How to Handle Damaged, Missing, or Short-Received Goods

When wholesale goods arrive damaged, missing or short, the owner should record what physically arrived before deciding how to pursue the loss. Trade Manager separates sellable quantity, non-sellable quantity and explicitly missing quantity for each item, then lets the owner raise and follow a separate claim against the responsible party.

That separation protects both stock and costing. Missing pieces never become inventory, completely non-sellable pieces are not treated as available stock, and the applicable purchase and delivery costs can be recovered across the pieces that can actually be sold.

At a glance

Business question	Correct treatment in Trade Manager
A piece arrived in good condition	Record it as Sellable
A piece arrived but cannot be sold	Record it as Non-sellable
A piece did not arrive	Record it as Missing/Short
A damaged piece can still be sold at a discount	Classify it as sellable; the owner decides its eventual price
A carton count is lower than expected	Record boxes received and reconcile the affected item quantities
Who caused the loss?	Raise a separate claim against Supplier, Payment Agent, Importer, Cargo or Other
Can photos be kept with the issue?	Yes; claim and receiving proofs remain attached to their relevant section
Does raising a claim add stock?	No; a claim is commercial follow-up, not stock received
Does a claim immediately reduce landed cost?	No; expected recovery is not treated as money already recovered
Which quantity reaches inventory?	Only the sellable quantity selected during the Trade Manager-to-Inventory Manager handoff
Can a short trade still be completed?	Yes; the owner can close it with a required reason when remaining goods will not arrive

Why receiving and claims must remain separate

Three different records are involved when delivery goes wrong:

1. Receiving truth: What physically arrived, and in what condition?
2. Claim truth: Against whom is the business pursuing a shortage, damage or other issue?
3. Costing truth: How much cost must the stock that can actually be sold recover?

Combining them creates dangerous assumptions.

For example, raising a shortage claim does not mean the supplier has accepted it. Marking a claim as open does not mean replacement pieces are on the shelf. Even a promised refund should not reduce product cost until the business handles the real recovery appropriately.

Trade Manager therefore records the delivery result first and keeps the claim as a connected but independent follow-up record.

Expected goods
      ↓
Inspect the actual delivery
      ↓
Sellable + Non-sellable + Missing/Short
      ↓
Raise a separate claim when required
      ↓
Calculate cost using the sellable quantity

Understand the three quantity fields

Sellable

Sellable means the piece can enter normal inventory and can be offered for sale.

A piece does not have to be visually perfect to be classified as sellable. If a slightly scuffed shoe or marked shirt can genuinely be sold at a discount, the owner may still count it as sellable and later choose the appropriate selling price.

Non-sellable

Non-sellable means the piece physically arrived but will not become saleable inventory. Examples include:

• a torn garment that cannot reasonably be sold;
• a permanently stained shirt;
• a broken footwear pair;
• the wrong item that the owner will not keep as stock; or
• goods written off on arrival.

These pieces are evidence of receipt and possible damage, but they are not stock available for billing.

Missing/Short

Missing/Short means the piece did not arrive in that shipment.

Trade Manager asks the owner to enter this quantity deliberately. It does not silently convert every arithmetic difference into a confirmed shortage because the ordered quantity, shipment allocation or another receiving field could itself be wrong.

The screen may show that some units are not yet accounted for or that the entered total is more than expected. That is a review warning: the owner should correct the quantities rather than saving a convenient but inaccurate record.

The exact receiving workflow

Step 1: Open the relevant shipment

A trade can arrive through one shipment or several consignments. Open the trade, go to Receiving, and select the shipment whose goods have reached the business.

The shipment should already identify which trade items it carries. This prevents a shirt from Shipment 1 from accidentally being recorded against Shipment 2.

Step 2: Verify the delivery details

Record the facts that will help identify the receipt later:

• date received;
• boxes expected and boxes received, where available;
• delivery or tracking reference;
• where the goods were received; and
• a short operational note.

Box count is useful as an early warning, but it does not replace item counting. Ten boxes can arrive while pieces are still missing inside them.

Step 3: Count every item into the correct condition

For each item, compare the expected shipment quantity with what is in front of you.

Suppose one consignment was expected to contain 120 shirts:

Condition	Quantity
Sellable	102
Non-sellable	6
Missing/Short	12
Total accounted for	120

The app initially makes normal receiving quick, but changing the exception quantities adjusts the sellable quantity as well. The owner can therefore record a clean delivery quickly while still having explicit fields when something is wrong.

