Credit recovery isn't magic and it isn't a negotiation the platform runs on your behalf. It's arithmetic on numbers you set. Four rates plus a set of aging thresholds decide what every monthly credit memo asks for. Set them to match the agreements you already have with each vendor, and the memos come out right without you touching a calculator. Set them wrong, and you either leave money on the table or over-ask and burn vendor trust. This post is a tour of each number: what it does, its default, and how to think about it.
Target margin — the number everything else depends on
Target margin is the share of each sale you intend to keep. It defines keystone, the price a product needs to reach to earn that margin:
keystone = cost ÷ (1 − target margin)
At the default 50% margin, keystone is your cost divided by 0.50 — exactly 2× cost. A $20 unit needs to clear $40 to hit target. Every co-marketing and aging credit is measured as the shortfall below this line, so target margin is the lever underneath both. One thing to be careful about: this is a margin (share of the sale price), not a markup (a multiple of cost). Entering it as a markup would shift keystone and quietly move every shortfall on every memo.
Why target margin matters
The three coverage rates
Once keystone sets the shortfall, the coverage rates decide what fraction the vendor picks up. Each one governs a different credit type:
| Rate | What it covers | Applies to | Default |
|---|---|---|---|
| Co-marketing rate | Vendor's share of a pre-approved promotion's below-keystone shortfall | Wholesale only | 50% |
| Aging coverage rate | Vendor's share when aged stock sells below keystone | Wholesale only | Inherits co-marketing |
| Return policy rate | Vendor's share of return and waste unit cost | Wholesale & consignment | 100% |
Co-marketing rate (wholesale)
The vendor's share of a pre-approved promotion's shortfall. The 50% default is the classic "split the billboard" arrangement — you made the pricing call, so you cover half; the vendor gets the sell-through, so they cover half. It only applies to promotions the vendor pre-approved, and only on wholesale product. The full mechanics are in co-marketing credits.
Aging coverage rate (wholesale)
The vendor's share when a slow lot ages past its threshold and you mark it down. It's a separate knob from co-marketing because a genuinely stale lot is often more the vendor's problem than a planned promo — so this rate can run higher. Leave it unset and it inherits your co-marketing rate. It's paired with your aging thresholds, covered in inventory aging credits, and like co-marketing it's wholesale only.
Return policy rate (both paths)
The vendor's share of the cost of a defective return or a destroyed unit. This is the one rate that applies on both wholesale and consignment, because a return or a destruction is a straight loss, not a discount. The 100% default reflects the common agreement that vendors stand fully behind defective product and expirations. Details in return and waste credits.
Aging thresholds — the timing rules
Thresholds decide when product is "aged" enough for the aging rate to fire. They're category-aware, and you set them at whatever level of specificity you want. The precedence, most specific first:
SKU > vendor > category > platform default
The platform defaults are 60 days for Flower, Pre-Rolls, and Concentrates, and 120 days for Vapes, Edibles, and everything else. A SKU rule overrides a vendor rule, which overrides a category rule, which overrides the default. If a vendor's live resin turns slow at 45 days, set a 45-day vendor rule and it governs their SKUs.
Why consignment is different
Two of these rates — co-marketing and aging — are wholesale only, and it's worth being clear why. On a consignment order the vendor's cut is calculated on whatever the product actually sold for. When you discount it, the vendor already shares that discount through the split, automatically. There's no separate markdown to bill back, so co-marketing and aging simply don't apply. What does carry over is the return policy rate: a defective return or destruction on consignment is still a real loss, and the vendor covers their agreed share — netted through the weekly settlement rather than billed as a wholesale credit. Set your rates knowing this split, and you'll never accidentally imply a consignment vendor owes you for a promotion.
Who sets these, and when they take effect
You do, and immediately. The retailer sets target margin, the three coverage rates, and the aging thresholds — per vendor, with sensible defaults filling in anything you don't override. They take effect the moment you save; there's no vendor sign-off on the rate itself. ShelfSpace doesn't broker the terms between you and your vendor — you agree to whatever you agree to directly. What the platform does is run the operations: apply your rates to the month's data, build the memos, send them, and handle the vendor's approve, approve-a-partial-amount, or decline on each one. The rate is your call; the review is still the vendor's.
What to do Monday morning
- Confirm your target margin matches how you actually price — and that it's entered as a margin, not a markup.
- Set each coverage rate to the deal you actually have per vendor. The 50% / 50% / 100% defaults fit most, but a vendor who agreed to more should be set higher.
- Set aging thresholds that match how your categories move, tightening them where product turns slow.
- Then run the month and read the memo. Every line traces back to one of these numbers — walked through in the anatomy of a vendor credit memo.
Dialing in your rates is the one bit of setup that makes credit recovery run itself afterward. If you'd like a hand mapping your existing vendor agreements onto these settings, start with a free evaluation and we'll walk your last 90 days through them with you.