Target and other retailers will often take deductions from your check and label them with mysterious-looking codes. What are these deductions, and what forms do they take specifically at Target?
Types of Deductions (AP and AR)
In the retailing world, there are two primary forms of deductions: Accounts Payable (AP) and Accounts Receivable (AR). The difference between AP and AR deductions is how the charges are dispersed.
Accounts Payable deductions are when the retailer pays its supplier less than the expected amount from an invoice. For example, you may see that your check is $200 less than expected, and there is a code number A030 next to the check line. Don’t be afraid! Target is simply telling you in coded language that they think your shipment was short $200 worth of merchandise. In other words, Target is reinterpreting the invoice to match what they believe they received.
Accounts Receivable deductions, on the other hand, take the form of an invoice sent by the retailer to the supplier. For a retailer like Walmart, this is how they handle fines for late or less-than-full shipments.
Difference between AP and AR deductions at Target
The difference between AP and AR deductions is not quite as important at Target as it is at other retailers. At Target, supplier fines and deductions often take the form of AP deductions taken out of the supplier’s check. Other retailers, like Walmart, for example, will make much more of the distinction between a “chargeback” (AR) and a “deduction” (AP).
What's in a name?
Target doesn't call everything a deduction (even though it is). They will still use the term chargeback, despite not actually charging anything back. Be prepared for that as you wade through Target's deduction landscape. A deduction = a chargeback. You can win back your money by disputing a deduction/chargeback in Synergy. When you make a dispute, it gets a case number.
Target can send these deductions your way for a variety of reasons. These reasons are communicated to suppliers in the form of codes (i.e. A030), and each code is meant to signify a specific way in which a rule of theirs has been broken. But here’s the catch: while Target and other suppliers are generally pretty quick to deal out deductions, the root cause of deductions is often invalid, so they are disputable. The burden of proof then falls on the shoulders of the suppliers, even if the responsibility is from the retailer side.