Unusually High Credit Notes
Table of Contents
Use Case:
Organizations need to monitor credit note activity to identify customers receiving an unusually high value or volume of credits compared with their peers. While credit notes may be issued for legitimate reasons, such as returns, billing corrections, or agreed commercial adjustments, excessive activity may indicate weak controls, improper discounts, fraud, or attempts to obscure the true purpose of a transaction. For example, a customer receiving significantly more credit notes than comparable customers may warrant further review to confirm that the credits are valid, properly approved, and supported by a clear business justification.
The Unusually High Credit Notes analytic identifies customers with a high ratio of credit notes based on either transaction value or volume relative to similar customers. By highlighting customers whose credit note activity falls outside typical patterns, the analytic helps organizations detect improper reimbursements, unusual discounts, inaccurate financial records, and transactions that may be used to generate or conceal inappropriate payments.
| Description | Identifies customers with an unusually high ratio of credit notes, based on either transaction value or volume, compared with similar customers |
| Domain(s) | Customer Revenue |
| Analysis Type | Indicator |
| Focus Area | Setting |
| Score Methodology | Customer credit note activity is ranked relative to peer customers over the configured historical period |
Default Scoring Criteria
Importance: 4 (default)
Enabled: True (default)
| Risk Result | Default Value | Notation |
|---|---|---|
| Weak | 90 | Percentile* |
| Moderate | 95 | |
| Strong | 99 | |
| Auto | Not set |
*A percentile notes the value below which a percentage of the historical data falls.
Unique Configuration
The Unusually High Credit Notes analytic compares each customer’s credit note activity with similar customers using one of the following comparison groups:
- No comparison group
- Customer Classification 1 (Industry) (default)
- Customer Classification 2
- Customer Account Group
Credit note activity can be measured by:
- Value (default): the total value of credit notes
- Volume: the number of credit notes
Comparisons are based on the previous 365 days of transaction history. Only Sales and Receivable Increase transactions are included when calculating the customer’s overall transaction activity.
Exclusions
You can configure exclusions based on:
- Subject ID
- Subject Account Group
The following default thresholds also apply:
- Customers with 12 or fewer historical transactions are not evaluated.
- Customers with a credit note ratio of 1% or less are excluded from scoring.
- Comparison groups with 10 or fewer customers are compared against the broader customer population so that a risk result can still be generated.