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Disposition Channels & Approval Thresholds

The five channels dead stock can exit through, the two-person approval thresholds that guard a batch, and the rules that apply per channel.

Last updated: September 22, 2026

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Disposition is what happens when inventory leaves without being sold at retail: returned to the vendor, liquidated, donated, sold to staff, or destroyed. Each of those has different financial, tax and regulatory consequences, so each is a separate channel with its own rules — and a batch that moves real value requires a second person to approve it.

Estimated time: 5 minutes

What you'll accomplish

  • Know the five channels and what each is for
  • Know when a second approval is required, and when it is always required
  • Understand the per-channel rules that will affect your workflow
  • Know what is not yet available

Requirements

  • Plan: Enterprise.
  • Found at Settings → Disposition channels; batches are created from Actions → Liquidation.

The five channels

Channel Use it when
Return to Vendor The supplier's terms allow a return — usually the best financial outcome
Liquidate Sell in bulk through a liquidation marketplace
Donate Give to a qualifying organisation and record the tax position
Employee Sale Offer to staff through a passcode-protected collection
Scrap Destroy, with a regulatory code recorded

Which one gets recommended for a given product is covered in Liquidation Candidates & Confidence. This article is about what happens once you act on it.

Approval thresholds

Disposition uses maker–checker: the person who builds a batch is not necessarily the person who can execute it. A second approval is required when a batch crosses any of these:

  • More than 500 units, or
  • More than $10,000 in value, or
  • Any Scrap batch, at any size.

Scrap is unconditional because it is the only channel with no recovery at all and no way to undo the outcome once the goods are destroyed. The unit and value thresholds are defaults and can be adjusted per merchant; the scrap rule is policy.

Per-channel rules worth knowing before you start

The record pack estimates the tax benefit using a default US federal rate of 21% (the C-corp rate) and a FIFO cost basis. Donations with a fair market value above $5,000 are flagged as needing a qualified appraisal, per US Section 170 rules. These are defaults to support the paperwork — they are not tax advice, and your accountant's treatment governs.

Employee Sale

A staff sale runs as a passcode-protected collection. Passcodes are 8–32 characters. A sale runs for 30 days by default and a maximum of 90. A passcode can be rotated, but only twice before the sale is blocked — rotation is for a leaked code, not a way to run an indefinite staff sale.

Scrap

A regulatory code must be recorded from a fixed list — WEEE electronic waste, FDA food, cosmetics or drugs, RCRA hazardous, lithium battery, or other. The destruction location must be specific enough to be meaningful (at least 10 characters), because this is the field an auditor reads.

Liquidate

Where a liquidation marketplace is connected, listings are tracked automatically. A lot still listed with no movement after 7 days is surfaced — a listing nobody is bidding on is usually a listing the provider dropped, and the goods are already written off. Where estimated and actual recovery differ by more than 20%, the variance is flagged for reconciliation.

What is not yet available

Reversing an executed batch is not available. The spec calls for a reversal to add inventory back and write inverse ledger records; that path is not built, so opening a reversal is blocked rather than offered.

This is the honest version of the trade-off: a reversal that only zeroed inventory and wrote a second write-off would corrupt both your stock position and your ledger. Refusing is the safe answer until the restore path is complete. Plan accordingly — treat an executed disposition batch as final.

Verify it is working

  • Open Settings → Disposition channels to confirm which channels are enabled and what your approval thresholds are set to.
  • Build a small test batch and confirm the approval requirement appears where you expect it.
  • Check that the audit record for an executed batch carries the channel, the approver and the regulatory fields for that channel.

Troubleshooting

A batch will not execute

Check whether it needs a second approval. Over 500 units, over $10,000, or any scrap batch requires one, and the batch waits until it is given.

An employee-sale passcode stopped working

Passcode rotation is capped at two rotations before the sale is blocked. Close the sale and open a new one.

A liquidation lot shows no updates

Lots are polled hourly where the provider has no webhook. A lot still listed with no movement after 7 days is flagged rather than left to sit.

FAQ

Can I undo a disposition batch?

No. Reversal is not available, and an executed batch should be treated as final.

Who can approve a batch?

Approval is role-based. The second approval must come from a different person than the one who built the batch.

Does a disposition write-off appear in my ROI figures?

Disposition records recovery where a channel produces any (liquidation proceeds, for example). A scrap write-off has no recovery by definition.