GE Fanuc High Speed Counter and Hercules Encoder

Hello everybody, I am experiencing the following problem, I hope someone can help me:
We use a Hercules encoder (model 2313I-AS1000)conected to a GE Fanuc high speed counter (APU300), this used in an automated tablecloth machine, the machine hems (sews) two sides of a roll of cloth and then cuts pieces of pre-entered lenght, this lenght is determined by the turns of the encoder activating the counter until the pre-entered count (equivalent to a tablecloth lenght).
The problem is that I have pieces of different lenghts, how can I check if the encoder is bad, how if the counter is bad. The encoder gets its power from a 24vdc power supply and delivers its pulses through a line to the counter.
What do you think could be causing this. Any ideas and comment are greatly appreciated.
Regards!

Is this a new machine, or has this machine been running ok for some time?

How much variation are you seeing? Are the pieces consistently too short, too long, or random variations? Is the cutoff mechanism controlled directly by the HSC's outputs or by standard PLC outputs? Do the variations happen at any time or at some particular line speed?

Thanks Steve and bluebyu for quick replys, I wrote my post yesterday during my working shift, and at the end of the shift one of my mechanics told me something I did not know:
After you push the "feed" button on manual mode you should push the "cut" button (which we were not doing) because if you don´t you will have the situation I was experiencing, too long pieces and then too short.
For avoiding material waste we decided not to use cloth for testing and since we didn´t have cloth we thought we didn´t need to cut, but the programm logics needed us to cut for the propper perfomance.
In order to minimalize the variation when we sew too long tablecloth we had to reduce the Feed (pulling)motor speed.
Right now the machine is working very decently.
Thanks a lot for your concerns and help. I think I am going to learn a lot from you guys. Great site this one.
Regards!