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As retailers cope with lagging sales and escalating costs, consumer products companies are feeling the domino effect with chargebacks (also known as customer deductions and short pays). Most can be classified into three categories:
 Intentional chargebacks, such as markdowns, discounts, margin guarantees, rebates, and advertising. Many of these are pre-approved, and therefore, aren't usually recoverable.
Preventable chargebacks, which generally result from compliance violations like early or late delivery, freight infractions, and handling charges.
Unauthorized chargebacks, which are often a mix of compliance violations and miscellaneous chargebacks. They can include concealed shortages, pricing discrepancies and returns. Getting chargebacks under control is challenging. In some companies, accounts receivable and finance departments get the blame, but chargebacks are generally the responsibility of the entire organization, often stemming from activities in the warehouse, customer service, sales and IT departments. In many cases, they can be prevented through improved business practices, negotiations with retailers, and other strategies.
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Chargebacks don't have to drag your company profits down. Reduce them, boost cash flow, and assure you stay in the black. |
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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