I’ve seen a lot of shifts in the finance world over the decades, but the current state of the supply chain is particularly ruthless. Artificial intelligence has stepped in, and while it promises efficiency, it is tipping the scales heavily in favor of retailers. They are using complex algorithms to analyze transactions, and the result is a sharp rise in chargebacks that are bleeding suppliers dry.
It used to be a straightforward process: you get a Purchase Order, ship the goods, bill for them, and get paid. But as Dallas Counts, COO of Vendormint, points out, there are plenty of points in that process that can break down. His company helps suppliers recover lost revenue, and he sees the damage firsthand.
“What’s pitched as efficiency on the retail side is quietly becoming a major margin leak for suppliers,” Counts says.
The Hidden Cost of "Efficiency"
These chargebacks—deductions that knock down the price retailers actually pay for goods—generally run between 3% and 8%. That is a massive chunk of change to lose on what should be a simple transaction. Sometimes these deductions are genuine errors, like a miscount at the receiving dock. But often, it feels like the system is being gamed.
Take early payment discounts, for example. A supplier might offer a 2% discount if the invoice is paid within 30 days. The problem? Retailers are taking the discount and dragging their feet on payment. Without a system to track exact terms, that 2% disappears into the ether. Tracking this manually is a nightmare, requiring someone to trawl through endless spreadsheets.
Playing Detective with Data
Then there is the issue of damaged goods and returns. Suppliers and retailers usually agree on an allowance for this. But when chargebacks swell beyond that limit, it triggers an audit covering the previous year. It is a messy, contentious process.
Sometimes the situation is even more nuanced. A retailer might decide they don't want to keep an older inventory item when a new seasonal color hits the shelves. They damage the old stock out to zero, throw it away, and slap the supplier with a chargeback.
“You have to play detective,” Counts explains. “It’s an investigation and the document trails aren’t always easy to follow.”
Fighting Fire with Fire
The only way to fight a machine is with another machine. Warehouses may be getting more sophisticated, but loading dock operations are still opaque. AI-driven monitoring is the only way to quickly spot anomalies—like a sudden spike in chargebacks the moment a new product arrives. It reads bills of lading, packing lists, and proofs of delivery faster than any human could.
While Vendormint is fighting the big battles for major suppliers, the rest of us aren't immune to payment headaches. If you are a freelancer, you don't have a receiving dock to blame, but you still have to track who paid what and when. You cannot afford to let margins leak because of administrative sloppiness.
You need to focus on the work, not the paperwork. That is where tools like Invoice Gini come in. It acts as an AI finance assistant that lets you generate professional PDFs and track payments with simple natural language commands. It ensures you get paid for what you deliver, without needing a forensic accounting team to back you up.
The bottom line is that technology is a double-edged sword. Retailers are using it to keep their pockets full. Suppliers and freelancers need to adopt the same sharpness to stop the bleeding. Don't let the algorithms eat your lunch.
Source: AI Is Bringing a Rise in Retailer Chargebacks. It Can Reduce Them Too