Walmart Deduction Guide

Managing Walmart Deductions for CPG Brands: A Comprehensive Guide

Walmart, as one of the largest retailers in the world, is a crucial partner for many consumer packaged goods (CPG) brands. However, managing Walmart deductions can be a complex and challenging process. These deductions can impact cash flow, profitability, and relationships with Walmart if not handled correctly. In this blog, we'll explore the various types of Walmart deduction codes, their definitions, and best practices for managing these deductions efficiently.

Understanding Walmart Deductions

Walmart deductions are reductions from the payment a supplier expects to receive for their products. These deductions can occur for various reasons, such as non-compliance with Walmart's vendor requirements, promotional allowances, or shipping discrepancies. For CPG brands, managing these deductions effectively is essential to maintaining healthy profit margins and a positive relationship with Walmart.

Common Walmart Deduction Codes and Their Definitions

Walmart uses specific codes to categorize the reasons for deductions. Understanding these codes is crucial for addressing the underlying issues and resolving them. Below are some of the most common deduction codes used by Walmart:

Code 10: Retailer - Pricing Variance

• Definition: This deduction occurs when there is a discrepancy between the allowances in the invoice and the PO, which can be either at the order or invoice level. This can occur if there's a difference between how much you ordered, how much it costs, or how it is packaged.
• Management Tip: Double check the PO for the correct cost and allowances, and contact the buying department to request a price correction if needed. Code 10s can only be disputed for Store Claims through the APDP portal, other claims should be discussed through your buyer.

Code 11: Retailer - Pricing Variance

• Definition: Code 11s are created when there is a cost difference between the invoice and purchase order.
• Management Tip: Keep any pricing agreements on discounts or allowances for easy disputing if there was a mistake. We also recommend keeping using a spreadsheet or a price tracking software (like Confido) to keep track of any pricing changes and the effective dates.

Code 12: Distributor - PO Discrepancy

• Definition: Code 12s means that there is a discrepancy in your invoice.
• Management Tip: Review your invoice to ensure it matches the Purchase Order.

Code 13: Retailer - Overship and Mis-Ship Fees

• Definition: Code 13s are issued when a supplier invoices for an item but Walmart receives a different (substitute) item, and that item is billed on the invoice at a higher cost than the item that was received.
• Management Tip: To dispute this, attach the bill of lading, invoice, and proof of delivery, if you believe that the proper item was shipped. Substitutions can also occur due to invoicing errors, so ensure that you confirm your item setups and match your invoice to the PO.

Code 14: Retailer - Short Ships

• Definition: This deduction occurs when there was damage or a shortage of items received at the facility, likely due to either poor packaging or mishandling.
• Management Tip: Evaluate your packaging if there is a high frequency of Code 14 deductions, especially for a certain carrier.

Code 15: Retailer - Short Ships

• Definition: Code 15s occur when there was damage or a shortage of items on a pallet or shrink wrapped shipment.
• Management Tip: Similar to a Code 24, evaluate the packaging if you're seeing a high frequency in this type of deduction.

Code 21: Retailer - Short Ships

• Definition: Code 21 is a shortage that was discovered when the shipment arrived at the store, rather than when the facility first received the shipment. For instance, there can ben shortages within the smaller cartons contained within the larger shipment, which can't be discoverable at first.
• Management Tip: These deductions will need the proof of delivery to dispute to show the items received.

‍Code 22: Retailer -Short-Ships

• Definition: This deduction occurs when there is a discrepancy between the quantity of products shipped and the quantity received by Walmart. For instance, if a Walmart store receives only 50 cases but the invoice was for 60, then Walmart will send a Code 22 for 10 cases.
• Management Tip: Ensure accurate shipping documentation and reconcile with Walmart's receiving records to avoid this deduction. Below is an example of the CSV backup that Walmart will provide to show the deduction.

‍Code 23: Retailer -Short-Ships

• Definition: This deduction occurs when there is a shortage in the order that arrived, but it was the shipper's responsibility to load the truck and confirm the quantities.
• Management Tip: Similar to a Code 22, ensure that the cases shipped match as noted on the freight bill, and ensure the BOL is not marked "SLC" (shipper load and count), or you will be liable for the shortages.

