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​What Documentation Do Retailers Require of Suppliers When Disputing Chargebacks?

Posted By RCVF Admin, Saturday, August 4, 2018
Updated: Saturday, August 4, 2018

What Documentation Do Retailers Require of Suppliers When Disputing Chargebacks?

In 2016, RVCF developed the white paper Expediting the Investigation and Reconciliation of Deduction Claims. We surveyed merchandise suppliers to find out what information they need from retailers to research chargebacks, determine validity, and shorten time to resolution. In what was essentially Part 2 of this survey, we recently asked retailers what documentation they require from suppliers to have a chargeback overturned and deducted money paid back.

In the interest of full transparency, we didn’t get responses from as many retailers as we would have liked. However, we combined the responses we received with the guidelines offered by several retailers on their compliance sites to create a matrix of recommended supporting documentation for disputing common deductions. This matrix can be viewed here. While providing the recommended documents by no means guarantees the reversal of chargebacks, this document can serve as a valuable guideline to help suppliers better manage disputes.

Researching and disputing chargebacks is a major headache, and a potentially long and expensive process, for merchandise suppliers. They receive a chargeback. They research the chargeback to the best of their ability based on the information they have. They believe the chargeback is invalid. They take it up with the retailer within the proper time period but don’t provide all documentation required by the retailer.

This typically leads to one of two scenarios. In the first scenario, the supplier’s request to have the chargeback reversed is flat-out denied. Some retailers only give suppliers one opportunity to dispute a chargeback. If the supplier doesn’t provide all required information the first time, that’s the end of it. There is no appeal.

In the second scenario, the supplier gets into a back-and-forth situation with the retailer. The retailer received some but not all documentation required to conduct their own research. They go back to the supplier and say they need X, Y and Z. Of course, the retailer never said upfront that the supplier needs to provide X, Y and Z to dispute a chargeback.

So the supplier sends a second set of documents to the retailer, who then must piece together this information with the first set of documents. This creates a delay in resolving chargebacks on the supplier’s books. As long as the chargeback is out there with no resolution, it affects their days outstanding. Meanwhile, the retailer considers it a closed matter, claiming the supplier’s window for disputing the claim has expired.

At the conclusion of this back-and-forth between trading partners, suppliers often end up with invalid chargebacks that are never reversed because of all the hoops they have to jump through in order to get the retailer’s attention before time runs out.

More importantly, the issue that caused the chargeback is often left unaddressed, possibly resulting in repeat occurrences of the same issue.

A Simple Solution

Retailers should provide suppliers with a checklist of the specific documentation required to dispute each type of chargeback. This allows suppliers to get their ducks in a row and send all necessary documentation right away. Retailers can then review this information one time and make a timely decision. They can either say the chargeback is valid and clearly explain why, or concede that the chargeback should have never been issued and compensate the supplier.

Regardless of the outcome, the supplier is happy to get the deduction off the books as quickly as possible so it doesn’t affect days outstanding. The supplier can also address issues in their supply chain to prevent future errors. A checklist from the retailer helps to steer them in the right direction.

The retailer is also happy because they can deal with the dispute once and have it resolved quickly. Employees can focus on higher value tasks rather than researching and reconciling the same claims over and over. Retailers that provide a list of requirements that suppliers must follow to ship orders correctly should just go the extra mile to tell suppliers exactly what must be done to dispute a chargeback.

It’s a checklist. It’s not that hard. And it can go a long way to reducing the tension and animosity that can build during a prolonged dispute about a chargeback.

We invite more retailers to participate in the RVCF survey, which will allow us to provide deeper insights to suppliers and ensure more retailers receive the right documentation when suppliers dispute chargebacks. To request a link to access the survey, contact Susan Haupt at




Tags:  Chargeback  Chargebacks  Deductions  Dispute  Documentation  Reconciliation  Survey 

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Chargebacks and Penalties for Poor Inventory Productivity?

Posted By RCVF Admin, Saturday, August 4, 2018
Updated: Saturday, August 4, 2018

Chargebacks and Penalties for Poor Inventory Productivity?

by Victor Engesser & Stephany Goodnight of RVCF

Inventory productivity is increasingly becoming a key area of focus for retailers.  As we highlighted in the June issue of the RVCF Link newsletter, inventory is typically the largest asset on the balance sheet for retailers and contributes significantly to the liquidity of the organization.  Many retailers are seeing their inventory turns slowing, which has a direct impact on cash flow.  At the same time, both retailers and suppliers are under pressure to operate with leaner inventory.  We recently read a trade article that got us wondering, "Will inventory productivity become the next element of supplier compliance management?"

