Why You’re Getting Paid Less Than You Think: The Hidden Cost of Unrecovered Retail Deductions

You shipped $1.2 million in product last quarter. So why does your bank account say $1.06 million?

The answer is hiding in your deductions.

Retail suppliers often track gross sales, but what really matters is net collections—the cash you keep after every compliance fine, shortage claim, overage penalty, and chargeback. And unless you have a laser-focused recovery process, you’re probably losing more than you think.

Let’s run a quick example. Say you operate at a 25% margin. If your deductions total just 2% of gross sales, you’ve effectively lost 8% of your profit. Now, imagine your deduction rate is closer to 5%, which is not unusual for suppliers in complex retail environments. That could mean you’re losing a third or more of your margin.

That’s why deduction recovery isn’t just an accounting issue. It’s a bottom-line, stay-in-business kind of issue.

What Can You Do?

• Benchmark your deduction rate by customer.

• Identify which codes account for the biggest hits.

• Don’t write off “low-dollar” claims—they add up fast.

Take Action

Curious what your actual net margin is after deductions? We’ll run the numbers and show you.

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