What Are Overages?
This article will answer the following questions:
What are overages and what causes them?
Why do most suppliers write off overages?
How do Walmart overages differ from Amazon and Target overages?
How can you turn overages into revenue recovery opportunities?
You Shipped the Goods, But You Haven’t Been Paid
Most suppliers are familiar with deductions that conspicuously appear on invoices as negative lines. But there's a less-talked-about revenue leak that can be especially damaging to your bottom line: overages. In fact, we estimate that the average supplier is losing ~1% of their gross merchandise value to overages.
But where there’s an overage, there’s an opportunity for recovery.
What Are Overages?
Overages can be difficult to pin down and define. Semantics are at least partly to blame because terminology can vary by retailer. Misreceivings, invoice reconciliation gaps, receiving discrepancies, and billable overages are all used interchangeably with overages. The vocabulary may change, but the problem is the same. For the sake of simplicity, SPS uses the term overages to refer to this issue regardless of the retailer.
And what, exactly, is the issue? Overages occur when a retailer:
- Receives more products than it's invoiced for; or
- Receives products its system is unable to match to an existing purchase order.
In other words, the products you shipped may be sitting at the retailer's warehouse, but because they weren't invoiced correctly, or because the retailer's receiving system mishandled them, the supplier isn’t getting paid.
Overages can be especially damaging to a supplier’s bottom line. That’s because in addition to not getting paid for products that have been received, suppliers may see overage fines as well. In other words, one issue can result in two financial hits. For example, a Walmart supplier can be fined for an overage via SQEP (an automated penalty) while simultaneously not being paid for the goods generating the fine.
Related Reading: What Is an Overage at Walmart?
What Causes Overages?
Overages can result from both supplier and retailer errors. But regardless of the source, the result is the same: lost supplier revenue.
Supplier Errors
The desire to meet on-time in-full expectations can lead suppliers to unintentionally overfill an order. Consider, for example, a supplier that sends 250 cases of product but only invoices for 200 cases. Even though the retailer received 250 cases, it will only pay for what is invoiced. The extra 50 cases may simply sit in the retailer’s warehouse, received but not paid for.
Retailer Errors
More often than not, however, overages stem from errors that occur during receiving. Retailers don't always receive goods correctly the first time. Freight can scan incorrectly, goods can get received under the wrong purchase order, and the retailer’s receiving system may try to resolve a mismatch automatically rather than flagging it.
Depending on the retailer and how its system works, such patches can cause more problems than they solve. A single receiving error can create an overage on one purchase and a shortage on another, leaving data that doesn't reflect reality.
The result: Money you're owed gets buried in transactions that appear to be resolved but aren't.
Related Reading: Common Root Causes for Retailer Shortages
Why Most Suppliers Don't Go After Overages
The most foundational reason most suppliers don’t go after overages is that they aren’t familiar with the concept of billable overages. Billable overages are regular overages that can be billed back to the retailer. For example, instead of letting those 50 extra cases sit unaccounted for in the retailer’s warehouse, the supplier could send a new invoice for the 50 cases to recoup revenue.
But awareness is only the first step. Suppliers must also overcome a lack of visibility, overwhelming complexity, and the assumption that it's not worth it.
Lack of Visibility
Visibility is the first hurdle. Overage data lives inside retailer portals across invoices, payments, and receiving records. Without a way to cross-reference all of it systematically, most suppliers simply don't know what they're owed.
Overwhelming Complexity
But even if you have some visibility, there’s a second intimidating hurdle to overcome: mind-boggling complexity. Thanks to automatic retailer matching systems described above and the cascade of inaccuracies they can cause, overages rarely look like a clean, obvious line item. By the time you trace an unpaid overage back to its source, it's often been shuffled through several transactions.
Low ROI Assumptions
Many suppliers operate on the assumption that going after overages isn’t worth the trouble it requires. And to be fair, on an individual level, overages can seem like a tiny slice of the pie. However, suppliers that have audited their full overage exposure across a two-year window consistently find the numbers are larger than expected. SPS has calculated that its supplier base is collectively owed millions in overages — hardly insignificant.
What Does Overage Recovery Look Like at Walmart, Amazon, and Target?
While the core concept is the same, how overages manifest and how they can be recovered differs by retailer. Let’s look at overage nuances across Walmart, Target, and Amazon.
Walmart
Walmart overages are identified using Walmart's own receiving data, cross-referenced against invoices and payments. Because these are based on Walmart's facts and figures, suppliers have strong grounds to invoice for them.
The recovery process involves identifying a billable overage, generating a new invoice referencing the original purchase order number, and submitting the invoice within two years of the purchase order date. No additional proof documentation is required beyond the invoice itself, but there is a time-consuming catch: Walmart doesn’t accept overage invoices through Retail Link. Instead, they must be submitted via EDI, which means most suppliers need to create EDI 810 invoices manually, coordinate across finance and IT, or skip invoicing entirely because the lift is too high.
Note: If a PO has both a shortage deduction and a billable overage, Walmart's guidance is to dispute the shortage first, then invoice for any remaining overage amount. It's also worth noting that SQEP overage fines are not the same as billable overages. SQEP fines apply to some overages but not all of them. Relying on the SQEP list alone will cause you to miss a significant portion of what's actually recoverable.
Target
Target overages work a bit differently. Target often automatically applies overages against existing shortages. This may sound helpful, but it isn't always accurate. Some suppliers have successfully identified overages from different purchase orders that Target hadn't applied, escalated them, and received payment. The path to recovery at Target is still being established, but the opportunity is real.
Amazon
When overages occur at Amazon, the retailer will either create over-received units that can be invoiced or attempt to match the additional units to other invoices that have shortages using an automatic matching algorithm called Smart Match. Designed to help vendors get paid faster, Smart Match can unintentionally create more problems than it solves. That’s because when a shortage is paid back via Smart Match, it doesn’t always mean that Amazon found the specific items from the specific shipment for the specific invoice. Rather, the retailer likely found something similar it’s using to pay the vendor.
Smart Match can match items across orders, DCs/locations, and Amazon Standard Identification Numbers (ASINs). Each “fix” can create a new mismatch elsewhere, compounding the problem across orders, locations, and ASINs.
Amazon's Goods Received Not Invoiced (GRNI) table is the key data source for identifying what's owed, but interpreting it correctly requires understanding how Smart Match has already touched the data. If and when an overage is identified, vendors can submit overage invoices directly into Vendor Central.
Related Reading: Invoicing for Amazon Overages: Get Paid While Making Smart Match Work Smarter
Turn Overages Into Opportunities
Deductions tend to get the most attention because they show up as money taken back. Overages are easier to overlook because they're tied to money that was never collected in the first place. But seen or not, overages will eat into your profits.
While overage particulars vary across retailers, there’s a common thread: The data to support these claims already exists. You just need a way to find it, sort it, and submit invoices.
If you ship to major retailers and haven't audited your overage exposure recently, there's a good chance you're leaving recoverable revenue on the table.
SPS Revenue Recovery helps suppliers identify and recover billable overages at Walmart and Amazon. Request a free audit that shows the actual recoverable amount in your account — no commitment required.