In the olden days, inventory management was fairly simple. A retailer met with a supplier, negotiated a price, wrote a purchase order, and paid in full 30 days after the product arrived into the retailer’s distribution center (DC). At that point, the inventory was all theirs to sell (or not sell).

However, over time, compliance management came to be.  Retailers expect orders to be on time, in full and in accordance with a myriad of other requirements.  As retailers keep "fine tuning" this process, is it possible we have reached a point where suppliers will not only be responsible for delivering inventory, but also for ensuring inventory is sold within a reasonable amount of time?  How much responsibility do suppliers have with respect to inventory productivity?

According to a recent article by Daphne Howland in Retail Dive, Amazon is instituting a series of initiatives aimed at improving inventory management on its Marketplace.  In July, Amazon began assigning an “inventory performance index” to each seller.  We are not sure how this index is calculated, but sellers who fail to achieve a minimum index score will be prohibited from sending new shipments to Amazon until their inventory levels drop below specified limits. Sellers will also be charged a “store overage fee” on the excess inventory. 

In the past, Marketplace sellers had been able to pay for unlimited storage.  Not surprisingly, Amazon is also taking a harder look at unsold inventory, especially aged (365 days or older) inventory, by adding additional monthly charges to motivate space productivity improvements.  Amazon’s fulfillment costs have escalated over the past year as new DCs have been added and Prime members’ expectations for customer service continue to rise.

In light of this, we can envision other retailers questioning whether they should be looking at store space productivity or DC space productivity in a similar way. Until now, most traditional merchandise retailers have made store shelf assortment decisions and planagram location and space decisions while looking at sales and margin metrics.  We have heard very little to suggest poor inventory productivity performance has escalated to a compliance program violation or candidate for automated chargebacks.  But we also recognize that fulfillment costs are escalating and DCs do not have unlimited space.

Clearly, inventory productivity can be measured and key performance indicators (KPIs) such as inventory turns, DIOH (days inventory on hand), and GMROI (gross margin return on inventory investment) are valuable performance metrics to add to a supplier scorecard.  But setting a required performance standard and holding suppliers to this performance as part of a compliance program is not the norm today, and with so much variability throughout the supply chain, a single standard seems unrealistic.   However, having supplier performance expectations around inventory performance does seem likely.

We at RVCF would like to hear your thoughts and opinions on this topic. We are especially interested to know if you feel inventory productivity should remain a retailer (internally-managed) responsibility and, as such, a business area best handled as part of the merchant/supplier relationship management process.  Or do you feel that inventory productivity should be thought of as an element of the end-to-end supply chain and would benefit if incorporated into the supplier scorecard so performance could be more broadly managed?

Give this some consideration and, if you agree, we can make this topic a part of the Retailer Open Forum discussion at the 2018 RVCF Annual Fall Conference this October in San Diego.  We are already planning to delve more deeply into the area of Inventory Management and Productivity during the Fall Conference, with three breakout sessions included in the agenda:  Business Processes Driving “Buy Online Pickup in Store,” Selling More with Less – Smart/Lean Inventory, and Best Practices in Inventory Management.

See you in San Diego!




Tags:  Amazon  Chargeback  Chargebacks  Inventory Integrity  Inventory Management 

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What It Really Means to Be Proactive when Dealing with Chargebacks

Posted By Administration, Thursday, February 9, 2017
Updated: Wednesday, February 8, 2017


We don't wait for the engine to fry. We get an oil change every 3,000 miles or so.

We don't wait for hackers to take over our computer. We install antivirus software.

We don't wait for our teeth to rot. We brush twice a day and visit the dentist twice a year.

Being proactive saves money. It saves us from aggravation. It allows us to focus on what we really need and want to do each day. Unfortunately, we spend too much time reacting to things. Chargebacks are a perfect example.

You know the chain of events. The shipment went out, the retailer received it and, lo and behold, there's a compliance violation. It could be an issue with the ASN, the pre-pack configuration, the retail price on the ticket – something on that order doesn't match the purchase order or adhere to the retailer's requirements.

The retailer issues a chargeback – the monetary solution to get the supplier's attention. Once that chargeback is deducted, the hourglass is flipped. Most retailers set a short time period for suppliers to research the cause of a claim and either address the cause or dispute the claim if the cause is determined to be invalid.

