Deduction Management Checklist

10-steps you should follow to improve your foodservice deduction balance

Is your deduction balance always increasing? It doesn’t have to.

Foodservice Deduction Management Checklist

What are foodservice deductions?

  • Reductions for existing invoices applied by customers
  • Originally focused on events directly associated with the invoice they were applied against (terms, quantity shipped, corrections, damaged goods, pricing errors)
  • Over the past 20 years, customers in all segments now “deduct” any dollar amount they deem to be “due”

Deductions can be a headache when not properly managed! Break the cycle.

Click here: Foodservice Deduction Checklist PDF



Top 10 Tips for an Efficient Deduction Management Process


  • Invest in an organized contract management tool
    • Enable easy communication with customers about deals
    • Decrease delays on claim settlementfoodservice deduction tips 1 and 2
    • Decrease discrepancies between allowed vs requested
  • Create standardization for invoice submission
    • Send a standard letter to customers with details on where to send invoices
    • Letters should request that the customer include contract name / ID for reference
    • Reduce the time you spend chasing down required backup via standard invoice submission guidelines
  • Enter deductions in your internal ERP system
    • Enter all information at the distributor house level (this creates an easy flow for matching deductions against billbacks and claims)
    • Reduce time spent researching open deductions
  • Set up an automated matching process
    • Match open deductions with claims having the same customer number, invoice number, and invoiced dollar amount
    • Reduce time spent matching open deductions to claims
  • Track customers that don’t properly submit invoices
    • Identify the customers and work with them to update their process to submit billbacks
    • Get any outstanding billbacks submitted
    • Increase your speed and claim processing turnaround
  • Build a standard repayment letter
    • Ensure you have a way to go after money due to an over-deduction or invalid deduction
    • Provide the customer with details as to what was invalid from the deduction they took
    • Increase your bottom line and decrease the amount of money you’re writing off
  • Track rebillable deductions
    • Track invalid deductions – when a repayment letter is sent to you, you have control
    • Request outstanding invalid deductions by sending and resending repayment letter follow ups
  • Implement a write-off process
    • A thought out and defined write-off process will help clear aged and invalid deductions that can’t be verified
    • Ensure you have good reporting to keep things on track
    • Increase your ability to correct distributor behavior going forward
  • Set a deduction balance goal
    • Identify a balance goal so you can measure your success
    • Identify red flags in your process if your balance goes above limit
    • Increase accountability of your process


Success from Smucker’s ▶ 📽