Amazon accruals are a fundamental part of the 1P vendor relationship. These co-op agreements, designed as cost-sharing arrangements for marketing and operations, directly deduct from your revenue. While you agree to help Amazon pay for programs that help you sell, hidden overcharges and mismanaged deductions can quietly drain your profitability.
Without rigorous oversight, accruals can erode your margins, turning a profitable quarter into a disappointing one. Understanding, tracking, and disputing these accruals isn’t just an administrative task—it’s a critical defense for your P&L.
Key Insights
- Profitability at Risk: Accrual overcharges are a common but often invisible drain on your bottom line, caused by everything from incorrect rates to system errors.
- Recovery is Possible: With expert oversight, vendors can not only prevent future overcharges but also recover significant funds. One brand recovered over $2 million in a single year by tackling these issues head-on.
What Are Amazon Vendor Accruals?
At their core, Amazon accruals are pre-negotiated percentages that Amazon deducts from a vendor’s net receipts to fund various initiatives. These deductions are typically taken at the end of the month.
The four main types are:
Accrual Type | Purpose | Typical Rate |
Marketing Development Funds (MDF) | Funds Amazon’s marketing efforts like site placement, emails, and personalization tools. | ~ 10% of Net Receipts |
Amazon Freight Allowances | Covers shipping from your warehouse to Amazon’s fulfillment centers. | 2-10% |
Amazon Damage Allowance | Offsets Amazon’s cost of handling and disposing of damaged returns. | 2-10% |
Co-op Activities | A general co-op fee that may include MDF and other shared costs. | Varies |
Other allowances you might encounter include fees for AVS/SVS, Subscribe & Save, or Price Protection. To complicate matters, Amazon may also retroactively apply missed co-op charges, making diligent tracking non-negotiable.
“Carbon6 is the premier service provided in the chargeback, shortage, and accrual/overbilling space. I’ve seen them return millions back to multiple vendor accounts. Their dashboard is intuitive, user-friendly and most importantly, drives dollars back in the business.”
~ Former executive | P&G, Nestle, and Duracell
The Silent Killers: How Accrual Overcharges Erode Your Bottom Line
Errors in a system as massive and automated as Amazon’s are inevitable. For vendors, these errors manifest as overcharges that silently eat into profits. Here’s what to watch for:
- Misclassified Deductions: The wrong rate or category is applied to an invoice.
- Duplicate Charges: Being billed twice for the same freight or damage allowance.
- Unapproved Fees: Deductions for marketing promotions that were never authorized.
- Incorrect Basis of Calculation: Charges assessed on the wrong criteria (e.g., net receipts vs. shipped COGS).
- System and Timing Errors: Deductions applied late or retroactively without proper alignment.
These charges fall outside your negotiated Amazon Co-Op agreements. Identifying them is the first step, but preventing them should be a core part of your operational strategy.
A Proactive Defense: Spotting and Preventing Overcharges
To stop this silent erosion of profitability, your team needs visibility and expertise.
- Audit Your Agreements: Regularly review your co-op agreements in Vendor Central (Settings > Agreements) to ensure the terms, rates, and dates are correct.
- Track Deductions Weekly: Don’t wait for the monthly statement. Monitor deductions as they occur to catch discrepancies early.
- Maintain Detailed Records: Keep meticulous records of all POs, invoices, and shipping confirmations to serve as evidence during disputes.
- Negotiate Strategically: If accruals are consistently eating into your margins, use your Annual Vendor Negotiations (AVN) to push for lower rates or a switch from a Net Receipts to a Shipped COGS basis.
Real-World Impact: From Overcharges to Recovered Profit
Identifying and disputing overcharges yields significant returns. A dedicated strategy doesn’t just plug leaks; it refills the tank.
- Farouk Systems (Beauty): After losing profits due to a knowledge deficit and untracked deductions, they partnered with Carbon6. The result: $1 million recovered in just 8 months.
- Global CPG Brand: Faced with high ongoing fees and historical shortages, this brand implemented a strategy of historical recovery and root cause analysis. The result: Over $2 million in profit recovered in one year and a 30% mitigation of future fees.
- Global Publisher: When presented with an initial settlement offer from Amazon that was far too low, they used advanced negotiation tactics. The result: A final settlement 668% higher than the initial offer, recovering over $640,000 more than they would have alone.
“We’re in the process of collecting money from Amazon we wouldn’t otherwise have collected, as well as improving our internal processes in regards to our Amazon 1P business.”
~ Wildkin, Consumer Goods Company
The Recovery Playbook: Disputing Overcharges in Vendor Central
If you’ve been charged in error, you can dispute the deduction to recover your funds. While the process seems straightforward, it requires precision and persistence.
- Identify the Overcharge: Review your Accrual Reports in Vendor Central and cross-check them against your Vendor Agreements. Look for any discrepancies in rates, types, or volumes.
- Gather Documentation: Collect all relevant POs, invoices, shipping confirmations, and contractual agreements. For chargebacks, this may also include photos or ASIN logs.
- Submit a Dispute: In Vendor Central, navigate to Payments > Co-op Accruals. Select the invoice, use the “Dispute” button, upload your supporting documents, and provide a clear, concise explanation.
- Track the Case: Monitor the Case ID and be prepared to provide prompt follow-ups if Amazon requests more information. The key to success is often in the diligent management of the case after submission.
Reverse Your Revenue Loss with a Strategic Partner
The time, expertise, and manpower required to master Amazon deduction management can be immense. A strategic partner can eliminate the heavy lifting and accelerate your recovery.
Carbon6 combines retailer-specific automation with a team of recovery experts who manage deductions, disputes, and follow-ups on your behalf. We turn a complex, resource-draining process into a streamlined revenue driver.
Discover what you’re owed. Schedule a complimentary audit with a 2-year lookback window and see the funds you could be recovering today.