described in FIG. 3. The payment data 325 may be configured in any
internal format desired by the financial institution that is
capable of being parsed by the adjustment management application
340.
[0074] Thus, the present embodiment serves to automatically match
payment data with invoice data. As mentioned above, the prior art
methodologies for matching payment data with invoice data involved
a great deal of manual effort and were quite slow. With the present
embodiment, most incoming payments may be matched and processed
automatically. Thus reducing effort and cost and providing a more
accurate assessment of available cash.
[0075] Additionally, the present embodiment is preferably directly
integrated with the seller's financial institution. Consequently,
no additional processing steps to inform the financial institution
or internal accounting sub-divisions of the seller's account at the
financial institution are necessary.
[0076] FIG. 6 illustrates a flowchart 600 of the operation of the
adjustment management application in greater detail. First, the
payment data and the order data are received at steps 601-602.
Next, at step 605, the payment data is received and batched by the
financial institution. That is, the financial institution may
accumulate a number of payments in a queue to form a batch. Then, a
person at the seller may access the financial institution's records
to process the batch of payments as a whole.
[0077] At step 610, each payment in the batch of payments is
evaluated. Preferably, the payment data 601 includes invoice
information linking a payment made by the buyer with a specific
invoice number sent to the buyer by the seller. The listing of
invoice numbers is preferably retrieved from the seller as part of
the order data 602. At step 615, it is determined whether the
payment includes an invoice number that matches an invoice number
provided by the order data. If an matching invoice number is found,
the process proceeds to step 630 and the invoice is matched to the
payment. If no invoice number match is found, the process proceeds
to step 620.
[0078] At step 620, additional processing, such as human
interaction by the seller may be required to match the received
payment data with one or more invoices retrieved in the order data.
Such further processing is further described in U.S. patent
application Ser. No. ______ filed XXXX, entitled "System And Method
For Seller-Assisted Automated Payment Processing and Exception
Management", which is incorporated herein by reference in its
entirety.
[0079] Proceeding now to step 630, the received payment has been
matched to a specific invoice number. Next, at step 632, the
invoiced payment amount included in the invoice is compared to the
received payment. If the received payment matches the invoiced
payment, the process proceeds to step 635. At step 635, the payment
is marked for posting to the seller's accounting system.
[0080] Conversely, if the received payment does not match the
invoiced payment, the process proceeds to step 640. At step 640,
business rules are applied in order to allow the payment to "match"
the invoice even if the payment amount is not exactly the invoiced
amount. For example, a global threshold may be set for the system
so that even if the received payment differs from the invoiced
payment amount, if the difference is small enough then the invoice
and payment still are considered a match. For example, as a global
threshold, if the received payment differs from the invoiced amount
by less than 1% or by less than $100, the invoice and payment may
still be considered to match. The global threshold is preferably
set by the seller.
[0081] In addition to global business rules that may be applied to
all buyers, buyer-specific business rules may be applied. For
example, a buyer-specific threshold that is more generous than the
global threshold may be employed instead of or in addition to the
global threshold in order to allow the received payment and the
invoice to match. For example, the seller may configure a
buyer-specific threshold of 2% or $500 and as long as the payment
received does not differ from the invoiced amount by more than the
buyer-specific threshold, the payment is considered to match the
invoice. Additionally, other buyer-specific criteria such as a
discount or other incentive may be applied.
[0082] The business rules including the global and buyer-specific
thresholds may be retrieved from the seller as part of the order
data at step 602. Alternatively, the business rules may be
retrieved from the seller when the process proceeds to step 640. As
another alternative, the business rules may be stored in the
adjustment management application and may be available to the
seller for periodic updates. All of the business rules are
preferably configurable by the seller.
[0083] Turning now to step 642, if the payment amount matches the
invoiced amount after the application of the business rules, the
process proceeds to step 650. At step 650, an adjustment document
such as a G/L (General Ledger) write-off record is created to
credit the difference between the invoiced payment and the received
payment. The process then proceeds to step 635 and the payment is
marked for posting. Once the payment is marked for posting, the
posting data is transmitted to the seller at step 690.
[0084] If the invoice amount does not match after the application
of the business rules, then the process proceeds to step 620 where
further processing, such as human interaction by the seller may be
required to match the received payment data with one or more
invoices retrieved in the order data.
[0085] The buyer-specific information may be originated for a buyer
either by a pre-existing default, by direct programming by the
seller, or by an automated analysis of the behaviors of a set of
buyers. For example, the business data filter may be configured to
dynamically increase the threshold percentage or other thresholds
based on the size of the most recent invoice or the size of the
payment. Additionally, for example, the threshold percentage or
other thresholds may be dynamically changed based on the length of
the relationship between the buyer and seller.
[0086] Thus, the present system may provide for automated
processing of payments from sellers when the sellers are claiming
and adjustment such as a deduction. By automatically processing
adjustments that fall within the pre-configured business rules, a
large quantity of adjustments may be automatically handled by the
system without requiring any human interaction. Instead, human
interaction may only be required for the small number of
adjustments that fall outside of the business rules. Consequently,
because many adjustments/deductions may now be handled
automatically, a significant cost reduction in worker-hours may be
realized.
[0087] Additionally, the present system automatically updates the
seller's accounting system to include adjustment documentation such
as a write-off record in the event of a deduction. Consequently,
even though the buyer's adjustment is automatically processed, a
record of the buyer's adjustments is included in the seller's
accounting system if needed, for example for review or compliance
purposes.
[0088] Also, the present system may be directly integrated with the
seller's financial institution. This allows for additional ease of
implementation and speed of processing. However, the present system
may also be hosted by a third party in communication with the
financial institution and the seller.
[0089] The present embodiments may be most useful in a system that
first attempts to automatically match all received payments with
invoices, such the system further described in U.S. patent
application Ser. No. ______ filed XXXX, entitled "System And Method
For Automated Incoming Payment And Invoice Reconciliation", which
is incorporated herein by reference in its entirety. The received
invoices that are not able to be directly matched by the invoice
reconciliation system may then be referred to the automated
adjustment management system of the present embodiments.
Additionally, if the present automated adjustment management system
is unable to automatically process the buyer's adjustment, an
adjustment document may be created and routed to a human for
approval or further processing. Such a system is described in U.S.
patent application Ser. No. ______ filed XXXX, entitled "System And
Method For Seller-Assisted Automated Payment Processing And
Exception Management", which is incorporated herein by reference in
its entirety. Additionally, the present embodiment is preferably
directly integrated with the seller's financial institution.
[0090] While particular elements, embodiments and applications of
the present invention have been shown and described, it is
understood that the invention is not limited thereto since
modifications may be made by those skilled in the art, particularly
in light of the foregoing teaching. It is therefore contemplated by
the appended claims to cover such modifications and incorporate
those features that come within the spirit and scope of the
invention.
* * * * *