How to Avoid Walmart Deduction Penalties
How to Avoid Walmart Deduction Penalties
How to Avoid Walmart Deduction Penalties

How to Avoid Walmart Deduction Penalties

Even more so than other retail giants, Walmart enforces a system of deductions, chargebacks, and penalties on its suppliers for various infractions. To streamline and expedite the resolution of these deductions and disputes, automation technologies, including Bots, are increasingly employed to interact with Walmart’s Supplier Center, minimizing manual effort and accelerating the resolution process.

In February 2024, Walmart announced an easing of some penalties by reducing its OTIF benchmarks from 98% to 90% “on time” and 95% “in full.” Vendors that fall short of these benchmarks face penalties of 3% of the cost of goods for the shortfall. However, by employing an effective management process, your organization can avoid many, if not all, of these Walmart Deductions.

Using the Walmart Supplier Center

Walmart’s Supplier Center is a comprehensive online platform designed to enhance collaboration and communication between Walmart and its suppliers. Beyond serving as a centralized repository for essential information, the Supplier Center is crucial in streamlining various aspects of the supplier-retailer relationship, including resolving deductions, chargebacks, and disputes.

Walmart Supplier Center Features Related to Deduction Resolution:

  1. Interactive Dashboards: The Supplier Center typically provides suppliers with interactive dashboards that offer real-time visibility into deduction-related data. These dashboards may include analytics and reporting tools to help suppliers monitor and analyze deductions over time.
  2. Automated Communication Channels: The platform incorporates automated communication channels to expedite the resolution process. Suppliers can receive alerts, notifications, and messages related to deductions, enabling them to stay informed about issues that require attention.
  3. Deduction Management Tools: Suppliers can access dedicated tools specifically designed for deduction management within the Supplier Center. These tools may include features for efficiently categorizing, tracking and resolving deductions.
  4. Documentation and Case Management: The platform typically supports documenting relevant information about deductions, chargebacks, and disputes. Suppliers can create and manage cases, attaching supporting documentation and correspondence for a comprehensive view of each deduction scenario.
  5. Resolution Workflows: Automated workflows are often integrated into the Supplier Center to guide suppliers through the steps required to resolve deductions. These workflows may include prompts for documentation submission, communication with Walmart’s teams, and other resolution-related actions.
  6. Collaborative Spaces: The Supplier Center fosters collaboration between suppliers and Walmart’s teams involved in the deduction resolution process. Dedicated spaces for communication and collaboration help streamline discussions and ensure that all parties are aligned in addressing deduction issues.
  7. Training and Resources: The Supplier Center may offer training modules and resources to empower suppliers in deduction resolution. These materials can include guidelines on best practices, explanations of common deduction types, and insights into Walmart’s expectations for compliance.

Suppliers must leverage the functionalities within Walmart’s Supplier Center to address and resolve deductions proactively. Regular interaction with the platform, staying informed about updates, and utilizing automation tools, including Bots, contribute to a more efficient and collaborative deduction resolution process. As features and functionalities may evolve, suppliers are encouraged to engage with the Supplier Center directly for the most current and tailored information.

Types of Walmart Deductions and Chargebacks

Deductions, in the context of Walmart’s operations, can take various forms, and a detailed list of Walmart deduction and allowance codes is provided at the end of this article. Common deduction types include shortages and damages, chargebacks for non-compliance, invoicing errors and discrepancies, returns and chargebacks, and OTIF (On-Time In-Full) charges.

  •   Walmart Shortage/Damages Deductions.
    These deductions occur when there are discrepancies in the quantity or condition of the delivered goods. Shortages and damages during transportation or handling are common reasons.
    Avoidance Strategies:
    • Ensure accurate and thorough documentation of shipments.
    • Use robust packaging to minimize the risk of damage during transit.
    • Implement quality control measures before shipping to identify and address potential issues.
  • Walmart Chargebacks for Non-Compliance.
    Walmart may impose chargebacks for non-compliance with supplier requirements, including labeling, packaging, and shipping standards.
    Avoidance Strategies:
    • Familiarize yourself with Walmart’s vendor guidelines and compliance standards.
    • Regularly update and audit your systems to meet Walmart’s specifications.
    • Communicate with Walmart’s compliance team to address any potential issues proactively.
  • Walmart Invoicing Errors and Discrepancies.
    Deductions may occur due to discrepancies in invoicing, such as pricing errors, inaccurate quantities, or mismatched product descriptions.
    Avoidance Strategies:
    • Implement rigorous checks in your invoicing process to catch errors before submission.
    • Regularly reconcile your invoices with Walmart’s purchase orders to identify and rectify any discrepancies.
    • Foster open communication with Walmart’s accounts payable team to address and resolve issues promptly.
  • Walmart Returns and Chargebacks.
    Chargebacks related to returns can be imposed if returned products don’t meet specified criteria or if the return process does not comply with Walmart’s policies.
    Avoidance Strategies:
    • Clearly understand Walmart’s return policies and ensure your products align with these guidelines.
    • Provide accurate product information to minimize the likelihood of returns due to customer dissatisfaction.
    • Work closely with Walmart’s return processing team to address and rectify issues promptly.
  • Walmart OTIF (On-Time In-Full) Charges.
    OTIF charges are incurred when suppliers fail to meet Walmart’s delivery standards, including delivering products on time and in the expected quantity.
    Avoidance Strategies:
    • Invest in robust logistics and supply chain management to ensure timely deliveries.
    • Utilize technology to track shipments and predict potential delays.
    • Maintain open communication with Walmart to address any issues and collaborate on improving supply chain efficiency.