If every expected item appears sellable and no damage or shortage is entered, Trade Manager asks for confirmation before saving the receipt as a full arrival. This small check helps prevent an untouched default from becoming a false business fact.

Step 4: Save the receiving record

After saving, the receipt shows a summary of:

• total sellable quantity;
• total non-sellable quantity;
• total missing quantity;
• the result for each item; and
• any box-count mismatch.

Receiving now describes the physical event. It does not yet say whether the supplier, cargo company or another party accepted responsibility.

Step 5: Attach receiving evidence

Keep useful proof with the receiving event, such as:

• photographs of unopened cartons;
• carton labels;
• delivery challan;
• photos taken while opening damaged packaging;
• a short receiving video or image sequence where appropriate; and
• the transporter acknowledgement.

Evidence is strongest when collected immediately. A photo taken days later may not clearly establish how the goods arrived.

Raise a damage or shortage claim

When non-sellable or missing quantities exist, the receiving view can suggest the appropriate next action:

• Raise Damage Claim for non-sellable goods; or
• Raise Shortage Claim for missing items or a short box count.

The suggestion carries the affected items and quantities into the claim form. A starting claim amount can be estimated from the claimed quantity and recorded purchase rate, but the owner remains responsible for checking the commercial amount before saving it.

Select the party responsible

A claim can be recorded against:

• Supplier;
• Payment Agent;
• Importer;
• Cargo;
• Other, with a custom party description.

Responsibility should follow the available evidence. A damaged outer carton may point toward transport, while an intact carton containing fewer pieces may need supplier investigation. Trade Manager records the owner's follow-up; it does not legally determine fault.

Record a useful claim

A practical claim record includes:

• claim type: Damage, Shortage or Other;
• affected items and quantities when raised from receiving;
• who the claim is against;
• a clear issue description;
• optional amount claimed;
• date raised;
• notes; and
• claim-specific proof photographs or documents.

Write descriptions that will still make sense months later. 12 Blue / M shirts missing from sealed carton in Shipment 2 is more useful than material less.

Follow the claim after it is raised

Claims can move through these business statuses:

• Open;
• In Progress;
• Resolved;
• Partially Resolved;
• Rejected; or
• Written Off.

A rejected claim requires a rejection reason. That preserves why the expected recovery did not happen rather than letting the claim disappear from memory.

Trade Manager also provides a central Claims area with separate open and resolved views. Claims are ordered by the date raised and loaded in pages, so an owner can follow pending issues across trades without reopening every purchase individually.

Updating a status does not rewrite the original receiving quantity. If 12 pieces never arrived, they remain missing even after the supplier refunds the amount or rejects the claim.

What happens to landed cost

The cost calculation uses the quantity that can actually recover the trade's cost.

Assume the 120 shirts cost ₹200 each and the shipment has ₹2,400 of applicable freight and other charges:

Calculation	Amount
Purchase value: 120 × ₹200	₹24,000
Applicable charges	₹2,400
Total landed cost	₹26,400
Sellable pieces received	102
Recoverable cost per sellable piece	₹258.82

Dividing ₹26,400 by the original 120 pieces would show only ₹220 per piece. But the business has just 102 pieces available to recover that cost. Using ₹220 would understate the cost of every sellable shirt by ₹38.82.

The six non-sellable and twelve missing pieces are not included in the sellable divisor. Their economic loss remains inside the trade until a real recovery is handled; merely raising a ₹3,600 claim does not pretend that ₹3,600 has already returned to the business.

For the full formula and multi-item allocation, read How to Calculate Actual Landed Cost Per Piece After Charges, Short Delivery and Claims.

What moves into Inventory Manager

The receiving record is also the control point before stock creation.

Only sellable quantities should move through the connected Trade Manager-to-Inventory Manager handoff. Non-sellable and missing goods must not become available inventory, public catalogue stock or invoice quantity.

Using the example above:

Recorded in Trade Manager	Eligible for inventory
102 sellable shirts	102
6 non-sellable shirts	0
12 missing shirts	0

The owner can then organise the 102 pieces into the correct colour-size SKUs, location and product record. If damage is discovered later—after stock was already added—use Inventory Manager's reason-based stock removal instead of editing the old trade receipt without understanding the timeline. See How to Restock, Transfer, Adjust and Write Off Inventory Safely.

Handling multiple shipments correctly

One purchase may arrive in parts.

Suppose 200 footwear pairs are allocated like this:

• Shipment 1: 80 pairs;
• Shipment 2: 70 pairs;
• Shipment 3: 50 pairs.

