Your holiday inventory seems to be in order, so why are retailers reporting shortages?

Holiday shipments can sometimes lead to expensive shortage deductions. Here are some ways suppliers can check retailer claims, spot issues when goods arrive, and protect their revenue.

Your warehouse records show the shipment was completed, the carrier confirms delivery, and the retailer’s order was filled as planned. But when you get paid, you see the retailer has deducted thousands of dollars for goods they claim never arrived.

This is one of the most frustrating deduction problems for retail suppliers. Your paperwork says the shipment was made, but the retailer’s records don’t match. As the holiday season gets busier, these issues happen more often and are harder to resolve, especially when inventory moves through several distribution centers, carriers, and receiving sites.

The financial impact is bigger than just one shortage claim. If suppliers keep getting deductions for goods they believe were delivered, it can lower margins, affect customer profitability, increase accounts receivable, and put pressure on cash flow during the busiest sales season.

Holiday Volume Raises the Risk of Discrepancies

According to the National Retail Federation’s October 2026 forecast, retail sales will top $1 trillion in November and December, thanks to the large flow of merchandise through supply chains.

For suppliers, this brings more chances to sell, but also more pressure on warehouses, transport providers, distribution centers, and receiving teams.

Seasonal staff, tighter delivery schedules, bigger orders, and more frequent restocking all mean more transactions that must be recorded accurately.

A shortage deduction can happen because of a real shipping mistake, a wrong receiving count, a problem with the advance ship notice (ASN), an item setup issue, or a mismatch between the supplier’s invoice and the retailer’s records.

During busy shipping times, it gets even harder to find the right paperwork as shipments pile up.

Keep in mind, a retailer’s shortage claim doesn’t always mean the goods weren’t delivered. It’s a financial claim that should be checked against the available evidence.

When the Same Shortage Happens Again and Again

Picture a snack company sending holiday promotional items to Walmart and several regional grocery chains. The warehouse system shows each order was picked, packed, and loaded correctly, and the transport companies have proof of delivery for every shipment. Still, the supplier starts seeing deductions for shortages from several distribution centers. At first, the finance team handles each claim one by one, gathering bills of lading, checking invoices, and disputing claims when they have the right documents. After a few weeks, the team notices that most deductions involve the same product setup and shipments from one facility. Further investigation finds differences between the warehouse records and the quantities sent through the ASN process. This turns out to be a recurring documentation issue that can be fixed operationally.

That’s why shortage recovery shouldn’t just focus on disputing individual claims. Suppliers should also look for patterns in deductions by facility, product, carrier, or time period, since these can reveal ongoing problems and financial risks.

Phantom Inventory Makes Things More Complicated

Shortage claims get more complicated when retailer inventory records don’t match the actual stock in stores or distribution centers. Phantom inventory happens when a retailer’s system says a product is available, but the real stock is missing, misplaced, damaged, or not for sale. These gaps can disrupt restocking, distort demand signals, and confuse suppliers trying to match shipments, receipts, and reported inventory. Both situations show why suppliers need to check inventory data from several systems instead of relying on just one report.

During the holidays, incorrect inventory records can cause big problems because products often have a short selling window. If there’s a discrepancy, the supplier may lose immediate sales and have trouble quickly investigating the original transaction.

What Suppliers Can Do Before the Holiday Rush

The best way is to keep accurate shipment records and have a process for spotting recurring deduction patterns. Finance teams need reliable shipping and receiving records, and operations should be able to see deduction activity that could reveal problems early.

Suppliers should also pay attention to dispute deadlines. Retailers have different rules for submitting documents, so missing the filing window can make it hard or impossible to recover a claim. To get ready for the higher volume of holiday shipments, confirm shipped quantities. Compare purchase orders, invoices, warehouse pick records, packing details, and bills of lading to see what was actually shipped. Check the case packs and quantities for any inconsistencies.

• Keep all delivery documents, such as the carrier's proof of delivery, delivery appointment records, seal records (if needed), and any receiving confirmations. Identify locations that come up often and sort shortage deductions by retailer distribution center, supplier warehouse, carrier, and shipping lane.

• Check the item setup and see if there are any differences. Look for changes in unit of measure, case pack, or item configuration that might explain repeated quantity issues. Keep a calendar for each retailer that lists filing deadlines and needed documents. Track total shortages, disputed amounts, confirmed recoveries, and unresolved balances.

• Share these results with your operations team. Instead of treating each claim as a separate accounting issue, use deduction patterns to find and fix problems.

The Bigger Opportunity: Preventing the Next Shortage

HRG started retail deduction recovery in 2010 and has recovered over one billion dollars for suppliers since then. This experience shows that investigating deductions brings financial value beyond just getting money back from a single claim.

If suppliers review shortage deductions by retailer, facility, product, and shipping activity, they can spot operational problems that might keep causing losses during the holidays.

When shipping volume goes up, the goal isn’t just to process deductions faster. It’s also to figure out which claims are valid, recover lost revenue from unauthorized deductions, and fix problems that could hurt future revenue. HRG can help your team review claims and recover revenue. Let’s talk.

Turn Insights into Action. Coming Nov. 1, 2026.