USA Collection of Previous Short Paid Invoice

Sep 7, 2016
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United States
Our company sells consumer products to retail chain stores. The retailers often "short-pay" our invoices with deductions cited for "vendor non-compliance penalty" or "damaged product". The non-compliance penalties are levied against us whenever a shipment arrives a day early/late, or the packing list contains an error, or a box has a label in the wrong place, etc.... The damaged product chargebacks are levied against us whenever product arrives damaged, or a consumer returns a product to the store (or someone damages a product by dropping it and then just sticks it back on the shelf for the someone else to find later). Our customers (the retailers) deduct these chargebacks for "non-compliance penalties" (fines really) or "damaged merchandise" from payment of our invoices. (We do not have them return damaged product because of shipping & handling costs.)

Our current practice is to issue a credit memo (debiting "non-compliance fees expense" account or "damaged merchandise expense" account) and apply the credit memo to the invoice from which the customer short paid.

But what do we, when 3 months later, a retailer determines that the deduction was taken in error and pays us the amount that was deducted earlier? How do we record this properly?
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