Because most suppliers do business with multiple retailers, chargebacks are inevitable, and they can mount quickly. Because the supplier is constantly researching and addressing chargebacks, it's almost impossible to not be in reactive mode. Almost. But does it really have to be that way? Is it possible to get out in front of chargebacks, or is that just wishful thinking? With a little work, you can be proactive and prevent chargebacks. The first and most obvious way to avoid chargebacks is to ship everything compliantly. Being perfect isn't exactly realistic, but greater attention to compliance requirements and collaboration with retailers to hash out any issues is the first step.

The easiest way to do this is by using the RVCF Compliance Clearinghouse. This is a free service for RVCF supplier and 3PL service provider members. Many of these members have even told us that the Compliance Clearinghouse was the main reason why they joined RVCF. RVCF constantly monitors the compliance rules and requirements of numerous retailers so suppliers and 3PL's can focus their resources on higher-value tasks. We then alert them of any changes in a daily e-mail. This allows you to be proactive in addressing these changes. Realistically, one notification of one requirement change from one retailer through the Compliance Clearinghouse could prevent a chargeback that far exceeds the cost of RVCF membership.

However, if you're unable to comply with retailer requirements due to systems issues or facility setup, it's your responsibility to be proactive and contact the retailer. Before you place that call, you should have a clear explanation of why you can't comply, as well as a solution to propose, even if it's a temporary workaround that buys you time while you work on a permanent fix.

Think of how much time and money you'll save by being proactive rather than waiting to receive the chargebacks and constantly playing catchup.

But you'll still get chargebacks. Nobody is perfect. Then what?

Many retailers offer pre-deduction notifications to alert suppliers to compliance violations so suppliers can research claims before deductions are taken. A pre-deduction notification will typically include a code or brief description of the violation and, ideally, more detailed information so the supplier can quickly research the issue.

At this point, the supplier can either acknowledge that the deduction is valid or dispute the claim and produce evidence that proves the deduction is invalid. Most importantly, the pre-deduction notification allows the supplier to correct an issue before any other orders are shipped, meaning the prevention of numerous other chargebacks that may have resulted had the issue not been resolved until after actual deductions took place.

Respondents to our 2016 Merchandise Supplier Compliance Management Survey offered a lengthy list of retailers that provide pre-deduction notifications – a sure indication that retailers are eager for their supplier partners to be proactive about resolving non-compliance issues quickly.

Sadly, many suppliers don't have a formal process for researching these notifications, or they simply don't have the resources. To take advantage of pre-deduction notifications, suppliers need to devote at least one or two hours per week to researching them. It's important to for suppliers to spend time on both sides of the deduction – before and after – to make a dent in combating the chargebacks they receive.

Prioritization is the key. Tackle retailer requirements as soon as they're issued. Use the RVCF Compliance to ensure you're receiving updates as they happen and managing them efficiently. Take advantage of pre-deduction notifications so one violation doesn't lead to many. Implement a formal process for researching and disputing chargebacks. Collaborate with retailers to solve problems.

The odds of completely eliminating chargebacks are slim. But being proactive, minimizing violations, and maintaining a close relationship with your retailer customers is far less costly and less stressful than constantly working from behind and digging out from a mountain of chargebacks.

CLICK HERE to return to the FEBRUARY 2017 RVCF LINK

Tags:  Chargebacks 

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From the Desk of Kim Zablocky: Suppliers, It's Time to Tighten Up the Ship

Posted By Administration, Thursday, October 13, 2016
Updated: Tuesday, October 11, 2016

Walmart and Target have begun to power up their vendor compliance programs and get more aggressive with their requirements. Higher fill rates. Faster replenishment. Smaller shipping and delivery windows. Shorter lead times. Fewer early or late shipments.

Of course, it's not just the big guys. The rest of the industry is following suit.

The more accurate and predictable the retailer's inventory, the less inventory they need to carry, which means lower carrying costs. When retailer requirements are met, they minimize the risk of out-of-stocks. Fewer errors means merchandise gets on the shelf and into the hands of the customer more quickly.

Greater inventory accuracy also helps retailers get better at accommodating e-commerce orders. When a shopper goes online and clicks "buy," the retailer needs to know if they have the item and where it is. Can the order be fulfilled from a store? If so, which one? If not, where is the item and how quickly can it be in the hands of the customer?

