Retail compliance used to feel like a binder on a shelf. Now it’s more like a moving target—with three versions. A routing guide gets updated. A portal rule changes. Someone forwards an email amendment. Your third-party logistics provider (3PL) has a checklist that’s nearly identical. Meanwhile, your warehouse is just trying to ship clean, on time, every day.

One deduction is painful. Two for the same issue? That’s a margin leak with a trench coat on. Duplicate deductions usually aren’t malicious. They’re procedural. Multiple systems, multiple teams, and multiple “reasons” can get attached to the same underlying event—especially when disputes are rushed, and documentation is scattered.

February can feel… quieter. No holiday promo chaos. No year-end close panic. Just a brief window where you can finally look up. And that’s exactly when a lot of suppliers discover the problem: deductions have been stacking up in the background, hiding in offsets, short pays, and messy remittance detail. One industry paper from the Return Value Chain Federation (RVCF) put it bluntly: depending on the industry, customer deductions can reach 5%–15% of revenue, and even “typical”

Tariffs don’t just change costs. They change deductions. Because the moment your costs move, you’re in a race between reality and the retailer’s system.

February is when the holiday glow fades… and the math gets loud. You shipped hard in November and December. Sales looked great. Then the “after” shows up: returns, refunds, disputes, and retailer chargebacks that quietly claw back cash when everyone’s already sprinting into the new year.

Last year, you could win a dispute with a decent note and a screenshot. This year, that same package gets denied because it’s missing the lot code, the timestamp, the condition photo, and the proof of delivery. It feels personal. It’s not.

There are deductions you disagree with. And then there are deductions you shouldn’t even be looking at—because you already dealt with them.

January is when retailers try to get their house back in order. They’ve got seasonal inventory to clear, new sets to build, and demand that usually cools off after December. One study found retail spending drops an average 22.4% between December and January.

Q1 is the quarter where everyone asks the same question: “Did we actually make money on that holiday volume?” Because the truth usually arrives late—through promotional billbacks, pricing deductions, and post-audit debits that land weeks (or months) after the product shipped. NRF’s Retail Monitor data showed 2025 holiday sales (Nov. 1–Dec. 31) grew 4.1% . That’s a lot of invoices, a lot of promotions, and a lot of opportunities for the math to drift. And drift is exactly how

Learn how to tackle defective deductions in Q1 returns. Stop losing money to defective deductions with our expert guidance and boost your margins.

1) Split-shipment confusion Holiday fulfillment is messy. Partial shipments are common. The dispute comes when the customer (or retailer’s system) treats “partial” as “missing.” What to save:  shipment IDs, carton tracking, carrier scans by package, and timestamps showing each leg of fulfillment. 2) “Porch claims” and delivery disputes Package says “delivered.” Customer says “never received.” Retailers increasingly push for faster resolutions to protect customer experience—th

Explore the intricacies of Q1 2026 Supply Chain Risk: Freight, AI, and Deductions. Learn how deductions impact your business strategy.

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Discover how to tackle promo deductions effectively and prevent margin leaks. Learn strategies to manage promo deductions in a tariff-heavy economy.

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.

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

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.”

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.