For suppliers doing business with Walmart, understanding post-audit deductions is not just important—it's crucial for maintaining a healthy bottom line. These deductions, though complex, play a significant role in your financial interactions with one of the world's largest retailers.
Understanding Post-Audit Deductions
Post-audit deductions are financial adjustments made by Walmart after the initial transaction. They encompass a variety of deductions, such as Accounts Payable deductions, which are taken directly off invoices, and Accounts Receivable deductions, manifesting as fines.
The Post-Audit Process at Walmart
Walmart's approach to post-audit reviews involves meticulously examining transactions, email correspondences, and supplier agreements. The process can span up to two years after the initial transaction, with multiple claims potentially arising during this period. Additional auditing firms are often engaged to ensure thoroughness.
Types of Post-Audit Claims
The landscape of post-audit claims is diverse, but some of the most common include:
Pricing: These occur when price-protected items are not fully captured in calculations.
Allowances include cash discounts and quantity allowances, which are typically off-invoice.
Freight & Handling Charges on Returns: Charges for delivering damaged products and a standard 10% handling charge on such items.
Trucks Ordered Not Used (TONU): Charges applied when a truck ordered by a supplier is not used.
Failure to combine loads: Claims arising from inefficient utilization of load space.
Preventing Post Audits
Prevention strategies vary depending on the deduction type. For pricing and allowances, meticulous documentation and adherence to vendor agreements are essential. Proper packaging and palleting can mitigate Freight & Handling Charges on Returns. For TONU, correct load constraints in the item master are crucial. Similarly, efficient load building can prevent claims for Failure to Combined Loads.
“The best deduction is the one that never happens.”
The Deducting Process of Post-Audit Claims
Walmart differentiates between correspondence-based and supplier agreement-based post audits. For claims ranging from $500 to $100,000, Walmart typically auto-deducts and notifies the supplier. Claims over $100,000 require more direct supplier engagement. Timeliness in response and dispute resolution is crucial in both scenarios.
How to Dispute a Post-Audit Claim
If disputing a claim, direct contact with the auditor is necessary. Suppliers should be prepared with all relevant documentation to support their case. For claims that have yet to be received, contacting Walmart's call center or requesting the claim packet is the first step.
In cases where auditors do not respond promptly, suppliers should escalate their concerns via the vendor call center. Persistence and proper documentation are essential.
Understanding and managing post-audit deductions is a critical skill for any Walmart supplier. Suppliers can navigate this complex landscape successfully by staying informed, adhering to agreements, and responding promptly and effectively to claims.
What We Do
Shortage 360 - This service includes automation for identifying, documenting, and uploading invalid shortage deductions into the Accounts Payable Disputes Portal (APDP) portal. Once uploaded, disputes are monitored throughout the process until resolution.
Recover - Research and identify errors and potentially rebill overpayments, chargebacks, and invalid deductions.
Cancel - Review potential deductions to achieve cancelation before processing -- when possible.
Improve Processes - Provide tools and expertise to identify root causation, process improvement, best practices, and industry trends.
As the CEO of Woodridge Retail Group, I've seen firsthand the impact of well-managed post-audit processes. It's not just about dispute resolution—it's about building a robust system that minimizes the likelihood of these claims. This proactive approach safeguards your profits and strengthens your relationship with Walmart.
Remember, knowledge and preparation are your best allies in retail supply. Stay informed and prepared, and you'll confidently navigate the maze of post-audit deductions.
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Woodridge Retail Group's deduction recovery solutions are powered by HRG, a pioneer in deductions, including compliance, promotional, allowances, and post-audit defense, as a few examples. Clients include some of the largest brands in every category across all the major retailers.