What is retail – spoil allowance?

I am a new manufacturer and the distributor is requiring a “spoils allowance” of 3%, or full return for damages. What exactly does this mean?

I understand what spoilage or breakage means, it is the discount that I am confused about. How is this applied?

Asked by: Rick Johnson, Affixit, LLC 643 days ago - 1 Answers - 2020 views

1 Answers

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Basically, if the cost of goods is $100,000, your distributor wants to pay on $97,000 — a 3% discount. The logic is that some of the goods you provide will spoil, rot, or get damaged in the distribution process.

If you are not willing to give him the 3% discount, then he wants to be able to return all damaged goods for a full refund.

Depending on what the goods are, the 3% discount might be a better way to handle the situation because it’s less complicated and the distributor are liable to keep the goods in a good condition. If you give him full return for damages, they could be less responsible and let you take the losses.

Answer by pinyo 642 days ago

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