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Vendor Fees?

The companies I have worked for have always been on the receiving end of fees from our customers for doing something incorrectly (wrong pallets, late delivery, ect), but I have never had the opportunity to take a deduction not directly related to the product sold. In the example of the wrong pallets being used, we used the wrong pallets and the customer is now short-paying an invoice.

Is the deduction taken by the customer being realized as revenue or as discount on the goods sold?

Thank you.

Answers

Maqsood Hassan
Title: Manager Tax
Company: Rafiq Spinning Mills (Pvt.) Limited
(Manager Tax, Rafiq Spinning Mills (Pvt.) Limited) |

Such deduction is never a discount. It is a penalty. Accounting treatment will be the same but criteria is different.

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