Bookshelf v7.5: Classes of Deductions

Preauthorized (or authorized) deductions. Representatives of your company can give customers prior approval to take deductions. For example, key account managers may authorize their customers to take deductions as reimbursement for promotional expenses. Within consumer goods organizations, these deductions are typically paid for by trade funds established to cover the cost of promotions.

Unauthorized deductions. These occur when a customer takes a deduction without prior approval from your company. Some unauthorized deductions may be taken for legitimate reasons. For instance, an invoice may be in error, products may have arrived in damaged condition, or a shipment may have arrived after an agreed-upon deadline. Other unauthorized deductions may be taken for non-valid reasons. The customer may have mistakenly taken a larger trade promotion deduction than your company authorized.