Q1 Trade Spend Triage: Stop Short Pays Before They Spread
- Jon Allen
- Jan 16
- 4 min read
Trade spend is supposed to buy growth.
In Q1, it often buys you something else: confusion, short pays, and weeks of “Can you resend the backup?”
If you’ve ever looked at a deduction and thought, “We already funded that promotion… why are we paying again?”—welcome to the club.
Why this matters more than ever in 2026
Retail is entering 2026 with shoppers still seeking value. Retailers are leaning into deals, private label, and “dupes,” and they’re getting more aggressive about promo visibility and price perception.
Grocery is also entering the year amid economic uncertainty and continued value pressure—meaning retailers will compete more aggressively for trips, loyalty, and basket size.
That pushes more suppliers into “We need a promotion” mode.
But here’s the uncomfortable truth: promotions are expensive, and a lot of them don’t pay back.
McKinsey reports that consumer packaged goods (CPG) companies invest about 20% of revenue annually in trade promotions, and 59% of promotions lost money globally (72% in the U.S.). Best-in-class promotions returned five times as much as the least efficient.
That spread is your opportunity. And your risk.
First, a plain-English definition
Trade spend is the money suppliers invest to influence retailer behavior and drive sales—temporary price reductions (TPRs), ad features, displays, scan funds, billbacks, lump sums, and off-invoice allowances.
It’s not “bad.” It’s a lever.
But it’s also one of the easiest places for margin to leak because it sits at the intersection of sales, finance, supply chain, and retailer systems. When those teams aren’t aligned, the retailer’s accounts payable process becomes your unofficial referee.
Spoiler: the referee is not on your side.
Why Q1 is where the leakage shows up
Four things collide right after the holidays:
The year-end close (finance wants clean, defensible numbers)
New calendars and new terms (promotions get reset, portals get updated, contacts change)
Post-holiday volume shifts (demand normalizes fast, and errors get louder)
Delayed deductions (the promotion happened in November/December; the short pay hits in January)
So Q1 isn’t just about running promotions. It’s about surviving the accounting aftershock.
A fictional scenario (but painfully familiar)
Fictional example: A midsize snack brand runs a four-week promotion across two retailers.
Retailer A requires a portal entry and a specific event code. Retailer B approves via email and expects billbacks submitted within a tight window. Internally, sales tracks the promo in a spreadsheet, finance accrues it differently, and the customer service team is the only group that knows where the approval email lives.
The promotion performs well. Everyone’s happy.
Then January hits:
Retailer A short-pays invoices because the portal entry reflected a different date range than the brand’s internal plan.
Retailer B deducts because the billback submission missed a deadline by a week.
Meanwhile, the brand’s team can’t reconcile what’s “real” because there’s no single source of truth.
No fraud. No incompetence. Just misalignment.
And misalignment is expensive.
The hidden killers: why promotions “look good” but lose money
One reason trade spend is so tricky is that promo lift can mask value destruction.
McKinsey highlights effects such as cannibalization and pantry loading (stockpiling)—tactics that can make a promotion appear successful while quietly eroding profit.
In other words: you may have sold more units last week… …but borrowed them from next week, at a lower margin, while paying extra fees.
That’s how trade spend turns into a treadmill.
The Q1 Trade Spend Triage Playbook
This is a practical approach we’ve seen work for suppliers of all sizes. It’s not fancy. It’s just disciplined.
1) Build a “Promo Truth Sheet” for every event
One page. No exceptions. This becomes your internal contract with reality.
Include:
Retailer + event name (exactly as the retailer labels it)
Start/end dates (and time zone if relevant)
Participating SKUs (stock keeping units) and pack configuration
Expected retail price and expected net cost
Funding method (off-invoice, scan, billback, lump sum, etc.)
Total expected spend + how it will appear (deducted, invoiced, paid separately)
Proof location (portal ID, attachment, email thread, approval screenshot)
Owner (one person accountable)
If you cannot summarize the promotion on one page, you don’t understand it well enough to execute it cleanly.
That sounds blunt. It’s also true.
2) Run a weekly reconciliation—because monthly is a donation
If your process is “we’ll reconcile at month-end,” you’re basically agreeing to:
Miss deadlines
Lose documentation
Pay duplicates
Argue from memory
Weekly cadence (30 minutes) should cover:
Short pays tied to active promotions
Billbacks submitted vs. billbacks received
Deductions that reference promo/event codes
Exceptions over your threshold (pick a number that matters)
This is where you stop the bleeding. Fast.
3) Triage by recoverability, not emotion
Some deductions are irritating. Some are recoverable. Those are not always the same.
In Q1, prioritize:
High-dollar term mismatches with clear documentation
Duplicate deductions (same invoice, same reference, taken twice)
Pricing/cost differences when the system is wrong
Repeat issues tied to the same root cause (same error across multiple invoices)
Avoid getting pulled into the “$28 rabbit hole” while the $28,000 leak suggests a structural issue.
4) Fix the root cause, or you’ll relive Q1 in Q2
This is the moment suppliers skip because it’s not urgent.
It’s just important.
Common root causes behind promo deductions:
Promo setup workflow lacks finance sign-off
Item data (pack, cost, dimensions) wasn’t updated before the event
No system-of-record for promotions (multiple spreadsheets, multiple truths)
Handoffs break between sales, supply chain, and accounts receivable
If you only dispute deductions, you’ll win battles and lose the war.
5) Make promotions easier to execute—even if they’re less exciting
Complex promotions create complex failure modes.
In 2026, a lot of suppliers will win by running:
Fewer events
Cleaner events
Events with proof that’s easy to retrieve
Events that are designed to be reconciled quickly
Boring promotions can be profitable promotions.
A simple “Do this next week” checklist
If you want a starting point you can implement immediately:
Pull the last 90 days of promo-related deductions and sort by dollars
Identify your top 3 retailers for trade spend leakage
Standardize promo documentation (one folder structure, one naming convention)
Create a Promo Truth Sheet template
Set a weekly reconciliation meeting (30 minutes, same attendees)
Set a dispute threshold (what you will chase, and what you won’t)
This is how you turn trade spend into a lever again—rather than a mystery.
Where Woodridge Retail Group fits (no hard sell)
Woodridge Retail Group works in the space where trade spend, and deductions collide—helping suppliers recover what’s valid, tighten documentation, and reduce repeat leakage.
Sometimes, the biggest win is simply finding the one workflow break that keeps generating the same “random” short pay.
