channel stuffing

Definition

A deceptive and illegal retail business practice in which a company sends more inventory than could be sold to stores along its distribution channel. Channel stuffing temporarily boosts the accounts receivable for the distributing company since more product is pushed out than normal, but can also result in more items ultimately being sent back to the distributor. Stores with excess inventory are more likely to send excess inventory back to the distributor instead of sending cash payments, which will ultimately deflate the value of the distributor's sales.