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Understanding Common Walmart Deduction Codes and What They Mean

The HRG Team

Walmart codes: Robot whispering into a man's ear.

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If you’ve ever looked at a deduction notification from a retailer and felt like you were reading a secret code, you’re not alone. Deduction codes can seem cryptic at first glance, but they tell an important story about where things may have gone wrong. Whether it’s a missing label, an early shipment, or a pricing issue, these codes explain the reason behind the deductions that chip away at your bottom line.


Let’s break down what deduction codes mean, why they matter, and how understanding them can help your brand avoid costly mistakes.


Why Deduction Codes Matter

Picture this: A mid-sized beverage company receives a deduction notice from a major retailer for $30,000. The reason? Code 25—no merchandise received for the invoice. The team scrambles to figure out what happened, only to realize the invoice was sent too early, causing a system mismatch. Without a plan to manage and dispute deductions, that $30,000 would have been written off as a “cost of doing business.”


But that shouldn’t be the case. According to the Retail Compliance Council, up to 10% of all deductions issued by retailers are incorrect or preventable. When brands understand deduction codes and take proactive steps, they can reclaim significant revenue.


Breaking Down Common Deduction Codes

Here are some of the most frequently seen deduction codes and what they mean:

  • Code 13: Substitution Overcharge

    • What it means: This code is issued when the invoice lists one item number, but Walmart receives a different item. If the item invoiced has a higher price than what was shipped, the difference gets deducted.

    • How to address it: Double-check the bill of lading and ensure the correct SKU is listed on the invoice. If you believe there was an error on Walmart’s end, provide proof of the shipped item.

  • Code 22: Merchandise Billed, Not Shipped

    • What it means: This deduction happens when the retailer receives fewer units than what’s listed on the invoice. For example, if you invoiced for 50 cases but only 45 arrived, expect a deduction.

    • How to address it: Use proof of delivery (POD) and signed shipping documents to dispute discrepancies.

  • Code 24: Carton Shortage/Freight Bill Signed Short

    • What it means: When a shipment is marked “short” at the retailer’s dock, it means fewer cartons arrived than expected.

    • How to address it: Confirm that your freight bill and carrier documentation align with the quantity shipped. In cases of carrier error, escalate the issue with supporting documentation.

  • Code 25: No Merchandise Received for Invoice

    • What it means: This code is typically issued when an invoice arrives before the merchandise. The system flags it as a mismatch, even if the shipment arrives later.

    • How to address it: Avoid sending invoices too early. If you need to dispute this, gather all related documents—purchase order (PO), bill of lading, and POD—and upload them to the dispute portal.

  • Code 47: Excessive Freight Charges

    • What it means: Walmart believes the freight charges on your invoice are too high.

    • How to address it: Provide a copy of the carrier’s invoice showing the exact freight cost.


The Cost of Overlooking Deductions

Let’s talk numbers. Imagine your brand generates $10 million annually in retail sales. If 5% of that revenue is lost to deductions, you’re looking at $500,000 gone—much of it potentially recoverable. Yet, many companies assume these losses are inevitable and write them off without reviewing the details.


Brands that invest time into understanding deduction codes and refining their compliance processes can recover a significant portion of those deductions. In fact, when deductions are disputed correctly, recovery rates can exceed 70%.


A Real-World Scenario

Let’s consider a fictional example of a personal care brand we’ll call FreshGlow Co. FreshGlow received $100,000 in deductions over the course of six months. After digging into the data, they realized that 30% of those deductions stemmed from early shipments (Code 64) and incorrect PO numbers on cartons (Code 68). With a few adjustments to their shipping schedule and stronger invoice reviews, they reduced their deductions by 40% within a year. The result? A $40,000 recovery that went straight back into their product innovation budget.


How to Navigate Chargeback Disputes

Filing a dispute isn’t just about hitting “submit” and hoping for the best. Here’s what a solid process looks like:

  1. Gather Documentation: Include the purchase order, invoice, bill of lading, and proof of delivery.

  2. Understand Retailer Guidelines: Platforms like Walmart’s Retail Link® have specific dispute submission steps. Following them to the letter can make or break your case.

  3. Track Progress: Keep a record of submitted disputes and their outcomes. This data can highlight recurring issues and help prevent future deductions.


Prevention Is the Best Cure

While disputing deductions is crucial, prevention is even better. Here’s how to get ahead:

  • Strengthen Supply Chain Visibility: Real-time tracking and accurate documentation can reduce discrepancies.

  • Improve Communication with Carriers: Ensure your logistics partners understand retailer expectations.

  • Audit Invoices and POs: Small errors in POs and invoices can snowball into major deductions. A second set of eyes can catch mistakes before they’re sent.


Final Thoughts

Deduction codes don’t have to be a mystery. When you understand what they mean, you can turn deductions into opportunities to strengthen your operations. Post-audit recovery isn’t about pointing fingers—it’s about creating clarity and reclaiming what’s rightfully yours.


Knowing the story behind the codes can save you hundreds of thousands of dollars and help your brand grow stronger, one dispute at a time.


So, next time you see a deduction code on an invoice, remember: it’s not the end of the story—it’s just the beginning of a smarter approach to your business.


(Note: This article references deduction codes based on insights from Walmart's Retail Link® deduction portal and common industry practices).


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