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In eCommerce the management of refund processes is still developing, and as such it takes up valuable resources. As businesses grow, auditors become involved in the already disorganized situation: slowly audit trail demands have started to draw merchants’ attention and make them consider solutions for the challenging refund processes.

Product returns are especially common in online stores selling high volumes. Products such as clothes cannot be tried on or tested before purchasing, so return percentages can easily climb into double digits. This in turn places high demands on customer service and other sectors, because customers want information on their refund processes as real-time as possible. Understandably, many are also eager to be reimbursed in the sum they have paid for the product they no longer want.

Eino Svinhufvud“E-commerce refers to a form of distance selling wherein, under the Consumer Protection Act, the consumer has the basic right to cancel the transaction and be refunded his money. The extensive manual input work required by the growth of online sales, with the risk marginal it entails, is difficult to direct,“ says Eino Svinhufvud, expert on ICT service outsourcing at the law firm HH Partners.

Thus, in addition to accordingly organizing their customer service, companies are expected to handle reimburses as efficiently as possible. Manual work is not the way to do it: for instance product return forms as a solution are a neat way of gathering information such as account numbers, but they still have to be punched in and saved in databases manually. In cases of rebates or discounts, the sum to be returned might even have to be negotiated with the customer.

Despite legal requirements, handling protocols for special or unforeseen situations tend to be overlooked. According to Svinhufvud, the accuracy demanded of accounting is relevant both in daily accounts and when drawing up financial statements. The auditor must perform his audit meticulously and be able to verify the accuracy of the accounting. The company should be able to communicate its refund information in such way that inspecting the accounts would not require manual input work or extensive audit charges.

In other words, all refunds and discounts must be systematically recorded and saved; vague doodles in a notebook will get you nowhere.

How to Cope

Few companies can claim to use any sort of standardized system wherein the myriad messages and claims from customers can be stored, let alone one that would be capable of automating the different phases of the refund process.

Erik Renfors Erik Renfors, specialist in financial and risk management services at KPMG, notes that companies ought to make it their business to explore those technological solutions that support both the planning of financial reporting and the management of cash flow. The reasoning behind this is in the fact that the growing volume of refunds in online stores is giving rise to significant challenges in terms of managing cash flow planning and liquidity. The company that prepares for inevitable chargeback traffic through appropriate payment management solutions and technologies is also the company with the highest chances of coping with exceptional scenarios.

Mikael Smeds Mikael Smeds, CEO of Maksuturva, stands behind Renfors’s view: “The significance of e-commerce as a sales channel is constantly growing, and the prerequisites for responding to competition just aren’t within the reach of businesses operating without or outside of it. In order for an online shop to succeed these days it has to not only look good, but also be well in the know about the processes and functions that make modern commerce tick.“


Asianajotoimisto HH Partners Oy is a law firm that offers services in all aspects of business law to both national and international clients. Learn more at www.hhpartners.fi

KPMG Oy Ab is one of Finland’s leading consultant organizations. Its services include consulting in auditing, taxation and general counseling. Learn more atwww.kpmg.fi

Suomen Maksuturva Oy is a Finnish Intelligent Payment Service Provider (iPSP), focused on intelligent payment transfer. The company also offers the utilities necessary for e-commerce refund management.

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