What is Ship & Debit?

A distributor buys parts at book cost, sells them to a specific end customer at a lower price the manufacturer agreed to (usually tied to a design registration), and files a claim — the debit — for the difference. The manufacturer settles claims as credit memos against the distributor's account.

Why do Ship & Debit claims leak revenue?

Most manufacturers pay claims without validating each line against the agreement behind it. Claims against expired or wrong design registrations, prices that drifted from the contract, duplicate lines, and quantities that never shipped all get paid — and period aggregates hide the line detail that would catch them.

What does Ship & Debit reconciliation require?

A connected record spine — design registration, quote, order, sales document, POS line, claim, aggregate, credit memo, GL — so every claim line can be matched to the sell-through it says it covers and checked against the registered price before the credit memo posts. Settled claims also need to flow back into tax as price adjustments.

Guide · Channel revenue

Ship & Debit reconciliation, explained.

The short answer: Ship & Debit is how distributors get paid back the difference between book cost and the price you agreed to for a specific end customer. Reconciliation means validating every claim line against the design registration and contract price behind it before the credit memo posts — not after the quarter closes.

How the money moves

A distributor buys your parts at book cost. For a specific design win — usually locked in by a design registration — you agree to a lower price so the distributor can win the end customer. The distributor sells at that negotiated price, then files a Ship & Debit claim for the difference. You settle claims, usually consolidated into one credit memo per period, against their account.

That means the design registration is a legal commitment, the claim is a demand against it, and the credit memo is real money leaving. Every claim line is supposed to trace back through the chain:

Design Registration → Quote → Order → Sales Doc → POS line → Claim → Aggregate → Credit Memo → GL

Where it leaks

Claims against expired or wrong registrations. The DR lapsed, the end customer changed, or the part isn't the one registered — and the claim pays anyway.
Price drift. The claimed delta is computed from a price that isn't the contracted one. Small per-line, systematic across thousands of lines.
Duplicates and phantom quantities. The same POS line claimed twice, or quantities claimed that never appear in sell-through data.
Aggregates that hide the lines. Distributors expect one consolidated credit memo per period; if you can't burst the aggregate back into claim lines, you're approving a total, not a claim.
Tax filed on the wrong number. Claims change the effective selling price after the invoice. If settled claims don't flow back into tax as price adjustments or credit memos, you file on the invoice price and the difference is misfiled.

The uncomfortable question is simple: of the claims you paid last quarter, how many were validated line by line against the registration behind them?

The four questions of the channel motion

Channel revenue follows Agree → Transact → Settle → Comply, and reconciliation is the Settle step answering all four at once: What price was promised (the registration and contract)? What actually transacted (orders and POS sell-through)? What was settled (claims and credit memos — and do they agree with the first two)? What was filed (tax and the audit trail on the net price)?

What reconciliation actually requires

A connected record spine, not reports from three systems. CRM has the registration, ERP has the invoice, the distributor feed has POS — reconciliation lives where they join.
Line-level matching of each claim to the POS sell-through it says it covers (a fingerprint match: part, end customer, period, quantity).
Validation before payment — registration status, contract price, duplicate detection — not sampling after the quarter.
Aggregates with line-level audit: one credit memo per period for the distributor, every underlying claim line preserved for the auditor.
A path back into tax and the GL, so settled claims adjust the filed numbers automatically.

How much is at stake? There's no reliable industry average; your claims file is the answer. Our published illustrative model assumes about 5% of distributor revenue goes out in unsupported claims, most of it disputable once claims are checked line by line. For the pharma version of the same mechanics, chargebacks play the role of Ship & Debit — the validation stack is here.

Seeing it end to end

The semiconductor practice page walks one transaction from design win to GL credit memo — twelve linked records, every number reconciling — and shows what a Phase 1 looks like: one distributor, one BU, one quarter of parallel run, fixed fee.

Put your claims on a ledger.

The Leak Ledger Workshop: one day, your data, a dollar ledger per lever — including what last quarter's claims would have looked like validated line by line.

Comparing tools? Read the ship & debit software comparison. Ready for the product itself? Nteli’s agentic ship & debit reconciliation software — every claim line matched to its agreement before the credit memo posts.

The Leak Ledger Workshop → The semiconductor practice