This is why retailers are putting so much pressure on merchandise suppliers to clean up their act. These days, most retailers are using exception-based software to analyze data from the purchase order, the advance ship notice, and the physical order. If one of the three doesn't match up, the retailer will hit the supplier with a chargeback.

As retailers become more aggressive with their requirements and chargebacks, suppliers need to raise their game. They need to make sure their warehouses are up to snuff. They need to make sure orders are packed accurately. They need to make sure shipments are properly scheduled and shipped on time. They need to beef up their supply chain and shipping apparatus.

For example, if you're relying on seasonal and part-time warehouse workers who don't exactly have a vested interest in what your company is trying to achieve, you increase the risk of non-compliance. If you're using a system and technology that doesn't scan items as they're packed so you're automatically alerted of packing errors, you increase the risk of non-compliance.

Suppliers that have been frustrated with seemingly unrealistic retailer requirements for years could be in for a rude awakening. Compliance is about to go from triple A to the major leagues, and suppliers that fail to adapt could get left behind. If you want to work with the big retailers, you need to be able to hit a 100 mile per hour fastball.

Recently, I had a conversation with one of our supplier members about having the right mix of people to manage deductions, and the fact that quite a few long-time vendor compliance people are looking for jobs.

He said, "If I have $1 million in deductions, why would I spend $150,000 a year on someone who's only going to collect $150,000 of that $1 million in deductions?"

I'll give you a second to pick your jaw up off the floor.

Here's the problem (one of many) with that line of thinking. That $1 million in deductions could quickly turn into $2 million or $3 million as retailers get more aggressive with their compliance programs. Instead of accepting chargebacks and burying the expense in the cost of goods, suppliers need to make smart investments in people, processes and technology to prepare for what's coming.

Tougher requirements from Walmart and Target are just the beginning. It's just a matter of time before this becomes the new normal.

Merchandise suppliers, you need to engage and collaborate with retailers. You need to show up at RVCF conferences and hash out these issues in person. Find out what changes are on the way and determine what adjustments need to be made on your end to meet the new requirements. Keep channels of communication open instead of simply continuing with the status quo, begging for forgiveness, and accepting chargebacks as a cost of doing business.

In the very near future, that cost may be too much to absorb. It's time to tighten up the ship.

(646) 442-3473

CLICK HERE to return to the OCTOBER 2016 RVCF LINK

Tags:  Chargebacks  Vendor Compliance 

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What Is the State of Compliance Management?

Posted By Administration, Thursday, February 11, 2016
Updated: Tuesday, February 9, 2016


A few weeks ago, Retail Value Chain Federation (RVCF) introduced a survey for merchandise suppliers that is intended to help us assess the state of compliance management. We want to know how compliance requirements, onboarding, and various types of deductions and chargebacks are being managed, the prevalence and role of cross-functional teams in managing chargebacks, and the level of collaboration with retailers.

What processes are you following? What tools are you using? Who is managing these processes? What are your biggest challenges and successes? How can certain pitfalls be avoided? What ideas, processes and/or tools might benefit other merchandise suppliers?

The results of this survey will be presented during a session at the annual RVCF Spring Conference, being held April 17-20, 2016 at the Sanibel Harbour Marriott Resort and Spa in Fort Myers, FL. Your participation will help us determine what is working and what is not so we can share information that will improve compliance management across the board.

In addition to highlighting key data from the survey during this conference session, we would like to assemble a panel of merchandise supplier representatives to speak about various topics related to compliance management. Each panelist would deliver a brief presentation about how their organization is successfully handling a certain component of compliance management – what processes or best practices are being followed, how specific tools are being leveraged, and the ideal organizational structure for meeting compliance goals and building a cohesive trading partner relationship.

A sample of topics that we would like to cover during this session at the Spring Conference includes:

  • Process and/or tool used to manage chargebacks, including cataloging, researching and disputing
  • Compliance department structure and communication within the supplier organization, including cross-functional teams
  • Processes for obtaining, reviewing, communicating, and negotiating updates to compliance requirements within the supplier organization and, as appropriate, with the trading partner
  • Process for onboarding with the trading partner

The ultimate goal of conducting this research, presenting the findings at the Spring Conference, and having a panel share specific examples of best practices for compliance management is to provide people who attend this session with solutions that they can implement in their own organizations.

