Deductions and Short Pay Root Cause Playbook

Deductions and short pays become permanent when no one classifies why they happen. This playbook installs a simple root cause log and prevention loop so recurring short pays shrink over time.

What you will produce

1. A deductions and short pay root cause log
2. A small root cause taxonomy (so trends emerge)
3. A prevention action tracker with owners and due dates
4. A monthly review cadence

Beginner-safe definitions

Short pay: when a customer pays less than the invoice amount.

Deduction: a short pay tied to a reason (pricing dispute, delivery claim, promotion claim).

Root cause: the underlying system issue that created the short pay.

Prevention action: a change that reduces recurrence (contract clarity, billing controls, evidence capture, approvals).

Root cause taxonomy

Use a small set of categories so trends become obvious:

• pricing or rate mismatch
• contract term dispute
• proof of delivery missing
• quantity or quality claim
• return or credit already issued
• unauthorized discount or promotion claim
• duplicate billing or invoice error

Do not create 40 categories. You will never review them.

Operating cadence

Weekly:

• add new short pays and deductions to the log
• assign owner and next action
• request evidence within a defined window

Monthly:

• review the top three categories by dollars
• decide prevention actions
• track whether recurrence decreases

Quarterly:

• confirm the top three causes are shrinking
• tighten contracts, pricing controls, or evidence requirements as needed

Templates

A) Root cause log table (copy and paste)

Copyable template (TEXT)
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Deductions and Short Pay Root Cause Log

| Customer | Invoice # | Amount | Reason category | Evidence link | Status | Owner | Prevention action | Next review date |
| -------- | --------- | -----: | -------------- | ------------ | ------ | ----- | ---------------- | --------------- |

Suggested statuses:

• Open
• Evidence requested
• Evidence received
• Resolved and collected
• Credit issued
• Closed and written off

B) Prevention action plan (copy and paste)

Copyable template (TEXT)
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Prevention Action Plan

Root cause category:
Problem statement:
Owner:
Action:
Due date:
Success metric:
Notes:

C) Short pay resolution note (copy and paste)

Copyable template (TEXT)
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Subject: Payment short of Invoice [#]

Hi [Name],

We received payment that is short of Invoice [#] by $[amount].

Please confirm the reason for the deduction and provide supporting evidence by [date].
If there is no valid claim, please remit the remaining balance by [date].

Thank you,
[Name]

What good looks like

• Every short pay has a category, owner, and next action
• Evidence is requested within a predictable timeframe
• The top short pay causes shrink month over month
• Prevention actions are documented and owned

Common failure modes

• root causes are too vague to act on
• no prevention actions are tracked
• deductions are closed without evidence
• “write off” becomes the default outcome