Home Depot refers to Accounts Payable (AP) Deductions as "chargebacks". There are three main chargeback types that a supplier is likely getting deductions for.

Shortages are a deduction issued against an invoice for the difference between what was invoiced by the supplier and what was received by the retailer.

Shortages are the most common form of chargebacks at Home Depot. Between pricing discrepancies (covered below) and shortages, it is not uncommon for suppliers to have 99% of their chargebacks attributed to shortages.

Unfortunately, Home Depot does not identify the specific type of shortage that occurred. Suppliers do not have a way to identify if the shortage issue is from a carton shortage, unit shortage, or damaged/defective shortage.

Additionally, majority of distribution centers will not have item level information on shorted goods. Suppliers will only have one lump sum deduction for all shorted goods.

Shortages can be identified in the Merchandise Payables remittance download by filtering down to doc type Z0 and RK, and then sorting by *SHORTAGE in the reason code column.

Pricing discrepancy chargebacks are when a supplier invoices for more than Home Depot expects to pay for those items.

Home Depot requests that suppliers review all cost discrepancies with their merchants before submitting a pricing dispute. A “531 SKU Detail” report should be requested of the merchant in order to properly confirm the pricing (pack size and cost) via SKU-related data. This data can also be found in the Data Connection or Vendor Drill applications within Supplier Hub.

Similar to shortages, pricing discrepancies can be identified in Merchandise Payables remittance download by filtering down to doc type Z0 and RK, and then sorting by *PRICING DISCREPANCY in the reason code column.

Trade discounts are contractual based on a supplier's SBA with Home Depot and is based on individual M-Vendor numbers. Though these are contractual, they are treated like chargebacks within Merchandise Payables. Suppliers do have the opportunity to dispute, if found to be invalid.

In general, it is important for suppliers to make sure that their EDI mapping is configured correctly to mitigate trade discount chargebacks, and help increase cash application efficiency.

Same as the chargebacks listed above, these chargebacks can be identified in the remittance download in Merchandise Payables by filtering down to Z0 and RK document type and looking for *TRADE DISCOUNT in the reason code column.