Deductions 101
What is a deduction?
If your KeHE, UNFI or retailer payment keeps landing well below your invoice, deductions are why. Here's what they are — and why a meaningful share is money you can get back.
OverDeduct Deduction Recovery Team · Deduction recovery specialists working with 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 deduction is money a retailer or distributor subtracts from what it owes you before paying an invoice. Instead of paying $30,000 and separately billing you for issues, they simply pay less — say $21,000 — and list the $9,000 of deductions on the remittance.
Deductions are a normal part of selling through retail, but the volume is startling: published estimates put deductions and chargebacks at roughly 2–15% of gross sales for many CPG brands (some estimates reach 20% once trade promotions are included), and estimates of the invalid, duplicated, or preventable share range from ~5% to ~60% depending on category and retailer. The recoverable slice is your money, being kept because disputing it is tedious.
What are the main types of deduction?
- Shortages / OS&D — the buyer says it received fewer units than you invoiced.
- Pricing / deal discrepancies — you were paid a different cost than agreed.
- Compliance / manufacturer chargebacks (MCB) — penalties for labeling, routing, EDI, or passed-through retailer discounts.
- Fill-rate / service-level penalties — you shipped less than was ordered.
- Promotional billbacks — scan-downs, TPRs, ad allowances and category fees.
- Spoils & damage — product deemed unsellable, plus disposition fees.
Each behaves differently and has a different recovery rate — see valid vs. invalid deductions for how to tell them apart.
Why are deductions worth disputing?
Per Finortal's 2025 benchmark, mid-market CPG companies write off roughly 1.2–2.4% of gross revenue a year to unrecovered deductions. For an emerging brand, a single missed shortage or double-billed promo can be a meaningful share of the month. The barrier isn't whether the money is owed — it's the manual work of proving it before the dispute window closes.
How do I recover a deduction?
- Identify the deduction type and what evidence would disprove it.
- Gather the backup — BOL/POD for shortages, PO and deal sheet for pricing, authorization for MCBs.
- File in the buyer's portal (e.g. KeHE K-Solve, UNFI Dispute Center) before the window closes.
- Track and respond to requests — resolution typically takes weeks, not days.
Or skip the manual work: upload a remittance and see which lines are worth disputing — free, in seconds.
See how much of your deductions you can recover
Upload a remittance from KeHE, UNFI, or any retailer and get a categorized, recoverable-dollar estimate in seconds. Free, no signup — your file never leaves your browser.
Use the free deduction recovery analyzerFrequently asked questions
What is a retail or distributor deduction?
A deduction is money a retailer or distributor subtracts from what it owes a CPG brand before paying an invoice — for claimed shortages, pricing errors, promotional chargebacks, or compliance fees. Instead of paying $30,000 and separately billing issues, the buyer pays $21,000 and lists $9,000 of deductions on the remittance.
How much revenue do CPG brands lose to deductions?
Published estimates for deductions and chargebacks cluster around 2–15% of gross sales for many CPG brands, with some estimates up to 20% once trade promotions are included. Trade spend overall runs roughly 15–25% of gross sales. No public industry-wide benchmark exists — these are vendor and consultant estimates.
What percentage of deductions are invalid?
Published estimates of the invalid, duplicated, or preventable share range from roughly 5% to 60% depending on category and retailer, with no industry consensus. A commonly cited mid-range is 10–40%. The share you can actually recover depends on your documentation and dispute windows.
Are deductions the same as chargebacks?
Not exactly. A deduction is the umbrella term for any amount withheld. A chargeback is a specific kind of deduction taken as a penalty or pass-through charge — for a compliance violation, a fine, or a discount the buyer extended and billed back.