‍Code 24: Retailer -Short-Ships

• Definition: Code 24 means that the facility received an order but claims to have received less than what was invoiced for.
• Management Tip: Confirm your item setups, and don't make any adjustments. on the invoice that do not match the PO. Make sure to match the units of measurement on both the invoice and PO, to ensure accuracy.

‍Code 25: Retailer - Short-Ships

• Definition: This occurs when Walmart claims they received no merchandise at all from the invoice.
• Management Tip: This often occurs when the invoice is sent too early before the shipment arrives. Make sure you don't issue a second invoice, since this will create a Code 30. Instead, just dispute the Code 25 with the correct shipping documents.

Code 28: Retailer - Short-Ships

• Definition: Code 28 is incurred when the receiving facility claims that the carton was damaged, which can be caused by improper loading and handling.
• Management Tip: If you are seeing a high volume of Code 28s, consider alternate carriers and/or carton + packaging.

‍Code 30: Distributor - PO Discrepancy

• Definition: This deduction occurs when two invoices are submitted for the same PO.
• Management Tip: This is common when Walmart issues a Code 25 and the supplier sends another invoice. Ensure that you only send one invoice per order, and to dispute the Code 25 rather than sending another invoice.

Code 43: Retailer - Freight Allowance

• Definition: Code 43s are freight costs that Walmart incurred for error in shipments. These deductions can encompass multiple shipments for a single charge.
• Management Tip: Double check that your are shipping in accordance with your supplier agreement.

Code 44: Retailer - Freight Allowance

• Definition: Code 43s are freight costs for returned items, which the supplier must pay if the agreements states that the supplier is liable for shipping for returned goods.
• Management Tip: If the supplier agreement that you negotiated does not state that you must pay freight for returned items, then this charge is disputable. With a tool like Confido, these high likelihood disputes will automatically be flagged based on the retailer contracts that you upload in the portal.

Code 47: Retailer - Freight Allowance

• Definition: This is a deduction when Walmart believes that you billed too much for the freight.
• Management Tip: Check the carrier rate that you've paid. and ensure that the amount billed is the amount that you paid.

Code 50: Retailer - Ads / Fees

• Definition: Code 50's occur when there is an advertising allowance that is listed on the PO, but not listed on the invoice.
• Management Tip: These must be disputed with your buyer, since the allowance is only on the PO.

Code 51 - Retailer - Slotting

• Definition: Code 51 is a promotional allowance for slotting / displays for a fixed period of time.
• Management Tip: Coordinate with the sales team that the promotional spend was valid, and match to the related promotion. Confido offers promotion matching and approvals routing to facilitate this workflow faster and easier.

Code - 52: Retailer - Volume-Based Discount

• Definition: Code 52 is a discount for when Walmart purchases a large volume of items.
• Management Tip: Similar with Code 51, coordinate with the sales team to ensure that this promotional spend was valid.

Code: 53: Retailer - Freight Allowance

• Definition: This deduction is a freight allowance that is typically negotiated with your buyer.
• Management Tip: Double check with the terms on the PO and buyer terms.

Code 54: Retailer - Freight Allowance

• Definition: This is a volume allowance on certain shipments that come through the warehouse.
• Management Tip: These deductions can only be disputed with your buyer given the allowance is only listed on the PO.

Code 55: Retailer - Off-Invoice Discount

• Definition:This OI is trade spend used to enter into a new location. At the store level, this bucket of spend is used for orders placed prior to the opening of a new store, or to cover the initial stocking of a warehouse.
• Management Tip: This bucket of trade spend is not passed down to the end consumer, so a close eye on it. Although necessary when expanding into new stores, it won't help generate lift.

Code 57: Retailer - Freight Allowance

• Definition: This type of freight allowance is for product that crosses through a warehouse and is sent to the store.
• Management Tip: Verify terms of the PO prior to fulfilling the order.

Code 58: Retailer - Service Level Fines

• Definition: These are a group of other allowances based on the last 13 weeks of audit data.
• Management Tip: Button up your shipping processes to avoid this deduction.