Receiving must be recorded against each shipment, not as one final guessed total. Trade Manager combines the sellable quantities across all consignments for costing and includes applicable transport charges from every consignment.

If Shipment 1 has three damaged pairs and Shipment 2 is short by five pairs, the owner can keep separate evidence and claims tied to their originating shipment. This is far clearer than one note saying 8 pairs issue.

Closing a trade when the balance will never arrive

A trade may remain incomplete because some ordered goods were never delivered. When the owner knows the supplier will not send the balance, Trade Manager allows the trade to be closed with missing items.

This action requires a reason, such as:

Supplier confirmed the remaining 12 pieces will not be shipped; shortage claim remains under follow-up.

Closing moves the trade to Completed; it does not erase the missing quantity or automatically resolve the claim. The trade can also be reopened if the situation changes.

Practical SOP for a wholesaler

Use this short process whenever a shipment arrives:

1. Photograph visibly damaged or opened cartons before unpacking.
2. Match the delivery reference and expected box count.
3. Count each product or variant, not only the cartons.
4. Separate sellable and completely non-sellable goods physically.
5. Enter missing quantity deliberately.
6. Review any not-accounted-for or over-expected warning.
7. Save receiving with a useful note.
8. Attach the evidence to receiving and the relevant claim.
9. Raise separate damage and shortage claims when both occurred.
10. Select the party supported by the evidence.
11. Update the claim status after every meaningful outcome.
12. Transfer only sellable pieces into Inventory Manager.
13. Review landed cost before deciding the selling price.
14. Close a permanently short trade only with a clear reason.

Common mistakes to avoid

Recording every received piece as sellable

This inflates inventory and can let staff invoice stock that cannot be delivered to a customer.

Treating damaged and missing as the same thing

Damaged goods physically arrived; missing goods did not. The responsible party, evidence and commercial response may differ.

Raising a claim without correcting receiving

A claim does not change stock. If five pieces are missing but receiving still says all pieces are sellable, inventory and costing remain wrong.

Reducing landed cost as soon as a claim is raised

An open claim is an expectation, not recovered money. Treating it as recovery too early can underprice the remaining stock.

Counting only boxes

A matching box count does not prove that every item inside is present or sellable.

Deleting an unsuccessful claim

If a genuine claim was rejected or written off, update its status and preserve the reason. Deletion removes useful history.

Sending non-sellable goods into inventory

Only sellable quantity should become stock. Use the connected handoff so missing and written-off pieces do not quietly enter the catalogue.

Frequently asked questions

Does Trade Manager automatically decide that an unaccounted difference is missing?

No. New receiving entries ask the owner to record Missing/Short deliberately. The screen warns when quantities do not reconcile so the underlying entry can be reviewed.

Can I record a damaged item as sellable?

Yes, when it can genuinely be sold. Classify it according to what the business will do with it, then set an appropriate selling price later.

Does a shortage automatically raise a claim?

No. Receiving records the physical shortage. The app then offers a convenient shortage-claim action, but the owner chooses whether to raise and save it.

Can one delivery have both damage and shortage claims?

Yes. Non-sellable goods can support a damage claim while explicitly missing goods support a separate shortage claim.

Is the suggested claim amount final?

No. It is a starting value based on affected quantity and recorded purchase rate. Contract terms, freight responsibility, taxes, insurance or another agreement may change the actual amount pursued.

Can I attach proof to a claim?

Yes. Claim photos and documents remain connected to that claim rather than being mixed into an unlabelled phone gallery.

Does a resolved claim automatically add replacement stock?

No. Claim status records follow-up. Replacement goods must be recorded through the appropriate receiving and inventory process when they physically arrive.

Does a rejected claim change the missing quantity?

No. The physical receiving record remains unchanged. The rejection reason explains why the commercial recovery was unsuccessful.

Can I finish a trade while a shortage remains?

Yes. If the remaining goods will not arrive, the owner can close the trade with a required reason. Any claim should retain its truthful status.

Where can I see claims from different trades?

Use Trade Manager's central Claims section. It separates open follow-up from resolved, partially resolved, rejected and written-off outcomes.

Keep the physical truth first

Damage and shortage are expensive, but unclear records make them harder to recover from.

Trade Manager keeps the chain understandable: record what arrived, separate what can be sold, preserve evidence, pursue the responsible party, and calculate cost from the stock the business can actually recover money through. That gives the owner a usable operational record even when the supplier or transporter dispute takes time to settle.

Continue with the Trade Manager complete guide, the actual landed-cost guide, or the received-goods inventory handoff guide.