One way to determine how well a company is doing is by taking a look at their sales and earnings. Some companies try to capitalize on this by sending retailers on their distribution channels a higher number of products than they can sell. This is a sketchy practice called channel stuffing often used by businesses to inflate their sales and earnings. How Channel Stuffing Works When a reporting period is fast-approaching, companies may engage in channel stuffing to improve their numbers. Reports tend to come out quarterly or at the end of the year, so a company may do it close to that time period. How it works is a company would distribute more products than a distributor can sell within a time period. They may also incentivize the distributor by offering things like significant discounts, extended payment terms, or rebates. Once the distributor accepts the items, the company books them as sales for that period, be it the end of quarter or year. This can, in turn, paint a picture of positive financial health. The issue with channel stuffing is it sometimes only temporarily