Code 59: Retailer - Spoils Allowance

• Definition: This deduction is for spoiled or defective merchandise.
• Management Tip: If the allowance was already given on the invoice, then this can be disputed. Analyze spoils patterns for any product defects

Code 60: Retailer - Overship and Mis-Ship Fees

• Definition: This is the handling fee for returns and spoils. Typically, Walmart will charge 10% the cost of the items.
• Management Tip: Limit the amount of spoils to limit the amount of Code 60s that you receive.

Code 63: Retailer - Overship and Mis-Ship Fees

• Definition: This fee occurs when the BOL is address to the wrong location.
• Management Tip: Ensure that you have the right address prior to shipping.

Code 72: Retailer - Overship and Mis-Ship Fees

• Definition: Code 72 accounts for the handling fees when shipments are repacked or ticketed at the warehouse.
• Management Tip: Clearly label all of your packages.

Code 73: Retailer - Retailer Other Fees

• Definition: This fee occurs when Walmart makes duplicate payments, and needs to reverse the extra payment that was made.
• Management Tip: Nothing to do here.

Code 80: Retailer - Retailer Other Fees

• Definition: Walmart will claim a Code 80 when they believe they did not take the proper cash discount, and they are trying to collect the full amount due.
• Management Tip: Nothing to do here.

Code 82: Distributor - Early Pay Discount

• Definition: Code 82 is a deduction for the interest lost by releasing funds early for Walmart's early payment program.
• Management Tip: These will always be expected when you participate in the early payment program.

Code 87: Retailer - Retailer Other Fees

• Definition: Walmart uses Code 87 as a catch-all for deductions that were not previously submitted.
• Management Tip: Always submit a backup request to understand what exactly they are deducting for.

Code 92: Retailer - Returns / Spoils

• Definition: This code is for returned goods due to overstock or recall.
• Management Tip: Your supplier agreement will have details on your responsibilty for overstocks.

Code 93: Retailer - Returns / Spoils

• Definition: Code 93 are for items returned since they are damaged, not not in selling condition.
• Management Tip: Review your supplier agreement and the allowance for defective goods that currently exists.

Code 94: Retailer - Returns / Spoils

• Definition: This is the fee for when there is a return that is considered spoiled.
• Management Tip: Check to ensure that the agreement you signed specifies that the supplier is responsible for defective returns. This obligation is necessary for Code 94s to be valid.

Code 95: Retailer - Retailer Other Fees

• Definition: Code 95s are when the wrong item is returned.
• Management Tip: Contact the return center to dispute.

Code 97: Retailer - Returns / Spoils

• Definition: This code is for the handling fee on returned items.
• Management Tip: Make sure that the item was actually returned, or else this can be disputed.

Code 99: Retailer - Service Level Fines

• Definition: This code is a claim related to the On Time in Full (OTIF ) program.
• Management Tip: Make sure to always ship on time, in full.

Standard Purchase Order Allowance Codes

The following describes the acronyms to expect for promotion spend allowances on the purchase order.

Best Practices for Managing Walmart Deductions

Managing Walmart deductions requires a proactive approach and meticulous attention to detail. Here are some best practices for CPG brands:

1. Maintain Clear Communication: Foster open communication with Walmart's buying and accounting teams. Regularly discuss any discrepancies or concerns to resolve them promptly.
2. Regular Audits: Conduct regular audits of your invoices, shipping documents, and compliance records. This will help catch errors early and reduce the likelihood of deductions.
3. Centralize PDF and data storage: Ensure that shipping documents, supplier agreements, and other PDFs needed for submission to dispute are all easily accessible.
4. Dispute Deductions When Necessary: If you believe a deduction is unjustified, don't hesitate to dispute it. Provide clear documentation and evidence to support your case.

Disputing through Confido

Confido has built native deductions and dispute workflows to streamline the process. First, Confido will automatically pull Walmart invoices daily into the portal, attach the backup with the appropriate payment, and code the deductions. The accounting team can push checks into the General Ledger directly from Confido.

Afterwards, Confido will flag high-likelihood disputes, and provide a single interface for CPG brands to dispute and track communications. No more logging into disparate portals and manual tracking.