May Margin Check: Are Deductions Cutting Into Growth?
- The HRG Team
- May 4
- 4 min read
May can be an unusual month for retail suppliers.
On paper, things often look good. Spring promotions are underway, summer inventory is moving, and buyers are already planning for back-to-school, fall, and the holidays. Retail demand is still strong. The National Retail Federation predicts retail sales will grow by 4.4% in 2026, reaching about $5.6 trillion.
That all sounds promising.
But suppliers know that sales growth and profit growth are not always the same.
A supplier might ship more cases and get more purchase orders, but still see margins shrink because of shortages, deduction claims, freight issues, promotional disputes, markdowns, and post-audit activity. That is why May is a good time to check your margins.
Not just a sales check.
A margin check.
More Volume Can Lead to More Deductions
When volume goes up, every part of the process is tested.
Item setup is tested.
Routing is tested.
Warehouse accuracy is tested.
Retailer portal discipline is tested.
Accounts receivable are tested.
Here is a fictional example. A regional beverage supplier gets a big spring boost at a national retailer. The team celebrates because shipments are up 18% over plan. But when the payment comes in, it is short. The retailer claims shortages on several shipments, adds late-delivery fees to two loads, and applies a promotional allowance that does not match the supplier’s agreement.
The sales report says, “Great month.”
The cash receipt says, “Not so fast.”
This is where many suppliers get stuck. Their sales are growing, but so are the retail deductions.
The Hidden Problem: Many Deductions Go Unchallenged
Retail deduction claims commonly fall into a gray area. They are too large to ignore, but too complicated to resolve quickly.
Supporting documents might be spread across three different portals. The bill of lading may need to be matched with an advance ship notice. The promotional agreement could be buried in an email chain. The deduction code might not clearly explain what happened.
So the team does what most busy teams do.
They move on.
But that can get expensive. According to SupplierWiki, suppliers working with several retailers often receive deductions, but only 20% to 30% are usually disputed. Of those, about 40% are won back on average.
That should make every chief financial officer stop and think.
May Is a Good Time to Review the Impact
May gives suppliers a helpful checkpoint before summer gets busy.
By this point, many spring deductions are visible. Easter promotions are over, Mother’s Day sales are happening, and Memorial Day promotions are coming up. Retailers are also working through resets, changes, and seasonal demand.
This is the perfect time for supplier teams to ask themselves:
Are shortage deductions going up?
Are compliance fees linked to the same distribution centers?
Do promotional deductions match the actual deal sheets?
Are freight claims related to carrier performance, routing mistakes, or retailer receiving problems?
Are post-audit claims showing the same old patterns?
These questions are not just routine. They point to real financial issues.
If shortage claims keep coming up, it could mean there are receiving disputes. A pattern of compliance deductions might show problems with labels, case packs, or shipping notices. A jump in promotional deductions may reveal gaps between sales, trade spending, and accounts receivable.
The money is important, but the patterns matter even more.
What Suppliers Should Do Before May Is Over
Start with a practical review. Gather retail deduction claim data by retailer, type, code, dollar amount, and age. Do not treat every claim the same. Focus on claims that are high in value, have strong documentation, and show up often.
Then, look both backward and forward.
Looking back: What has already been deducted that you might be able to recover?
Ahead: What can you fix now to prevent the same issues in June, July, and August?
For example, if a supplier keeps seeing shortage claims from one retailer's distribution center, it is not only about getting money back. It could be a problem with shipping documents, pallet setup, receiving, or proof of delivery. Recovering money is important, but finding the root cause helps prevent future losses.
Both recovering money and finding the root cause are important.
How HRG Can Help
Harvest Revenue Group helps suppliers recover invalid retail deductions and spot patterns that could otherwise go unnoticed. HRG was created to solve this problem: helping suppliers recover money lost between what they earned, what was deducted, and what can still be claimed.
The goal is not to create conflict with retailers.
The goal is to recover valid claims, dispute incorrect ones, and help supplier teams see where margins are being lost.
May is a great time to review your numbers before the year gets even busier. If deductions are cutting into your growth, HRG can help you find out where the money is going.
Take Action
Schedule your deduction recovery review with HRG today and start regaining lost margin before summer.
