Deductions for Walmart suppliers can add up to lost revenue that can represent a significant drain on profitability. Various Walmart deductions, if overlooked, quietly erode profit margins over time.
In this article we’ll cover how to find these hidden profit killers, and, most importantly, what you can do to handle and reverse them.
Key Insights
- Deductions, if overlooked, can become a significant threat to profitability.
- Total deductions can eat up as much as 2–10% of annual revenue.
- There are inherent complexities to handling deductions in-house, including time, resources, and specific knowledge required.
- Effective management of Walmart deductions is about more than just recovering dollars. It’s about protecting your overall P&L.
The Problem
Walmart deductions can eat up as much as 2–10% of annual revenue, depending on category and how well you stay on top of them. As such, they have the potential to impact your margins without setting off major alarms. These deductions are not a simple line item, which means they can be difficult to find and track.
The good news is, they don’t have to remain hidden. The better news? They can be handled.
Demystifying the Killers
A sample of deduction types and estimated % of annual revenue they impact gives an idea of how these can add up.
| Deduction Type | Typical Codes | Estimated % of Annual Walmart Revenue |
| Shortages | Code 22, 24, 25, 28 | 1-3% |
| Pricing Discrepancies | Code 10, 11 | 0.5-2% |
| Compliance Fines | OTIF and SQEP | 1-4% |
| Chargebacks | Various (transportation, labeling, etc.) | 0.5-1.5% |
| Markdown Allowances | Code 46, 51, 52, 54, 55, 57- 59, 150 | 1-2% |
| Return & Unsalable Goods | Code 92, 94 | 0.5-1% |
Finding these can require expertise. Walmart typically issues deductions through remittance advice, not directly on the invoice you submit, which means you’ll need to know where to look and be diligent with your management of the process.
Examples:
| Deduction Type | Where It Appears | The Way It Appears |
| Shortages | Remittance Advice | Goods Billed Not Shipped, Carton Shortage |
| Pricing, Allowance, and Returns | Remittance Advice | Price Difference, Defective Merchandise Allowance, Return Adjustment |
| AR Chargebacks | Separate AR Invoice | Markdowns, Advertising |
| Compliance (OTIF, SQEP) | Separate AR Invoice | PO Line Accuracy, Overage |
These are evaluated and assessed daily as Walmart processes supplier shipments and inventory. Walmart deductions are a 24/7 operation. Unless you have a capable team dedicated to deduction management, these hits can impact revenue day after day, month after month, year after year.
This is fixable.
Walmart provides a means for you to manage deductions, along with steps you can take to recover them.
To aid in your quest to maximize profits, take advantage of Carbon6’s free Supplier tools:
Walmart APDP (And Its Challenges)
Walmart provides a portal for this purpose. The Accounts Payable Disputes Portal (APDP) lets you drill into each deduction line by line. With APDP You can:
- See deduction codes and amounts
- Download remittance details
- Submit disputes with documentation
APDP is your designated, Walmart-provided tool for both tracking and disputing deductions. You’ll want to make sure your team is familiar with the tools and process for managing deductions, allocating the manpower, specialized expertise and diligence required to stay on top of this important part of your supplier operations.
A strategic partner can also help.
The Bottom Line
A few facts about the true cost of Walmart deductions.
- Deductions can add up to 2-10% in lost revenue.
- For mid-to-large suppliers, this can translate to hundreds of thousands to millions of dollars annually in lost revenue.
- Managing deductions forces teams to divert resources from other initiatives to manual reconciliation, documentation gathering and dispute filing.
- As noted, the complexities of Walmart’s APDP portal, including a required understanding of deduction codes, documentation requirements and other standards, only adds to the burden.
It’s important to remember:
- Managing Walmart deductions is not just about recovering a few dollars. It is, at its core, a P&L protection issue.
- Every dollar unrecovered is a margin leak.
- Poor deduction management can inflate COGS, distort revenue figures and undermine your EBITDA.
Better solutions exist. Automation and proactive dispute strategies, properly applied, are not just a nice-to-have operational improvement, they’re a financial safeguard.
A strategic partner can help bring this area under full control.
The Solution
Carbon6’s deduction management software helps Walmart suppliers recover lost revenue so your team doesn’t have to, providing expertise without adding internal headcount.
Carbon6 combines retailer-specific automation and recovery expertise to manage deductions, disputes and follow-ups, in order to accelerate the recovery of your Walmart deductions and reduce the lift from your team.Get started with a complimentary recovery audit to see what you stand to gain.
Do This Easy Health Check
Being proactive yields the best results when it comes to improving your margins and plotting a path to increased profitability.
One low-risk, high-value next step you can do today is what we call a “deduction health check.” This is an easy, effective measure to stop revenue leakage.
Schedule a deduction health check. Stop losing revenue to Walmart deductions with Carbon6 Revenue Recovery. With zero upfront costs and detailed reporting, we make recovery effortless.
Start your complimentary recovery audit today.
