How One Company is Responding to Rising Costs from Tariffs

IOFM’s financial operations professionals across all industry sectors have been reporting how tariffs have resulted in unpredictable payment terms, impacted vendor renegotiations, and complicated customer disputes.

Melissa Schmear, APM, Accounts Payable Manager at Batteries Plus, participated in a recent informal tariff survey. In this article, she shares how she and her company’s financial operations team are in the process of reengineering Batteries Plus’s processes, strengthening the company’s cross-functional collaboration, and preparing for economic risk. 

Here is an overview of a discussion IOFM had with Melissa.

Q. Which of the discussion points in the recent IOFM tariff questionnaire were most pertinent to you and your operation?
A. The questions alerted me to the critical issues surrounding the tariffs and led me to become more involved and passionate about the subject.

I began to actively examine how tariffs were shaping our processes, and I became increasingly aware of the importance of working jointly with my entire financial operations team to face the evolving challenges.

At Batteries Plus, AP has always had a strong working relationship with the sourcing, product, and logistics teams, and I have been very fortunate to have a seat at the decision-making table. When the new tariff challenges emerged, we worked closely as a team to devise a strategy. As a result of our collaboration, we modified many of our current processes and created some new ones. In the process, we gained a new awareness of and confidence in the strength of our cross-functional partnerships.

Facing the emerging challenges together has strengthened our relationship and deepened our understanding of each other’s processes. That alignment will make it easier and more rewarding to work together in the future.

Q. What are your biggest challenges right now in regard to the tariffs?
A. The biggest challenges for AP lie in keeping pace with the constant changes. We’re introducing new vendors, changing our freight carriers, shifting our payment terms, and adapting our discount and warranty structures.

Since reducing costs is always a priority, many of these changes happen at the last minute and require manual adjustments. Staying aligned with sourcing, product, and logistics is critical so we can anticipate and manage all the moving pieces effectively. The pace of change is not just operational, it’s also demanding on the team. And in this environment, staying flexible and adaptable is critical.

Q. Do you think being in the retail franchise business sector, you see the impact of the tariffs sooner than other industry sectors?
A. Yes, I do believe we feel the effects sooner in the retail franchise business sector. Tariffs directly increase the landed cost of the products we import (the landed cost is the total price of a product once it has arrived at its final destination, ready for sale or use). Consequently, the impact is immediate — there’s no long lag time before it shows up in our financials.

Unlike industries where costs can sometimes be absorbed upstream in the supply chain or spread out across long-term contracts, retail pricing is very sensitive and more dynamic. In a franchise model, the effect of upstream cost absorption moves quickly from our distribution centers to the franchisees (who need to maintain margins to stay profitable), and then, ultimately, to our customers.

Our visibility into the supply chain makes these changes very noticeable. Even slight shifts in vendor pricing, freight terms, or payment conditions ripple across multiple locations and partners. That said, as I’ve talked with others across industries, it’s clear that very few businesses are untouched. Even those not buying directly from tariffed countries often feel the impact through higher prices passed along by their suppliers.

Q. Has your industry been particularly hard hit?
A. Definitely! Even though we have been strategically shifting our sourcing away from China over the past six years and reducing our purchasing from them by nearly 30%, we still source about 20% of our product from southeast Asia where tariffs are high.

We source as much as possible domestically, but some of what we sell isn’t produced in the United States. Like many other organizations, we are exploring new vendors in other areas such as Mexico, India, and Europe to get the quality products our customers expect and the best possible cost. The long-term shift in sourcing has helped us weather the storm, but the reality is that no business is immune.

Q. Have you had to raise prices for your customers?
A. Unfortunately, yes. There really is no way around it. Our product team and our pricing team work diligently monitoring and negotiating vendor pricing, as well as monitoring competitor pricing to ensure we stay competitive without being over or underpriced. We also have our franchisees to keep in mind – most of the product they sell comes from our distribution center, so we need to ensure we are selling product to them at a low enough price that they can still make a profit on the sale. Balancing franchise profitability with customer affordability makes our pricing strategy a constant juggling act.

Q. How involved are you on the strategic and problem-solving/analysis level?
A. My role has shifted dramatically. Before tariffs and COVID, my contact and work with procurement and logistics was fairly surface level, focused on invoice processing. Now, I work much more closely with these departments to find the most efficient and cost-effective ways to process and manage freight invoices.

We have had to unwind a lot of our processes and rebuild them to accommodate new ways of projecting shipment costs, accounting for tariffs, and working with new carriers to reduce costs. Admittedly, there were a few times that my company’s directors came to me asking AP to change a process, and my immediate response was “We can’t do that!” But we dug in anyway and figured it out. This shift has positioned the AP team not just as processors, but as problem-solvers and strategic partners.

Q. Do you find that being an IOFM Advisory Panelist and Chapter Leader is helpful in coming up with strategies? What have you learned from other practitioners?
A. It has absolutely been helpful! IOFM’s Panel and Chapter members always have thoughtful questions and insightful answers. I love hearing about how other teams solve problems and knowing that I’m not alone. I was so excited when the tariff survey came out because this is such a hot topic right now. I couldn’t wait to hear what problems others were facing and how they were dealing with them. The exchange of ideas has not only given me new strategies and also provided me the awareness that our AP challenges are shared and solvable.

Q. In grappling with the tariffs, what lessons have you learned so far?
A. The challenge with the tariffs has taught me and my team that flexibility is key. Processes must be built to adapt quickly. Vendor diversification is no longer optional but essential. We can’t afford to be too reliant on one geographical region. And perhaps most importantly, collaboration matters. Stronger relationships with your sourcing, product, and logistics teams can transform challenges into opportunities and make you more resilient in your organization.

Q. What is your best advice to other practitioners?
A. If there is one thing tariffs have taught me, it’s that resilience and creativity are just as important as compliance.

My advice to other financial professionals is to always be ready for change. Keep your processes simple and easy to adapt or adjust if needed. Complex processes make change unnecessarily difficult and cause tension and frustration for all who are involved. Be willing to think outside the box and try new things – don’t assume it can’t be done! There is always a way. You just need to find it!

Let’s Keep Learning Together!
I hope that my colleagues in financial operations will join me on November 6th at the IOFM’s Fall Conference, where I will be part of a discussion panel entitled Strategies from the Cash Flow Frontlines: AP & AR Responses to Tariffs and Other Risk Factors.

Editor’s Note: Melissa is an Accounts Payable Manager at Batteries Plus. a large franchise-based retail chain  located in Hartland, Wisconsin. She is a member of IOFM, part of the leadership team of the Midwestern Region IOFM Chapter and is a member of IOFM’s AP Advisory Panel.