We want all audience members to walk away with ideas for reviewing compliance guides and researching deductions more efficiently, disproving and recovering money due to invalid deductions, and negotiating better agreements. We want you to become acquainted with technology that other suppliers are using and connect with the service providers who can help you deploy these tools. This session could even be an opportunity for you to prove to senior management that your organization is shorthanded in the area of compliance management.

The first step is to complete the compliance management survey thoroughly and thoughtfully. The second step is to let us know if you would like to participate in a panel during the Spring Conference session in which survey findings will be presented. Again, each panelist will have an opportunity to deliver a brief presentation about a specific example of how they are succeeding with compliance management.

If you're interested in participating in the compliance management survey, contact Evie Hooper. For more information about the RVCF Spring Conference, click here. Early bird pricing ends February 15, 2016, so register today!

CLICK HERE to return to the FEBRUARY 2016 RVCF LINK

Tags:  Chargebacks  Compliance Management  Cross-Functional Teams  Deductions  Sc 

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Out of Control Chargebacks

Posted By Administration, Thursday, February 11, 2016
Updated: Tuesday, February 9, 2016

by Chris Manchen, 1 EDI Source, Inc.

Studies indicate that chargebacks can add up to almost two percent of revenue. Ask these three questions to learn whether or not chargebacks are out of control in your organization.

Usually retailers have good reasons for implementing chargebacks. Yes, chargebacks can be painful, but the retailer believes that the momentary financial pain will drive suppliers to better comply with policies and eliminate costly inefficiencies in the overall supply chain. However, when the supplier lacks visibility into the actual reasons for those chargebacks and are unable to fix the systematic problems, they usually resign to the fact that chargebacks are simply a cost of doing business. With today's modern EDI technology, it doesn't have to be that way.

First, an organization must understand how chargebacks affect their business and, more importantly, relationships. Start by asking these questions:

  1. Does your organization have a deduction threshold and how much is it?
  2. Do you believe retailers are "playing games"?
  3. Are chargebacks considered a cost of doing business? How are they reported and is there an understanding of why retailers assess chargebacks?

Deduction Thresholds
Accounting teams seeking to streamline operations implement deduction (or chargeback) thresholds to reduce research time spent on issues considered too small to worry about. They are trained to write-off anything under a certain threshold (let's say $75 for this example) with the assumption that anything less wouldn't be worth the time to investigate.

While the assumption seems logical, the reality is that these deductions quickly add up. In fact, in Attain Consulting Group's Customer Deductions: 2015 Benchmark Study, they suggest that those fines can add up to two percent of overall revenue. So if there is little to no oversight, the issues can be difficult to resolve.1

Once an organization understands how large the deduction thresholds are for a supplier, it can determine how big of a problem they have with chargebacks – but a good indication that chargebacks are out of control is thresholds that exceed $100.

Retailers Playing Games
A vast majority of retailers issue chargebacks as an attempt to make the supply chain more efficient. For example, if an Advanced Ship Notice (EDI 856) is missing when the goods are received in a distribution center, it can be costly for that retailer. Instead of automatically sorting goods, they must each be manually entered and labels must be printed before they are sent on their way. So when a supplier indicates that a retailer is just playing games, it's pretty clear that the supplier doesn't have a full understanding of the chargebacks they are receiving and how to resolve the issue.

Cost of Doing Business
Many suppliers feel that chargebacks are just a cost of doing business and even have a budget line on the income statement to account for them. When chargebacks become so predictable that an organization must budget for them, the system in place is out of control.

Moving Forward
Over the last 20 years, the retail supply chain has been automated to a large degree and suppliers do have the tools to eliminate this friction – here's how:

  1. Measure chargebacks by retailer and by type
  2. Develop a team from accounting, IT/EDI, fulfillment and customer service that meets regularly to review chargebacks
  3. Implement tools to catch chargebacks and other fees before they reach the accounting department

Learn more about minimizing and even eliminating chargebacks at the RVCF Spring Conference in Fort Myers.


Chris Manchen plays multiple roles as 1 EDI Source's CIO that go well beyond the traditional duties of a CIO. Since Chris worked was a client prior to joining 1 EDI Source, he brings an unprecedented understanding of executive decision making, empathy for technology end users, and a solid understanding of the market that we serve. What makes him unique is how he is able to apply his experience into a client-centric view of internal systems and processes. We invite you to visit our website at

CLICK HERE to return to the FEBRUARY 2016 RVCF LINK

Tags:  Chargebacks  Deductions 

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