Deduction type
Manufacturer chargebacks (MCB)
A promotional discount a distributor gives a retailer and bills back to the manufacturer — often with a processing fee on top.
Mihir Naik · Founder, OverDeduct — deduction recovery for emerging & mid-market CPG brands
Last reviewed: August 4, 2026
Educational content — not legal, tax, or accounting advice. Verify deadlines and fee details against your current distributor agreement before disputing.
A manufacturer chargeback (MCB) is a discount a distributor extends to one of its retailer customers and then bills back to you, the manufacturer. Distributors frequently add a processing fee on top of the passed-through discount — KeHE, for example, has applied an 8% MCB fee with a $65-per-DC minimum.
Valid, authorized MCBs are a legitimate cost of doing promotions. The recoverable ones are duplicates, MCBs applied outside the agreed dates or SKUs, and MCBs claimed with no authorization on file.
Controlling MCBs comes down to matching every chargeback to an approved deal — which is exactly the reconciliation most brands don't have time to do line by line.
Selling through KeHE? See how manufacturer chargebacks (mcb) work at KeHE, including the specifics and how to dispute them in K-Solve.
Wondering how many manufacturer chargebacks (mcb) you're actually being charged? Run a real remittance through the free deduction recovery analyzer to see every line categorized and what's realistically recoverable.
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Frequently asked questions
What does MCB stand for?
Manufacturer chargeback — a promotional discount a distributor gives a retailer and then bills back to the manufacturer, typically with a processing fee. (In pharma, MCB means managed care billing — a different context.)
When is an MCB invalid and recoverable?
When it's billed twice, applied outside the agreed dates or to the wrong SKUs, or claimed with no authorization on file. Matching every MCB to an approved deal is how you find these.
Other deduction types
- Shortage deductionsA charge for units the buyer says it didn't receive against your invoice — one of the most recoverable deduction types because it turns on delivery documentation.
- Pricing & deal discrepanciesShort-pays where the buyer paid a different price than invoiced, or applied a deal you didn't agree to — among the most recoverable deduction types.
- Fill-rate / service-level penaltiesA penalty for shipping fewer units than were ordered — distinct from a shortage at receiving, and typically a percentage of the shorted value.
- Co-op advertising (co-op) deductionsA deduction taken to recover advertising or marketing spend the buyer claims to have run on your behalf — recoverable when the spend wasn't approved, documented, or was billed twice.
- Returns / RTV deductionsA deduction for product the buyer returned — unsold, damaged, or non-conforming. Usually legitimate; recoverable mainly when the return wasn't authorized or was double-counted.
- Duplicate deductionsThe same deduction taken more than once — on one invoice, across invoices, or as both a chargeback and a short-pay. Highly recoverable because it's a pure paperwork error.
- Post-audit deductionsCharges raised by an auditor reviewing past invoices — often months after the transaction. Recoverable when the audit's claim is wrong, undocumented, or falls outside the dispute window.
- Unearned / unauthorized cash discount deductionsA prompt-payment (terms) discount the buyer took without actually earning it — paying late but still deducting the discount, or taking a rate it wasn't entitled to. Among the most recoverable deductions.
- Promotional billback / scan-down deductionsDeductions that recover promotional discounts — billbacks, scan-downs, off-invoice and temporary price reductions. Recoverable when unauthorized, mis-keyed to the wrong dates or SKUs, or billed more than once.
- Slotting / new-item / free-fill deductionsFees charged to place a new item — slotting, new-item, placement, and free-fill (free initial cases). Often contractual, but recoverable when duplicated, charged beyond the agreement, or taken for items never stocked.
- Spoilage / swell / unsaleables deductionsDeductions for damaged, expired, or unsellable product — spoilage, swell, and unsaleables. Usually valid within an agreed allowance; recoverable when they exceed the allowance, aren't documented, or are duplicated.
- Freight / backhaul / detention deductionsShipping-related deductions — backhaul allowances, detention, lumper fees, fuel, and freight-audit charges. Recoverable when applied on the wrong freight terms, at the wrong rate, or duplicated.