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Struggling With Chargebacks?

February 08, 2011

As retailers cope with lagging sales and escalating costs, manufacturing and distribution companies feel the domino effect with chargebacks (also known as customer deductions and short pays). Most can be classified into three categories:

Intentional chargebacks, such as markdowns, discounts, margin guarantees, rebates, and advertising. Many of these are pre-approved, and therefore, aren't usually recoverable.
Preventable chargebacks, which generally result from compliance violations like early or late delivery, freight infractions, and handling charges.

Unauthorized chargebacks, which are often a mix of compliance violations and miscellaneous chargebacks. They can include concealed shortages, pricing discrepancies and returns.
Getting chargebacks under control is challenging. In some companies, accounts receivable and finance departments get the blame, but chargebacks are generally the responsibility of the entire organization, often stemming from activities in the warehouse, customer service, sales and IT departments. In many cases, they can be prevented through improved business practices, negotiations with retailers and other strategies.

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