A/R Finance & Factoring Terms GLossary

Definition ofChargebacks (Retailer)

“There’s no doubt about it: manufacturers who fail to meet a retailer’s vendor standards can get into financial trouble. After all, shave off $20 here for a short lot, $5 there for a cracked pallet and $10 over here for a mangled shipping label, and before long, it can run into real money. Manufacturers, consultants and trade groups supplying retail businesses are up at arms over these chargebacks, arguing that their profits are being slashed unmercifully–and sometimes unfairly–by retailers claiming noncompliance.

In some cases, they say, the requirements are petty, arbitrary or even illogical. What’s more, retailers may change the standards regularly, making it difficult to keep up with what’s required. Even though retailers will swear to you that chargebacks aren’t a profit center, the candid opinion in the industry is that retailers intentionally make compliance difficult to make it a profit center, says Norman Katz, CEO of vendor-compliance consulting firm KatzScan Inc. of Deerfield Beach, FL.”

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