It’s important to note that the specific types of deductions and the processes for avoiding them can vary based on your specific agreement with Walmart, the nature of your products, and Walmart’s policies. Regular communication with your Walmart representative, staying informed about their policies, and maintaining a proactive approach to compliance can significantly help reduce and address deductions.

Carixa technology is specifically designed to streamline the Walmart deduction process, including RPA BOTS and automatic matching and reconciliation, with workflows to identify and recapture erroneous deductions. Further, Smyyth’s Deduction Teams perform “Audit & Recovery” projects to ensure no monies slip through the cracks due to excessive deductions.

Ready to get started? Schedule a personal consultation with our team to learn more.


Walmart Deduction and Chargeback Code List

Paper Code EDI Code Definition
1 F1 Defective
2 15 Return recall
3 GG Unsellable merchandise
10 1 Price Difference as Documented
11 1 Price Difference between PO & Invoice
12 3 Invoice Incorrectly Totaled/Extended
13 A5 Substitution Overcharge
14 6 Short/Damaged (Trailer Seal Intact)
15 6 Pallets/Shrink-wrapped Short/Damaged
20 6 Concealed Damage
21 6 Concealed Shortage
22 59 Merchandise Billed not Shipped
23 6 Carton Shortage SL&C
24 6 Carton Shortage/Freight Bill Signed Short
25 A9 No Merchandise Received for Invoice
26 TI Carton Shortage – Misrouting changed FOB
27 6 Carton Damage – SL&C
28 6 Carton Damage – Frt. bill signed damaged
29 TI Carton Damage – Misrouting changed FOB
30 19 Duplicate Billing
31 MH PO number not on invoice
32 MF Multiple PO numbers on invoice
33 MG PO number incorrect on invoice
34 10 Pallet charge
35 55 Sales tax – state
36 55 Sales tax – city
37 DO Insurance
38 30 Stop-off charge incorrectly added
39 MC Freight cost on backorder
40 B8 Routing violation – excessive freight
41 SO Collect – should have been pre-paid
42 MB Backhaul/pickup allowance
43 RJ Merchandise S/B prepaid to consolidator
44 RL Freight on returned merchandise
45 21 Prepaid freight incorrectly added to invoice
46 RB Freight allowance
47 SF Excessive freight charge on invoice
48 21 Freight should be prepaid to consolidator
49 54 Freight cost to forward misrouted shipment
50 71 Advertising Allowance
51 A8 Promotional allowance display/fixture allowance
52 D5 Volume allowance
53 D5 Truckload allowance
54 ZZ Warehouse allowance
55 A3 New location allowance
56 89 Allowance not given off invoice
57 D5 Quantity discount
58 OT Other allowances
59 82 Defective merchandise allowance
60 97 Handling charge as documented
61 37 Incorrect color/size allowance
62 98 Labor and handling
63 40 BOL addressed to wrong location
64 RH Early shipment
65 99 Late shipment
66 MP No PO number on carton
67 MN Incorrect PO number on carton
68 ME PO number not on BOL
69 MD Incorrect PO number on BOL
70 MO No item number on cartons
71 MM Incorrect item number on cartons
72 C9 Labor and handling
73 86 Duplicate payment
74 E1 Previous account – debit balance
75 MI Transfer of debit balance
76 C4 Buyer’s reserve
77 WO Overpayment of invoice amount
78 MQ Storage charges
79 GD Sample charges
80 76 Cash discount
81 FA Anticipation – vendor request
82 FA Anticipation – early payment of invoice
83 D6 Discount not taken at time of payment
84 L5 Interest on recovery of payment in error
85 RU Interest on overpayment
86 55 Excise tax
87 ZZ Other
90 D3 Unauthorized charge – system deduction
91 93 Merchandise destroyed – damaged/defective
92 15 Merchandise return – overstock/recall
93 4 Merchandise return – damaged merchandise
94 F1 Merchandise return – defective merchandise
95 A2 Merchandise return – wrong item
96 B5 Merchandise for repair/assembly – not returned
97 97 Returned merchandise handling charge
150 82 Soft goods defective allowance
151 B2 Purchase rebate allowance
152 28 Wholesale club allowance
161 B2 Purchase rebate allowance


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