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Blog · Board and management reporting · FMCG and CPG brands

Chargebacks on ten deductions: the whole arithmetic on one page

The complete retailer chargeback split on ten deductions from two retailers, small enough to check by hand: the retailer's reason code mapped to the brand's reason, the join to the shipment and proof-of-delivery records, valid where the records agree, disputable where they contradict, unmatched where no shipment is found, cost per case by retailer, the reason that recurs at one retailer, and the identity that deductions equal the three states and that remittance plus deductions equals invoiced, so a reader can reproduce every figure and then run it on their own deduction file.

By CoviragePublished 17 September 20263 min read
The short answerTen deductions from two retailers, each with the retailer's reason code, mapped once to the brand's short list. Each is joined to the shipment on the PO reference and to proof of delivery. Where the brand's record agrees with the deduction, late delivery on a shipment the POD shows late, it is valid; where it contradicts, a short-shipment charge on a bill of lading that matches the order, it is disputable; where no shipment matches, unmatched. Retailer A: $11,400 of deductions on 40,000 cases, 39 percent disputable. Retailer B: $2,900 on 25,000 cases, mostly valid. Deductions equal the three states, and remittance plus deductions equals invoiced for each retailer. Every number can be reproduced by hand.

Chargebacks arrive as deductions with codes, and on ten of them the whole split can be done by hand. This page works the mapping, the join, the three states, the cost per case, the recurring reason and the two identities.

The mapping, written once

Retailer A code Retailer B code Brand reason
LD 041 Late delivery
SS 022 Short shipment
LB 077 Labelling
PR 090 Promotional allowance

The ten deductions

Deduction Retailer Code Brand reason Amount PO ref Shipment found Brand's record State
1 A LD Late delivery $2,400 8821 Yes POD: delivered 2 days late Valid
2 A LD Late delivery $1,800 8834 Yes POD: delivered on time, signed Disputable
3 A SS Short shipment $2,100 8840 Yes BOL: 480 of 480 cases Disputable
4 A SS Short shipment $900 8851 Yes BOL: 470 of 480 Valid
5 A LB Labelling $1,200 8857 Yes ASN correct; no label fault recorded Disputable
6 A PR Promotional allowance $2,000 n/a Promotion agreed Agreed in calendar Valid
7 A LD Late delivery $1,000 9902 No: PO not ours Unmatched
8 B 041 Late delivery $1,400 7710 Yes POD: 1 day late Valid
9 B 022 Short shipment $600 7722 Yes BOL: 195 of 200 Valid
10 B 077 Labelling $900 7730 Yes ASN correct Disputable

The split

Retailer Deductions Valid Disputable Unmatched Cases shipped Cost per case
A $11,400 $5,300 (46%) $5,100 (45%) $1,000 (9%) 40,000 $0.285
B $2,900 $2,000 (69%) $900 (31%) $0 25,000 $0.116

The recurring reason, retailer A

Reason Deductions Value Valid share
Late delivery 3 $5,200 46%
Short shipment 2 $3,000 30%
Labelling 1 $1,200 0%

Late delivery recurs and half of it is valid: a logistics finding at the brand's DC. The other half is disputable with the POD attached.

The identities

deductions = valid + disputable + unmatched: A: 5,300 + 5,100 + 1,000 = $11,400; B: 2,000 + 900 + 0 = $2,900. Hold. remittance + deductions = invoiced: A invoiced $412,000, remitted $400,600, deductions $11,400. Holds. B invoiced $238,000, remitted $235,100, deductions $2,900. Holds.

Where it goes wrong, even at ten

Codes unmapped. LD and 041 analysed as two reasons.

No join to the records. Deductions 2, 3 and 5 paid without a dispute: $5,100.

Ranked by dollars. A is the problem retailer by amount and by rate; on a larger base the small strict retailer hides behind the large one.

Unmatched written off. Deduction 7 is on somebody else's PO and the brand paid it.

From ten to ten thousand

The same mapping, the same join, the same three states per deduction, summed per retailer, reason and DC. Covirage runs it on the deduction file and the shipment records every month. The chargebacks guide covers the measure, and the revenue leakage guide covers where the disputable share sits among the seven leaks.

Questions people ask

What makes a deduction disputable?

The brand's own record contradicts it. A late-delivery charge where the proof of delivery is signed on time; a short-shipment charge where the bill of lading matches the order quantity; a labelling charge on a shipment the ASN shows correctly labelled. Each has the document attached to the dispute.

What is unmatched?

A deduction whose reference matches no shipment: a wrong PO number, a reference to a different entity, a duplicate. It cannot be validated or disputed until it is matched, and the deductions team chases the retailer's detail for it.

Why cost per case?

Because retailer A's deductions are four times B's in dollars and A ships less than twice B's cases. Per case, A charges the brand 28 cents and B 12. The per-case figure is the fair ranking and the one the account manager takes to the retailer's compliance team.

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