What is a deduction?

A deduction is any amount a retailer withholds from an invoice payment. It covers compliance chargebacks, agreed trade allowances, promotional funding, damaged or shorted goods, and pricing discrepancies. Each carries a reason code on the remittance advice, and the codes are how a supplier tells a legitimate allowance from a disputable penalty.

Deductions are broader than chargebacks. A promotional allowance you agreed to and a penalty you did not both arrive the same way, which is why each one has to be coded and reviewed before any of them is written off.

More on Chargebacks & Deductions, or browse every commerce operations answer.