The first two weeks of January are when finance teams do something heroic. They take a year of real-world chaos—short shipments, pricing updates, promotions, returns, compliance issues—and force it into clean financial statements.

You can have a strong sales year and still feel broke. That usually means one thing: money is leaking out after the sale—through deductions, chargebacks, and short pays.

If 2026 had a supply chain slogan, it would be: “Nice single-source you’ve got there. Hope nothing happens.” Most suppliers don’t dual-source because it’s fun. They do it because retail punishments for inconsistency are real: out-of-stocks, missed promotions, and sometimes lost shelf space.

If you sell into retail, January is when the “customer experience” turns into a finance problem. Returns are the obvious headline. But the sneakier issue is what rides along with returns: disputes, claims, and deductions that show up weeks later on the remittance—often coded in ways that make them hard to validate quickly.

From all of us at HRG, Happy New Year. As you wrap up year-end close and head into 2026, we know you are juggling more than most people ever see—margin pressure, shifting retailer programs, and a growing list of deductions and chargebacks to sort through. We just want to say: we see the work behind the numbers, and it matters.

There is something about the last few weeks of the year that makes everyone want a reset. Sales is thinking about new distribution. Operations is thinking about capacity. Finance focuses on cash, margin, and how closely the numbers align with plan. And deductions?

Merry Christmas and warm holiday wishes from the team at HRG. This season, we are especially grateful for the finance, accounts receivable, accounts payable, and operations teams who keep things moving when the pressure is highest. Behind every successful holiday season are people reconciling deductions, resolving disputes, and protecting margin one decision at a time.

You know the drill. Everyone celebrates the holiday numbers: “Record Black Friday!” “Best Cyber Week ever!” “Christmas sell-through is way ahead of plan!” Then Q1 rolls around. Finance closes the books.Suddenly, the story changes

2026 looks like a year of modest top-line growth, more challenging profit math, and more “systems-driven” retail. Translation: retailers will still want growth, but they’ll increasingly demand it through automation, tighter compliance, and pay-to-play visibility.

Year-end is when everyone wants something from you. Finance wants clean books. Supply chain wants frozen forecasts. Sales wants that last push to hit the number. Leadership wants a tidy story for the board. Somewhere in the middle of all this, deductions sit in a report tab called “later.”

If you’re a retail supplier, 2025 probably felt like you were fighting margin with both hands tied behind your back. Not because demand disappeared. Not because your product suddenly got worse.

If you work in finance, accounts receivable, or accounts payable, you’ve probably seen the promises in your inbox: “Let artificial intelligence handle your deductions.” “Automate disputes end-to-end.” “Close more claims with fewer people.”

By early December, most suppliers are looking at the same thing: big, beautiful holiday sales numbers… and a deduction report that feels like a crime scene. Retailers are forecasting more than $1 trillion in U.S. holiday sales this year, with November and December accounting for around 19% of annual retail sales. That’s the good news.

Here’s a slightly uncomfortable truth: retailers are already benchmarking you. They benchmark your on-time performance, your fill rates, your chargebacks, your defectives, and your responsiveness when something goes wrong. Programs like On-Time In Full (OTIF) can assess penalties of around 3% of the cost of goods for shipments that are late, early, or incomplete. Some retailers’ chargebacks range from 1–5% of gross invoice when suppliers don’t follow routing guides.

By early December, most suppliers are looking at the same thing: big, beautiful holiday sales numbers… and a deduction report that feels like a crime scene. Retailers are forecasting more than $1 trillion in U.S. holiday sales this year, with November and December accounting for around 19% of annual retail sales. That’s the good news.

On paper, your deduction report looks clean. You see totals by retailer, maybe a breakdown by code or reason. Someone tells you, “We’re running at about 2% of sales in deductions—pretty typical.” You nod, move on to the next slide, and feel reasonably at peace.

If you’re a chief financial officer (CFO), you probably have a sixth sense for where money hides. You can sniff out bloated trade spend, slow-moving inventory, and overhead creep from a mile away. But there’s one place even sharp finance leaders quietly overlook: the deduction line.

Nearly 203 million consumers shopped during the five-day Thanksgiving–Cyber Monday weekend—a record. More orders, more shipments, more exceptions. And that means more chargebacks. If November and December are when sales spike, January is when the chargebacks show up in your inbox. The trick is not just to pay them and move on, but to treat them like a free consulting report from your retailers.

Holiday returns are here—and how you classify them decides whether you pay for them later. You must separate true defective products from shipping damage or policy abuse (like “used once, then returned”) before retailers reset your “excessive defectives” rates. What’s at stake: the wrong label today can lock in higher return allowances or additional chargebacks for months. Fictional example (for illustration): A home electronics brand treated all returns as “defective.”

The National Retail Federation (NRF) expects 2025 holiday retail sales in November and December to cross the $1 trillion mark for the first time, up about 3.7%–4.2% over last year. And 2024 already set a record, with core holiday sales hitting roughly $994.1 billion, up 4% year over year. That’s great for headlines. But here’s the question that matters for you as a supplier: Did holiday retail sales actually lift your margin?