Published by Dan Hulkower, SVP Business Development, After, Inc. on June 10th, 2016.
Most manufacturers are pretty good at managing the risk associated with their limited warranties. After all, they have QA teams in place to manage product quality, years of data, and the motivation that comes with holding the liability. Most just reserve as a % of revenue (typically around 2%), with analysis only when it goes over.
Despite that, companies are regularly forced to restate their reserves. When reserves go up it is most commonly because of unforeseen losses that can be a balance sheet disaster and create cause for concern from shareholders. Reducing reserves is less of a calamity, but it points to opportunities lost because being over-reserved is an inefficient use of capital.
But the fact is that most manufacturers are over-reserved. The fear of a balance sheet adjustment forces manufacturers to reserve more than they need to, and often they don’t have the data required to be more precise. Many companies wrestle with disparate data sources and use basic tools for forecasting rather than investing in predictive models that can pay for themselves but may be outside of their area of expertise.
That’s where After, Inc. can help. We process diverse data sets and use our state-of-the-art predictive models to provide the data manufacturers need to properly predict future claims. The numbers can add up quickly – we are often able to find anywhere from 10%-30% savings, which translates into more capital available today and not at the end of the limited warranty period. And we do it cost effectively – we don’t ask you to do an expensive software installation – just send us the data and let us do the analysis.
Leverage After, Inc.’s experience developing predictive analytics models and improve your warranty reserve position. If you would like to speak with After, Inc. regarding your warranty program, please give us a call at 800-374-4728. We’re always available for a conversation!