Model the first-year economics of a major retailer launch — slotting fees, free fills, deduction erosion, and the cash conversion gap that revenue projections hide.
| Retailer | Peak trough | Trough month | Break-even | Net cash Y1 |
|---|
A specialty food brand with four SKUs accepts a Walmart invitation to 1,200 doors. The broker projects $499,200 in Year 1 revenue. The actual net cash impact after all costs and collection delays: −$36,320.
| Line Item | Amount |
|---|---|
| Gross Year 1 Revenue | $499,200 |
| Upfront Allowances (New Store) | −$48,000 |
| Free Fills (1 case / SKU / door) | −$86,400 |
| Trade Spend (12% of gross) | −$59,904 |
| Learning-Curve Chargebacks (months 1–3) | −$14,976 |
| Ongoing Deductions (1% steady-state) | −$4,992 |
| Broker Commission (5%) | −$24,960 |
| COGS | −$224,640 |
| Net Year 1 Cash Impact | −$36,320 |
| Peak Cash Trough (Month 4) | −$165,000 |
Source: Lailara LLC analysis; inputs confirmed by a $28M specialty food operator. 4 SKUs, 1,200 Walmart doors, wholesale price $1.00, velocity 2 units/door/week.
Revenue recognition and cash collection are not the same thing. The brand invoices $41,600 in Month 1, but with Walmart's 60-day payment terms and the deduction netting that accompanies first-shipment allowances and free fills, no cash arrives until Month 3. Meanwhile, COGS and operating overhead flow out every month. The result is a $165,000 working capital requirement at the trough — a number that does not appear in the broker's projection, and one that has surprised better-capitalized brands than Cinderhaven.