Before accepting a first wholesale order, answer two questions: what does the order contribute after its variable costs, and can the business fund every commitment before collection? Use this worksheet when a buyer has proposed quantities and terms, whether your brand currently sells only through DTC or already has a small wholesale channel.
Wholesale changes the route to the customer. Prices, order sizes and selling costs can differ from DTC, so a retail selling price alone is not a useful comparison. Shopify’s channel overview describes these differences. The decision below is about your actual order, not an assumed industry margin.
1. Gather evidence for five readiness checks
Use this suggested review structure. Give each missing input a named owner and a date; distinguish signed terms, supplier quotes and your own estimates.
| Check | Evidence to collect | Question to resolve |
|---|---|---|
| Economics | Quantity, price, discounts, return rights, allowances, product cost, freight, commissions and retailer deductions | What remains after the costs of this order? |
| Timing | Deposit and balance dates, shipping, acceptance, invoicing trigger, payment terms and collection scenario | What is the lowest cash point before collection? |
| Capacity | Supplier and fulfillment commitments, case packs, lead times, DTC inventory reservations and replenishment plan | Can operations deliver without displacing commitments we want to protect? |
| Downside | Cost changes, deductions, delayed delivery or collection, cancellation conditions | Which assumption would change our decision? |
| Funding | Company cash forecast, existing obligations, available facility terms and a decision owner | How will we cover the dated gap if the downside occurs? |
For each important input, record: source, amount, date, owner and unresolved issue. Have the appropriate adviser review unclear contract provisions before relying on them. A submitted financing application is not a cash receipt. For example, SBA-backed 7(a) financing can support working capital, but requires eligibility and a lender application process; it is not an automatic consequence of winning an order. SBA program overview.
2. Compare contribution on a consistent basis
Contribution is sales less variable costs, leaving an amount to cover fixed costs and potentially profit. It is not net profit. OpenStax explains the contribution calculation.
Illustration only: every number below is invented, not a client result, industry benchmark or forecast. Both columns represent 1,000 ordered units of the same hypothetical product. Wholesale gross price is $50 per unit; DTC gross price is $100. All listed product and channel costs are treated as variable for this example. Your actual cost classification may differ.
| USD for 1,000 ordered units | DTC | Wholesale |
|---|---|---|
| Gross sales | $100,000 | $50,000 |
| Discounts/refunds or credits/allowances | ($10,000) | ($2,500) |
| Net sales | $90,000 | $47,500 |
| Product cost | ($20,000) | ($20,000) |
| Outbound freight | ($9,000) | ($3,000) |
| Separate fulfillment | ($3,000) | $0 |
| Payment fees | ($3,000) | $0 |
| Returns processing | ($2,000) | $0 |
| Variable acquisition or sales commission | ($25,000) | ($2,375) |
| Contribution before fixed costs and financing | $28,000 | $22,125 |
| Contribution / net sales | 31.11% | 46.58% |
Wholesale allowances are 5% of gross sales; commission is 5% of net sales. The wholesale freight assumption includes fulfillment. Zero payment fees and returns-processing costs are simplifying assumptions, not claims that these costs never apply. The example assumes no inventory recovered from returns; reductions to sales and handling costs are separate and counted once.
The wholesale calculation is $47,500 − $20,000 − $3,000 − $2,375 = $22,125. DTC is $90,000 − $62,000 = $28,000. Percentages use net sales; dollar calculations retain full precision.
DTC produces more contribution dollars in this example; wholesale produces a higher contribution percentage. Neither proves which channel is better for the company. Assess expected volume, capacity, incremental fixed commitments and cash timing as well. For a real model, identify acquisition costs attributable to each channel and avoid counting them again inside another cost line. The DTC column does not assume immediate cash settlement.
3. Put the wholesale order on a cash timeline
Payment terms need a defined starting event. For example, Shopify’s net payment terms run from order placement, while its documentation also describes other term types. Its payment-method guidance allows upfront or later collection. These platform mechanics do not establish your retailer’s contract. Shopify payment terms, payment methods.
For this fictional contract, assume payment is due and collected 60 days after accepted delivery on day 60. Collection is therefore on day 120. The supplier receives a 30% deposit against the $20,000 product cost on day 0, with the balance on day 45. Freight is paid at delivery; commission is paid when the retailer pays.
| Day | Assumed cash event | Movement | Cumulative order cash |
|---|---|---|---|
| 0 | Supplier deposit | −$6,000 | −$6,000 |
| 45 | Supplier balance | −$14,000 | −$20,000 |
| 60 | Accepted delivery; freight payment | −$3,000 | −$23,000 |
| 120 | Collect $47,500; pay $2,375 commission | +$45,125 | +$22,125 |
The order’s largest pre-collection cash outlay is $23,000, and the first supplier payment precedes collection by 120 days. Cumulative order cash starts at zero to isolate this order; negative values show its funding requirement, not the company’s bank balance. In this simplified example, final cumulative cash equals contribution because every included receipt and cost has been settled.
This excludes taxes, tariffs, financing charges, fixed overhead, existing DTC operations and further orders. These are not assumed to be zero in your business. Add applicable amounts and dates before using the model for a decision. The order-only outlay is not the company’s total financing need.
4. Change the assumptions before making a commitment
Each row changes one base assumption; all others stay the same. Results remain hypothetical and exclude the additional costs listed above.
| Scenario | Peak order outlay | Collection day | Contribution before fixed costs and financing |
|---|---|---|---|
| Base case | $23,000 | 120 | $22,125 |
| Product cost rises 20% to $24,000 | $27,000 | 120 | $18,125 |
| Collection occurs 30 days later | $23,000 | 150 | $22,125 |
| Credits/allowances rise to 10% of gross sales | $23,000 | 120 | $19,750 |
The late-collection row has the same outlay only because no extra carrying costs or commitments are included. It leaves the order funded for longer. In the higher-allowance row, collection is $45,000 and commission is $2,250; both change with net sales.
If a scenario fails your cash or return requirements, investigate an agreed customer deposit, different supplier terms, a smaller pilot or a later launch. These are options to negotiate and model, not entitlements. Recalculate dates, costs and operating commitments for the actual agreed change.
5. Make the decision inside the company forecast
Add the order’s dated flows to your existing forecast without counting the same purchase twice. Opening cash plus receipts minus payments gives closing cash; carry that balance into the next period. The Australian government’s cash-flow guidance describes this structure.
Extend the forecast through collection and the next replenishment cycle. Include the DTC inventory you intend to retain, payroll, overhead, tax and debt payments, and financing assumptions with their conditions and dates. Compare the lowest forecast balance with a reserve chosen for your business.
Write down one decision and the evidence behind it:
- Proceed: the agreed economics, capacity and funding fit your requirements.
- Renegotiate: a specific price, term or commitment must change.
- Pilot: a smaller commitment can test the assumptions; model that order separately.
- Defer: a material input or funding plan remains unresolved.
This is a decision worksheet, not a universal readiness score or funding recommendation.
Get a focused second look
Inflection CFO’s published Sunday Citizen case, from prior and advisory engagements, describes forecasting, cash-flow visibility and lender/debt work. It provides relevant finance experience; it does not establish a wholesale launch result. Read the case.
Explore consumer-brand CFO support or DTC finance support. To discuss one order, cash-timing question or missing model input, request a free 30-minute financial assessment. This is an initial diagnostic conversation, not a full model build, financial-statement audit or promise of retailer placement or financing approval.