Mopping the wet floor is not enough - You need to turn off the spigot
We find 3 great truths to Chargebacks: 
- Retailer chargebacks are LOST PROFIT
- There are really only two types of retailer chargebacks - those we can dispute and recover profit and those caused by internal problems we have to fix.
- Many chargebacks are actually are due to the supplier's workflow and inventory problems, not EDI issues.
Like it or not, these days you have to pay closer attention to the day to day logistics of serving your retail clients - And toe the line as never before. That is, close examination of Chargebacks and working on prevention can significantly save profit dollars. For instance, did you know that you can be charged multiple times for one error? One "Contents Don't Match ASN" error can cause four different CB's. Example - PO, ASN, and invoice was for 6 pieces of item "X" size small and 6 pieces of the same item "X" size large - invoice cost to retailer is $5 per unit with total expected payment of $60. We ship 4 pieces size small and 8 pieces size large in one carton. The following will occur:
$10 - CB for "Contents Don't Match ASN"
$10 - CB for PO Variance
$10 - CB for "Omission" (CB amount is the cost of the 2 size small units that were not shipped)
$10 - CB for "Merchandise Not Ordered" (CB amount is the cost of the extra 2 large pieces that were not shipped were not ordered)
$40 - Total CB Deductions - TOTAL LOST PROFIT for one PO
Addressing workflow and inventory problems turns off the spigot. In addition, there is a chance to recover some of that money. In fact, we are presently working to recover between $10-20,000 each - for this current year - for two different clients.
That is some good news, but do not rest easy. A top five retailer is planning to withhold payment this coming Fall if the Purchase Order, receipt and invoice do not match perfectly. The enviroment most likely will get worse before it gets better so be precise, be vigilant and fight for those dollars!
Next issue:
Strategies for reducing risk on margin guarantees.
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