Common KeHE Deductions (and How To Minimize Them)

No one likes a bad surprise, and that’s exactly what deductions (aka chargebacks) can be when they start chipping away at your KeHE invoice totals. Moreover, deductions can be particularly confusing when working with a distributor, as revenue loss can come from both the retailer and the distributor.   

Maximizing your margins as a KeHE supplier involves more than just getting your products in as many retailers as you can. In this article, you will learn about: 

• Common KeHE deduction categories, including KeHE fees, unsaleables, and invoice adjustments. 

• Common retailer deductions, including promotional fees. 

• How to minimize the occurrence and impact of deductions at KeHE. 

Related Reading: KeHE Deductions and Invoice Prefixes 

Common KeHE Deductions 

KeHE organizes its most common deductions into three main categories: KeHE fees, unsaleables, and invoice adjustments.  

1. KeHE Fees 

This category includes the following common types:  

KeHE CONNECT Business Insider® Program 

The KeHE CONNECT BI Program is a digital platform within KeHE’s CONNECT Supplier® portal that provides reporting metrics, business analytics, and data visualization tools for suppliers.  

KeHE applies a 2% allowance to all purchases for KeHE CONNECT BI Program benefits. The allowance is calculated on the net of each purchase order (PO) and is given as a separate line on each supplier invoice.  

Payment Terms and Discounts 

All terms and conditions concerning KeHE’s payment terms, repayment procedures, audits, and pricing-related issues are outlined in Section 4.1 in KeHE’s Supplier Policies and Procedures guide.  

KeHE explains that the payment due date for all invoices is calculated from the latter of either of the following: 

• The date KeHE receives the invoice at its billing address 

• The date KeHE receives the shipment into its distribution center, the case count is confirmed, and the products are available to be sold by KeHE 

KeHE considers payment to be timely and within payment terms if it mails a check or sends an electronic funds transfer (EFT) on or before KeHE’s first payment cycle following a due date.  

Note: If a supplier owes KeHE an amount of money that’s greater than the amount KeHE owes the supplier on the invoice (a situation KeHE refers to as a debit balance), the supplier won't receive any payment when that invoice payment is due. That invoice will be considered paid, and the supplier won’t receive payment for any other invoices during that period. 

KeHE bases its discount calculations for early payment on the net invoice amount and will apply it to invoices offset by amounts due to KeHE, including suppliers in debit balance. The KeHE Supplier P&P Terms Form lays out the following early payment discounts: 

• Standard: KeHE will subtract a 2% discount if it pays the invoice within 10 days (net 30). 

• Special event: KeHE will subtract a 2% discount if it pays the invoice within 60 days (net 61). 

Promotional Processing Fees  

Promotional processing fees refer to the administrative fees KeHE imposes for processing manufacturer chargebacks (MCBs) and extra performance (EP) promotions.  

• MCBs are discounts KeHE provides its retailer partners that get passed back to the supplier. KeHE’s MCB processing fee is 8% of the MCB amount (quantity sold x MCB amount x .08). The minimum fee per DC is $65, processed bi-weekly. 

• EP refers to promotional and other funding amounts that are processed by KeHE on behalf of the supplier and retailer, such as coupons, placement, and in-store demos. KeHE charges an 8% fee calculated from the invoice submitted by the retailer. The minimum fee is $35, and the maximum is $700. Each fee is assessed on a per-invoice basis. 

Advertisements and Events 

KeHE encourages opting into its many advertising and event opportunities as a way of building brand awareness and driving sales growth. Advertising opportunities include: 

• KeHE digital publications, including the KeHE Promotional Buying Guide, KeHE Show & Trends (retailer guidebook at KeHE shows), and KeHE Fresh Selling Guide 

• The KeHE CONNECT Retailer® platform (i.e., the buying platform used by KeHE retailers) 

• The KeHE Digital Marketing Platform® (Note: This functions independently of KeHE CONNECT and enables suppliers to deliver tailored promotions directly into KeHE retailer inboxes.) 

• KeHE digital media (e.g., kehe.com, KeHE social media) 

• KeHE digital communications, including the monthly Retailer Connections newsletter, Retailer Connections dedicated email, and KeHE Commercial Connections Toolkit (internal SharePoint site where KeHE sales and commercial team members access their resources) 

• KeHE trade shows and events 

• Independent channel retailer promotional programs, including Spotlight, Street Deals, New Item Placement, Limited Time Deals, and Goodness on the Go! 

• New@KeHE (DC-specific monthly new item launch program) 

• KeHE partnerships with iHeart Media and American Airlines 

The fine print and fees associated with these options are published in the Advertising Overview every year. KeHE notes that “payment for participation in events and programs may be up front and pre-paid, or deducted from [the] supplier’s account, at KeHE’s option.” 

Noncompliance Fees 

Noncompliance fees get subtracted from a supplier’s payments when KeHE’s expectations aren’t met.  

