Code 59: Defective Merchandise Allowance (DM)

Overview

Code 59 deductions occur when Walmart determines that a defective merchandise allowance listed in the supplier agreement is missing from the invoice. A defective merchandise allowance provides a credit that directly offsets merchandise returns from stores.

Suppliers should verify that defective merchandise allowance terms included in supplier agreements and purchase orders are accurately reflected on invoices before fulfilling shipments.

Many invalid Code 59 deductions occur when the correct allowance amount was already withheld but applied in a different invoice location than expected.

Common Root Causes

A common cause of invalid Code 59 deductions is when the supplier agreement requires the defective merchandise allowance to be applied off-invoice, but the EDI provider applies it at the line-item level instead. Although the correct dollar amount is deducted, Walmart may interpret the allowance as missing.

• Defective merchandise allowances listed in the supplier agreement but missing from the invoice.
• Purchase orders containing incorrect allowance information.
• Invoices that do not accurately reflect purchase order allowance terms.
• Incorrect EDI allowance codes used for defective merchandise allowances.
• Differences between supplier agreement terms and invoice allowance calculations.

How to Prevent Valid Code 59 Deductions

• Verify all purchase orders are accurate before shipping products.
• Ensure invoices reflect purchase order details exactly, including defective merchandise allowances.
• Confirm with your EDI team or provider that supplier agreement and purchase order allowances are correctly included on EDI 810 invoices.
• Double-check that allowances specified in supplier agreements appear on both purchase orders and invoices.
• Maintain clear documentation for special deals and ensure buyer acknowledgment.

Can It Be Disputed?

Yes. Walmart allows disputes for invalid Code 59 deductions through the Accounts Payable Dispute Portal (APDP) if suppliers can prove that the defective merchandise allowance was already applied on the invoice. If the allowance was not applied, suppliers generally need to work with their buyer for assistance with reimbursement.

While APDP accepts Code 59 disputes, they can be difficult to win. When the correct allowance amount was already deducted but applied differently than expected, providing documentation to the buyer can often help overturn the deduction.

How to Dispute Invalid Code 59 Deductions

Suppliers can attempt a dispute through the Accounts Payable Dispute Portal (APDP). If the dispute is unsuccessful, supporting documentation should be provided to the buyer to request a payback.

Supporting Documentation

• Supplier agreement showing the approved defective merchandise allowance.
• Purchase Order showing the expected allowance.
• EDI 810 invoice demonstrating that the allowance was applied.
• Return documentation showing defective merchandise credits.
• Documentation for any special allowance agreements approved by the buyer.

Conclusion

Code 59 deductions typically result from differences between supplier agreements, purchase orders, EDI invoice configurations, and defective merchandise allowance calculations. Reviewing allowance terms, validating EDI mappings, and maintaining accurate documentation can help prevent these deductions. When the allowance was already applied correctly, supporting evidence through APDP or buyer communication provides the best opportunity for recovering invalid deductions.