In this eye-opening episode, Sarah breaks down the harsh food distributor chargeback reality that many founders don't discover until it's too late. Using a real-world example of a brand that invoiced KeHE for $68,267 but received only $13,345 (just 19.5%), she dissects exactly where that money went.
From the surprising "initial PO" payment policy that can delay your first check for 3-6 months, to the specific chargebacks that consumed 80% of a brand's revenue, Sarah provides the financial transparency food entrepreneurs desperately need before signing distribution agreements.
The episode explores several chargeback categories including intro allowances, free fills, spoilage allowances, and promotional fees – revealing how these can quickly transform an exciting distribution opportunity into a significant cash flow challenge.
Sarah shares practical strategies for surviving the distribution onboarding process, emphasizing the importance of “velocity over doors” and suggesting regional distributors as potentially more transparent alternatives to national giants.
Tune in for an essential financial reality check that could save your food business from a costly distribution mistake or help you prepare properly for sustainable growth through distribution channels.
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