Year-End Close: Don’t Wait on Retail Deductions
- The HRG Team
- Nov 10
- 4 min read
If you’re staring at December 31 and thinking, “We’ll clean up deductions after the holidays,” here’s the friendly nudge: don’t. A slow dispute now becomes a write-off later.
And it’s not just pennies. In consumer packaged goods, it’s common to see $2–$3 million per $1B in revenue leak through deductions—much of it invalid, miscoded, or double-counted. That’s the margin you already earned.
Let’s make sure it lands in this year’s P&L, not trapped in next year’s A/P.
What’s at stake (and why timing matters)
Retailers tighten up operations heading into peak season. Think blackout windows for ticketing, returns, system changes, and sometimes even dispute handling from mid-December through early January. Your team might still submit disputes, but approvals and credits often don’t flow until after the calendar flips.
That lag triggers two headaches:
Accrual gaps — revenue looks good now, but you miss the expense/credit alignment and have to restate or absorb noise in Q1.
Expired rights — dispute windows (90/120/180+ days) keep ticking. Wait too long, and an otherwise winnable claim times out.
A quick (fictional) example
Fictional scenario for illustration: A mid-market snacks brand enters December with $1.2M in open shortages and compliance chargebacks. Finance assumes half will be recovered “eventually,” but doesn’t accelerate review. Blackout hits; credits slip into February; 13% of claims age out due to a 120-day window. Final result? $156K lost to the clock, plus a bumpy Q1 variance story.
The Year-End Deduction Close Checklist
Use this now—before blackout dates kick in.
1) Set a hard internal cutoff.
Choose a pre-holiday “last day to submit with full documentation” (e.g., December 10).
Communicate it across Finance, Sales, Ops, and 3PLs.
2) Triage ruthlessly. Sort the queue by three fields:
Age to dispute-window expiry (red = <30 days; yellow = 30–60; green = 60+)
Dollar value (top 10% first)
Historical win rate by code/retailer (work the high-probability wins early)
3) Lock your accrual method.
Policy: Accrue for valid deductions you expect to pay and probable recoveries you can reasonably estimate.
Inputs: historical recovery % by code, cycle time to credit, open claim aging, known retailer freezes.
Documentation: memos by code/retailer with assumptions and evidence.
4) Close the evidence gap.
Assemble proof packs: PODs (proof of delivery), BOLs, carrier scans, item setup screenshots, promo approvals, cost files, ASN logs.
Standardize filenames and store centrally (shared drive by retailer > code > claim #).
5) Align with Sales (yes, now).
Confirm promotions, new-item launches, and price-file changes that could trigger “valid” debits (no surprises in January).
Have Sales validate which “shortages” are actually receiving variances or misapplied allowances.
6) Time-box the tech.
If an automation rule is 80% right and 20% wrong, turn it off for year-end or add manual review—bad auto-disputes waste the window.
7) Pre-book retailer differences.
For retailers known to credit post-holiday, book accruals to match the expected timing and reverse when credits arrive.
Accruals that won’t bite you in Q1
Here’s a pragmatic way to avoid “January surprise” swings:
Expected Recovery (by code & retailer) =Open Amount × Historical Win Rate × Probability of Resolution before/after blackout
If a retailer reliably credits 30–45 days after approval, assume credits initiated after Dec. 10–15 will land in Q1.
Book the accrual now, document the basis, and set a reversal date aligned to typical credit timing.
Reconcile weekly through January until the variance drops under your materiality threshold.
Pro tip: Keep the model simple but transparent. Auditors love clarity. Controllers love no-drama closes.
The 10 reports to run this week
Open deductions by retailer × code × age
High-value top 50 claims (with assigned owner)
Claims <30 days to expiration (red list)
Recovery win rate by code (last 12–24 months)
Average days-to-credit by retailer
ASN/label error trend (last 90 days)
Shortage vs receiving variance match-rate
Promo/billback mismatch log (promo ID vs invoice)
Cost-file change log (effective dates vs PO dates)
Carrier performance report for OTIF-related claims
Roles and fast handoffs (so nothing stalls)
Finance (owner): set accrual policy, approve disputes, maintain evidence library, publish the red list daily.
Sales: validate promos/terms, escalate with merchants when policy was followed.
Ops/Logistics: supply POD/BOL, ASN evidence, carrier notes; flag systemic issues (labels, appointments).
IT/Data: ensure portals, EDI, and ticketing are stable; instrument dashboards with age/dollar risk.
Create a 30-minute daily huddle through December 20 with a single Kanban: To Build → To Submit → Pending Retailer → Credited.
How HRG fits
Harvest Revenue Group (HRG) lives in this world daily—decoding codes, assembling airtight proof, and pushing recoveries across the line before windows close. If you want a quick year-end pulse check—Are we under-accrued? What’s at risk by January 5? We can help you see it clearly and act fast—practical triage.
Your move this week (summary)
Pick a pre-holiday cutoff and announce it.
Publish the red list (claims near expiry).
Lock your accrual assumptions with short memos.
Spin up daily 30-minute huddles until December 20.
Celebrate the credits that hit this year, not next.
You earned the margin—let’s make sure it shows up in 2025. Contact us.
