What Are the Different Types of Kroger Deductions?
- The different types of Kroger deductions
- What each code means
- What you can do to fight invalid deductions
Kroger suppliers will see different types of deductions that will impact their profits. For this reason, they need to thoroughly understand the various Kroger chargeback types to avoid costly mistakes.
To understand these deductions, suppliers only need to check the vendor contact list to see the entire list of deductions. This article explains what each deduction code means and a few additional details.
What are the types of Kroger deductions?
There are 13 types of deductions Kroger deductions that suppliers can see. The kind of deduction will be on the invoice as a code (e.g., CD or ORAD). Suppliers need to understand that they don’t have much time to file claims on invalid deductions. They can only do so within 180 days.
Cash Discount (CD)
On the invoice, suppliers will see the Cash Discount (CD) deduction as “Discount Amount.” These types of deductions are typically in percentage terms. To understand them, suppliers must research any cash allowances before submitting their dispute claims.
CRV Repays (CV)
The CRV Repays (CV) type of chargeback isn’t for everybody. They are only applicable or relevant to suppliers with a California Refund Value (CRV) or Bottle Deposits agreement. A Bottle Deposit Repay Request is necessary to dispute this deduction.
EDI Non-Compliance (EV)
The EDI Non-Compliance (EV) deduction occurs when there is an issue with a required EDI document. Before going any further, it’s worth stating that Kroger prioritizes Electronic Data Interchange (EDI). Without it, none of the following would be possible:
- Increased accuracy
- Better timelines
- Low operating costs/expenses
To this end, suppliers should have no problem receiving or sending any purchase order through EDI. They usually have 90 days to comply with this requirement. Otherwise, they should be ready to pay an additional fee of either $250 or 1% of the amount on the invoice.
List Cost (LC)
List Cost (LC) is another term or code that suppliers must learn when invoicing Kroger. It refers to the difference in cost in simple terms, which the vendors can derive or determine from the “3” Reason Code.
For price increases, Kroger requires written notice from the supplier within the following deadlines:
- 90 days prior to the effective date for general merchandise
- 60 days prior to the effective date for health and beauty care products
- 30 days prior to the effective date for all other items (excluding commodity items, such as perishables or tobacco)
Kroger is not obligated to increase a good’s price if the retailer does not receive a notification within the timeframes listed above.
For price decreases, suppliers must submit a written notice of a proposed decrease a minimum of 30 days prior to the effective date (excluding commodity items). If Kroger does not receive a notification within that timeframe, the retailer will apply a price support charge.
List cost deductions occur when price changes are reflected on the supplier’s EDI documents without proper notification to the Kroger representative.
Off Invoice (OI)
Suppliers with allowances that are due off-invoice will receive deductions using this Off Invoice (OI) code. Typically, they work with Kroger to take these allowances from their invoices but only as a “2” reason code.
However, suppliers have to take note of two other things here:
- Deductions are only from the payment.
- Deductions only come into play when manual corrections are necessary for trades, co-ops, salvages, or any other kind of off-invoice allowances.
Late Shipment (ORAD)
Suppliers who would prefer to interact with Kroger at any level can only do so after acquainting themselves with Supply Chain Vendor Documents listed on the Lavante platform’s help menu. These documents are full of information on codes such as On Time Delivery Charges.
More importantly, the documents also inform suppliers about the applicable Late Shipment (ORAD) fines. When preparing an invoice, the term or code to use would be ORAD, which one needs to understand before submitting any claim.
ORAD stands for “Original Requested Arrival Date,” meaning the delivery date listed on the purchase order. Kroger has other compliance requirements regarding the delivery of ordered items, such as on-time and case-fill rates.
Overage (OV) is simply an overpayment that’s above what suppliers indicate on their invoices. It’s the extra amount on top of the gross total appearing on the invoice. Under the Kroger system, this would include claims that fall under any “7” reason code.
At this point, it’s worth mentioning that Kroger doesn’t encourage overages. Nevertheless, the company’s system creates room for the overage. That explains why this code is available as one of the different Kroger deduction types.
Shipper Billing (PS)
Shipper Billing (PS) is a type of Kroger deduction that applies to specific invoices. It’s only for any invoice for the Kroger or Peyton warehouse locations. This deduction will appear as ###PS.
Pickup Allowance (PU)
The Pickup Allowance (PU) deduction reason code refers to the freight charges that suppliers have to pay on purchase orders that Kroger carriers pick up (i.e., collect suppliers). Suppliers will see these types of deductions as “9” reason code.
Return Issues (RT)
Return Issues (RT) deductions relate to issues with or the need to return items. Kroger has a returns and refunds policy in the case of customer dissatisfaction.
Examples of the different ways suppliers will see this code include:
- 701-9####### / 701-8#######
Shortage (SH) deductions are pretty common in transactions with Kroger. Suppliers will see them under “4” or “6” Kroger deduction types for accounting. These types of deductions appear as deduction code “08” for Peyton’s invoices.
This code often indicates two circumstances, which are:
- Shortage of units
- List cost issue
Shortage deductions are reasonably easy to dispute using a Bill of Lading and relevant EDI documents showing that the supplier delivered the order in full.
Stop Payment (SP)
Stop Payment (SP) is only applicable where reissued checks are concerned. Typically, Kroger only honors this request for checks that suppliers haven’t received within 30 days. This kind of information is readily available on the Kroger program too.
However, suppliers have to check the document known as “Stop Payment” for all the information they need to submit this claim. The paper addresses all the nuances regarding such a request, which helps suppliers to avoid mistakes.
Wrong Vendor (WV)
Yes, wrong vendors are a thing in the transactions between Kroger and suppliers. Some vendors receive deductions or payments wrongly. Here, the Wrong Vendor (WV) deduction code refers to those whose Supplier ERP ID details are different from what’s in the system.
What you should know about Kroger deductions
First, it’s important to state that the deductions can be erroneous to all accounts payable. Even if they aren’t, the infractions that forced Kroger to cite them in the first place could be wrong. That explains why suppliers have to know not only the deductions but also the infractions.
If you feel like disputing, then you should follow your instincts. Fortunately, Kroger has enough personnel to handle such disputes. We will go over how to create claims for deductions in Lavante in another article.
Other than that, you could also get in touch with Kroger through DemandTec, an online service that it works with to provide suppliers with information on Kroger deduction types. You should email email@example.com to register for DemandTec.
The email you send to the above address should contain some pertinent information. These include your company’s name, the name of your company’s contact person, email address, phone number, and mailing address.
After registering, you should now be in a position to access all details regarding the different Kroger deduction types. If you don’t understand, don’t hesitate to ask Kroger for clarification to prevent erroneous deductions.
Written by The SupplyPike Team
About The SupplyPike Team
SupplyPike builds software to help retail suppliers fight deductions, meet compliance standards, and dig down to root cause issues in their supply chain.Read More