What are chargebacks and how can I avoid them?

A chargeback is a fee that a customer (usually a retailer) places on a supplier for errors in not following the retailer’s business requirements. The chargeback was introduced to offset the extra cost the retailer incurs as a result of the supplier’s non-compliance.

 
Chargeback schemes began in the 1980’s as a way for retailers to recoup costs incurred due to supply chain errors. At the time, many suppliers objected to them as unfair profit centers for large, powerful retailers. Although purely punitive fines are not legal, cost recovery is—so chargebacks quickly became adopted by most retailers. It’s easy to understand how mislabeled, mis-packed, late, and wrong-quantity shipments add up to real labor costs and out of stock difficulties for retailers. Distasteful as they may be for suppliers, chargebacks make business sense for retailers in trying to recover costs and are here to stay for the foreseeable future.
 
What can lead to a chargeback being applied to my organization?

·         Early, late, or non-authorized partial delivery of goods or services.

·         Missing, incorrect, non-readable or wrongly placed shipping labels.

·         Substituting products without prior agreement.

·         Ship to incorrect location.

·         Product packaged wrongly according to retailers agreement.

·         Damages that did not occur during transit.

·         EDI 810 invoice not matching original purchase order and/or with wrong terms and details

·         EDI 856 ASN (Advance Ship Notice) does not arrive on time or does not match items in carton.

 
How can my organization eliminate chargebacks or at least reduce greatly the potential of receiving them from my customers?

·         Comply fully with customers EDI requirements.

·         Make sure labels are correct and can be read or scanned easily.

·         Do not substitute products without prior approval.

·         Ship to the correct location.

·         Pack items correctly according to retailer’s requirements.

·         Try to make sure goods arrive in perfect order.

·         Deliver the correct products, quantities and cartons

·         Send accurate and complete EDI 810 invoices.

·         Make sure EDI 856 ASN (Advance Ship Notice) arrives on time and details are correct.

 
To comply fully with your customers EDI requirements and business rules, I would recommend that you enlist the help of a good 3^rd party EDI provider. 3^RD Party EDI providers immediately know retailers requirements, what is expected and how they must be delivered. If you would like to know more about outsourcing your EDI needs to B2BGateway and how we can help you eliminate or greatly reduce potential chargebacks please call +1 (401) 491 9595 or email Sales@B2BGateway.Net