How to predict your Anticipated Deduction %

In most cases, your distributor will act as a transactional intermediary between you and the retailer. Distributors will purchase product from you, resell them to the retailer, and pay bills on your behalf to the retailer for things like promotional administrative fees, authorized free-fills or trade spend, fair share allowances, etc. Additionally, your contract with the distributor may include provisions for spoiled product allowances, damaged product allowances, lumper fees, or distributor marketing programs.

When it comes time to pay you for the goods they purchased, your distributor will accumulate all the bills they have paid on your behalf, and the fees you’ve incurred with them, and deduct that amount from what they owe you.

Understanding this % is crucial to developing a good idea of what your cash flow will be.

For a look at aggregated data for 27 CPG brands like you, check out this additional resource