The $500M Retail Deduction Playbook: Audit-Ready in 14 Months
- The HRG Team
- Sep 26
- 3 min read
Podcast takeaway, made practical. On The Savvy Supplier, host Al Frank sat down with Boyd Evert, CEO of HRG, and Kevin Stewart, Partner at Crowe. The big idea: if you want fewer retail deductions, faster closes, and calmer audits, you don’t start with deductions—you start by building an audit-ready finance team.
Here’s the retail deduction playbook, in plain English.
Step 1: Get your house in order (then deductions get easier)
Kevin’s first move with growing suppliers isn’t to chase retail chargebacks—it’s to map people, process, systems, and data flow. When those four are tight, deduction recovery becomes a routine, not a fire drill. Think of it as building a lighthouse: stable, bright, and always on.
Punchline: Fix the machine, and invalid deductions will stop being applied.
Step 2: Know actual cost—or you’ll misprice, mis-accrue, and miss margin
Kevin sees it all the time: teams think they’re profitable until they finally include tariffs, freight, discounts, and allowances in standard cost. It turns out that a “hero SKU” can be a loss leader without anyone noticing. Action: Reconcile landed cost end-to-end. If it touches inventory, pricing, trade spend, or deductions, it belongs in your model.
Step 3: Tariffs = uncertainty. Bake them into deals anyway
Policy shifts create moving targets. The advice: plan by lane and lead time, then incorporate tariff assumptions into pricing and accruals before shipments reach DCs. Someone pays the tariff—if you don’t plan it in, your P&L will.
Step 4: Align revenue terms with reality
If your contract says “warehouse allowance” but you fund a “volume allowance,” you’re inviting compliance chargebacks and post-audit recovery headaches. Action: Match revenue recognition and allowance codes to the contract—exactly. Create a pre-shipment checklist for price changes, promotions, and code mapping.
Fictional but familiar example: A supplier agrees to a warehouse allowance but funds a volume allowance in their ERP. The retailer sees a gap, takes shortage deductions, and incurs a compliance hit. Weeks later, AP finds the mismatch—after the dispute window closed.
Step 5: Documentation isn’t busywork—it’s money
Audit trails win disputes. Confirm price changes in writing—store approvals where AP, AR, Sales, and deduction management can find them fast. Five minutes of documentation can prevent six figures in CPG supplier deductions later.
A $500M transformation—why this matters
Kevin shared a real-life story from retail: a $500M company closing its books in 21 days, with vendors unhappy and accounts unreconciled. In ~14 months, they moved to a 3–5 day close, standardized processes, and became a respected business partner. No magic. Just disciplined process, system fixes, and a team operating from the same playbook.
The Audit-Ready Finance Checklist (pin this)
Process map Order-to-Cash and Procure-to-Pay; close gaps that create deductions.
Single source of truth for item, cost, and pricing data; lock owner & audit history.
Tariff scenarios by lane and timing; accrue at order, validate at receipt.
Contract → ERP fidelity: revenue terms and allowance codes 1:1.
Price change controls: pre-ship validation, customer confirmation, and EDI spot checks.
Cash application automation with human oversight for exceptions.
Close calendar that hits 3–5 days—and sticks.
Dispute playbook: code-by-code reason trees, required docs, and deadlines.
KPI set: dispute win rate, duplicate-claim rate, days-to-close, % invoices with proof.
Cadence: weekly Sales–Finance–Ops standup to align risk, pricing, and claims.
Why HRG?
Deductions are never one-and-done. Retail rules change. Portals multiply. And post-audit recovery can hit long after the quarter closes. HRG’s expert-led approach (tech + humans) helps you prevent, prioritize, and recover—without turning your team into a full-time dispute desk.
Free Tariffs Risk Analysis
HRG is offering a free Tariffs Risk Analysis—identify exposure, quantify financial impact, and get mitigation options you can put in quotes now.
Book your call, and ask for the Tariffs Risk Analysis. Wiser decisions, fewer deductions.