Here are the supplier noncompliance fees outlined in November 2025 Inbound Routing Guide Fee Schedule: 

And here are the shipment noncompliance fees provided in the November 2025 Inbound Routing Guide Fee Schedule: 

Related Reading: KeHE Product Labeling Requirements for Suppliers 

2. Unsaleables 

In Section 9 of KeHE’s Supplier Policies and Procedures, the food distributor defines unsaleable products as “any product removed from the primary channel of distribution, regardless of the reason for removal.”  

KeHE divides unsaleables into three main categories: underperforming and discontinued products, spoils, and nonconforming products. However, KeHE notes that a product doesn’t have to fit into one of these three categories to be considered unsaleable.  

Underperforming and Discontinued Products 

The decision to discontinue an item can be made by KeHE, the supplier, or the retailer.  

• Products discontinued by KeHE: According to KeHE, suppliers “accept financial responsibility and provide full credit at KeHE’s landed cost for products in KeHE’s inventory that are discontinued by KeHE or underperforming and/or overstocked products.” 

• Products discontinued by supplier or retailer: KeHE says that suppliers “accept financial responsibility and provide full credit at KeHE’s landed cost for products in KeHE’s inventory that are discontinued by supplier or retailer.” Moreover, if a retailer discontinues any products at some or all of its stores, KeHE will charge the supplier back at KeHE’s landed cost credited to the retailer plus a per-unit processing fee. And if a retailer discontinuation causes the product to not move fast enough through KeHE’s distribution centers, KeHE will return the product to the supplier, and the supplier will reimburse KeHE for them at KeHE’s landed cost.  

Spoils 

KeHE recognizes two different types of spoils in its supply chain: warehouse spoils and retailer spoils (often just called “spoils”). 

• Warehouse Spoils: These are products in KeHE’s inventory that are short dated, expired, out of date, or deemed unsaleable for another reason. Suppliers accept financial responsibility for these products and must provide full credit to KeHE at KeHE’s landed cost. For product returns, suppliers must arrange return shipping or pick-up plans within 14 days of being notified and are responsible for any freight charges. Unclaimed products will be donated or discarded by KeHE and charged back to the supplier at KeHE’s landed cost. 

• Retailer Spoils: These are expenses that stem from retailers, such as expired, mislabeled, and leaking products. Suppliers are responsible for the following charges, as outlined in the Supplier Policies and Procedures: 

• Store spoils: “Supplier is responsible for the amount which KeHE has credited to the retailer, plus a per unit processing fee as provided in the Supplier P&P Terms Form and Fee Schedule.” 

• Retailer spoils allowance: “Supplier is responsible for a fixed-rate spoilage allowance that may be incorporated into KeHE’s price to retailer, in lieu of individual retailer spoils billed back to the supplier.” 

Nonconforming Products 

This category includes products that are: 

• Recalled 

• Misbranded 

• Adulterated 

• Damaged 

• Nonconforming 

• Defective 

• Not in compliance with KeHE documents  

Suppliers are solely responsible for any expenses related to replacing nonconforming products and must reimburse KeHE for all associated costs.  

3. Invoice Adjustments 

When there is a product price or quantity discrepancy between a purchase order and the corresponding invoice, KeHE will make invoice adjustments to correct the differences.  

For example, if the purchase order quantity for a product is 90 but KeHE only receives 85, KeHE will deduct the purchase order price for five of those products. Or if the purchase order lists a product’s price as $10 but the invoice lists them at $12, KeHE will deduct the discrepancy from the next payment. 

Related Reading: KeHE EDI Requirements for Suppliers: What Documents You Need and When to Send Them 

Retailer Deductions 

Working with a distributor involves both distributor deductions and retailer deductions. KeHE processes these deductions (see “Promotional Processing Fees” above), but they originate from the retailer. 

Retailers commonly charge suppliers for: 

• Pass-through deductions — These include extra performance activities such as placement/slotting, advertising, coupons, and scans. 

• Promotions — This category encompasses manufacturer chargeback (MCB) promotions, custom retailer promotions submitted through KeHE, and retailer Everyday Low Price (EDLP) submitted through KeHE. 

Tips for Minimizing Deductions 

There are steps you can take to minimize the occurrence and impact of deductions on your bottom line.  

Related Reading: A Guide to Disputing KeHE Deductions in K-Solve 

Minimize the Impact of KeHE Deductions with SPS Commerce 

If you’re struggling with deductions at KeHE, SPS can help.  

• Do you need more KeHE-specific resources? Check out our library of topics on everything from K-Solve disputing to order management.  

• Do you need support with EDI compliance? SPS Fulfillment gives your team one place to manage orders, documents, updates, and required next steps. 

• Do you want deduction management support? SPS Revenue Recovery can help you identify and recover lost revenue at both KeHE and UNFI.