Is a markdown allowance the same as a chargeback?

No. An allowance is built from an agreement both sides signed. A chargeback or compliance deduction is built from an event, such as a shipping or labeling error, charged regardless of any agreement.

What's the difference between a co-op deduction and an advertising deduction?

Both are promotion or ad-program allowances. The label varies by retailer, but the mechanism, a negotiated program both sides agreed to, is the same.

Can a new-store or new-item allowance be disputed?

Yes, on the same four-field check as any allowance: item, rate, period, and duplicate status, checked against the standard program rate on file.

What if there's no signed agreement for the allowance being deducted?

No agreement on file is itself grounds for a dispute.

Allowance disputes

Allowance and Markdown Deductions

A trade promotion, allowance, co-op, or markdown deduction is money a retailer withholds under a deal the vendor already agreed to. It's not a penalty for a shipping or paperwork error. It funds a promotion, an ad program, a margin shortfall, or a new-store or new-item rebate negotiated in advance by both sides.

What is an allowance, co-op, or markdown deduction?

Four allowance types, how each is agreed, and where each shows up on a remittance.
Allowance type	How it's agreed	Where it shows up
Markdown / margin support	Negotiated rate in the vendor agreement or PO terms	Burlington code "MD" (mark down)
Trade promotion / co-op advertising	Promotion agreement or ad program terms	Named "advertising" or "co-op" line on the remittance
New-store / new-item allowance	Standard rebate program rate set by the retailer	Deduction at the program's current standard rate
Price difference / discount / substitution	PO terms or a price-change notice	Burlington code "DMC"

Four allowance types, how each is agreed, and where each shows up: markdown or margin support (a negotiated rate in the vendor agreement or PO terms, Burlington code MD); trade promotion or co-op advertising (a promotion agreement or ad program terms, a named advertising or co-op line on the remittance); new-store or new-item allowance (the retailer's standard rebate program rate, a deduction at the program's current standard rate); and price difference, discount, or substitution (PO terms or a price-change notice, Burlington code DMC).

How do allowance deductions differ from compliance or shortage deductions?

An allowance or markdown deduction is built from a deal both sides signed. A compliance or shortage deduction is built from an event, such as a carton-count mismatch or a labeling error, charged regardless of any agreement. The test is simple: does a document defining the rate exist, or only a document describing what went wrong.

Allowance and markdown deductions versus compliance and shortage deductions: what creates each and what determines it's valid.
Deduction family	What creates it	What determines it's valid
Allowance / markdown / co-op	A signed rate in the vendor agreement, PO, or promotion terms	The agreed rate, period, and item match the deduction
Compliance / shortage	A shipping, labeling, or receiving event	Whether the event actually happened as documented

Allowance, markdown, and co-op deductions are created by a signed rate in the vendor agreement, PO, or promotion terms, and are valid if the rate, period, and item match the deduction. Compliance and shortage deductions are created by a shipping, labeling, or receiving event, and are valid if the event is documented.

How do you check an allowance deduction against the agreement?

Checking an allowance or markdown deduction means matching four fields between the deduction and the underlying document, whether that's the vendor agreement, the promotion agreement, or the PO terms: item or department, rate or amount, period, and whether it's already been taken once. A mismatch on any field is grounds for a dispute.

Item or department named in the agreement vs. the item or department the deduction was taken against
Rate or flat amount in the agreement vs. the rate or amount actually deducted
Effective period in the agreement vs. the period the deduction covers
Whether the same amount, period, and item were already deducted once (duplicate check)

Checking an allowance or markdown deduction means matching four fields against the agreement, the vendor agreement, the promotion agreement, or the PO terms: item or department, rate or amount, effective period, and whether it's already been deducted once. A mismatch on any field is grounds for a dispute.

When is an allowance or markdown deduction disputable?

An allowance or markdown deduction is disputable when no signed agreement covers it, the rate or period doesn't match the agreement, it was deducted twice, or it was applied against the wrong item. It's valid when the deduction matches a signed rate, period, and item exactly, regardless of the amount.

Disputable when versus valid when, five matched conditions.
Field	Disputable when	Valid when
No agreement	No agreement on file for this allowance	A signed agreement covers this exact allowance
Rate	Wrong rate (doesn't match the agreement)	Rate matches the agreed rate
Period	Wrong period (outside the agreed dates)	Period matches the agreed dates
Duplicate	Duplicate (already deducted once)	Deducted once, matching the agreement
Item / department	Applied to the wrong item or department	Applied to the item or department named in the agreement

Disputable when versus valid when: no agreement on file for this allowance, versus a signed agreement covering this exact allowance; wrong rate, versus a rate that matches the agreement; wrong period, versus a period that matches the agreed dates; a duplicate deduction, versus one deducted once, matching the agreement; and applied to the wrong item or department, versus applied to the item or department named in the agreement.

What do you attach when disputing an allowance deduction?

A dispute needs the signed agreement or PO terms showing the rate, period, and item; the deduction detail from the remittance; and, when claiming a duplicate, the earlier deduction it duplicates. Roy matches each deduction to the documents that answer it and prepares the dispute for review.

The signed vendor agreement, promotion agreement, or PO terms showing the rate, period, and item
The deduction detail from the check remittance or AP form (invoice number, amount, code)
If claiming a duplicate: the earlier deduction record it duplicates
If claiming wrong item or department: the PO or item record showing the correct item

Deduction on remittance, matched against the agreement or PO terms, then the agreement plus deduction detail are attached, plus a duplicate or item record if applicable, and the dispute is submitted for review. Roy matches each deduction to the documents that answer it and prepares the dispute for review.

Questions

Frequently asked questions

Is a markdown allowance the same as a chargeback?: No. An allowance is built from an agreement both sides signed. A chargeback or compliance deduction is built from an event, such as a shipping or labeling error, charged regardless of any agreement.
What's the difference between a co-op deduction and an advertising deduction?: Both are promotion or ad-program allowances. The label varies by retailer, but the mechanism, a negotiated program both sides agreed to, is the same.
Can a new-store or new-item allowance be disputed?: Yes, on the same four-field check as any allowance: item, rate, period, and duplicate status, checked against the standard program rate on file.
What if there's no signed agreement for the allowance being deducted?: No agreement on file is itself grounds for a dispute.

Check your own deductions

Match your open allowance and markdown lines against your agreements before you file.

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