Term | Definition |
Deduction | This is the general term referring to charges taken out of the paid invoice due to supplier errors, as determined by the retailer. |
Chargeback | Often used interchangeably with the term deduction, chargeback can also refer to charges issued to the supplier from the retailer after an invoice is paid. |
Fine | Also sometimes used interchangeably with chargeback or deduction, fines more commonly refer to charges issued specifically relating to supplier compliance infractions. |
Allowance | Allowances are previously agreed upon amounts deducted from the invoice. Usually, allowances are related to promotions. |
Trade deductions/allowances | Another term for allowances, trade deductions or allowances are specific allowances taken based on pre-negotiated terms relating to promotional or marketing agreements. |
Post audit | “Post audit,” as a term, is Walmart-specific, and refers to deductions issued well after the incident as part of an audit process done by the retailer. |
AR deductions | Accounts receivable deductions |
AP deductions | Accounts payable deductions |
Off-invoice | Where some allowances are billed after the invoice, off-invoice allowances are billed directly on the invoice payment. |
Rebate | Rebate allowances are retroactively billed, after the invoice has been paid. |
Billback | Billbacks are allowances billed after the invoice. |
Valid deductions | Valid deductions are deductions issued based on legitimate supplier error. |
Invalid deductions | Invalid deductions are deductions issued in error by the retailer. These deductions should be disputed. |
Slotting fee | This is a payment made by the supplier to the retailer for specific shelf space or placement for products. |
Trade spend | Trade spend refers to the total investment made by suppliers to drive product sales, brand visibility, and/or performance. |
Debit memo | Debit memos are documentation issued by retailers to notify and/or explain a deduction imposed. |
CoOp is what Amazon calls allowances. | |
Meaning Supplier Quality Excellence Program, this is a Walmart specific supplier compliance program | |
Meaning on-time in-full, this is a common compliance program category that encompasses retailer requirements for supplier deliveries to not be late or short. | |
Vendor scorecard | Often housed in the supplier portal, the vendor scorecard is how suppliers’ can track how well they are complying with retailer compliance standards. |
OS&D | Stands for overages, shortages, and damages, and is a common way retailers refer to compliance infractions relating to short- or over-shipping or shipping damaged products. |
Overage/shortage | This is common terminology for shipments that are received with more, or less product than listed on the PO. |
Damage | Common term used to explain a deduction issued due to when damaged products are received by the retailer. |
Unsaleable | Another common term for products received that are damaged or otherwise not fit for sale on retailer shelves. |
Freight terms | Freight terms are the contractual rules that define the parties financially and operationally responsible for the transportation of product. |
EDI | Electronic Data Interchange. This is an electronic, automated system for managing supply chain processes and documents in a consistent format. |
Fill rate | Similar to OTIF, fill rate is the calculation retailers use to determine how many orders are fulfilled in accordance with what was requested. |
Dispute window | The deadline by which a supplier can submit a dispute for a deduction received. |
A BOL is a signed, legal, and binding contract used in freight shipping. | |
A PO is a document sent by a buyer to a supplier to authorize a purchase. | |
The POD is the confirmation of the receipt of goods. | |
ASN is an electronic document that provides trading partners with detailed shipment information before delivery. | |
Invoice | The invoice is the payment request sent by the supplier to the retailer for product processed through the supply chain. |
Revenue recovery is the process of using deductions as an opportunity for growth by focusing on preventing valid deductions, and getting money back through successfully disputing invalid deductions. |
Glossary of Common Deduction Terms
By Sharon Hayford, Content Writer
Last Updated December 8, 2025
3 min read
