u/crazylocks

I run a small company that does deduction recovery and trade promotion management for CPG brands. 7 customers right now, ranging from emerging to mid-market. Talking to controllers and CFOs all day, every brand under $200M is saying the same thing: deductions are creeping up and distributor support is slower than ever to respond on disputes.

Wanted to share some patterns from the trenches in case it's useful. None of this is product talk, just what I'm seeing.

Deduction codes are getting more granular and less explained. We're seeing a lot more "misc" and "compliance" codes with basically no backup behind them. If you push back on these, they get reversed maybe 60% of the time. Most brands don't push.

KeHE and UNFI handle disputes very differently right now. KeHE is slow but consistent, clean documentation gets you paid in 30-45 days. UNFI is faster on small ones but pushes back hard on anything over $1K. Different playbook needed for each.

Unauthorized deductions are the most painful category we're seeing. Distributors taking deductions for promotions the brand never approved. If you don't have your trade plan documented somewhere ironclad, you're defenseless. This is the single biggest leak point for brands under $50M.

Most brands genuinely don't know what their deduction rate is. We ask new prospects "what percent of gross sales are you losing to deductions?" Half the time they don't know. The ones who think they know are usually understating by 30%+ because they're not counting MCBs and post-audit claims, which are a huge chunk.

Recovery is a process problem not a tech problem. You can have great software and lose money if nobody is consistently reviewing line items and filing within the 90 day window. Most small brands need a service, not a tool. We've leaned into that hard.

One more thing I keep seeing. Brokers are not your friend on recovery. They get paid on new orders. They have zero incentive to help you fight deductions on old ones. If you're relying on your broker to flag this stuff, you're losing money and don't know it yet.

Anyway. If you work at a brand and any of this resonates, I'd love to compare notes. We're also raising a small round right now and would especially love to talk to CPG operators who've been through this pain themselves and might want to angel invest.

If you make a food or beverage product and sell it through distributors like KeHE, UNFI, or any of the regional ones, here's something you might not know: the random deductions on your invoice that you can't explain? You can fight most of them. Most brands don't, and they lose 2 to 5% of their revenue every year because of it.

Quick about us. I'm the CEO. My co-founder runs ops and validation. We're a 2 person team. We built software plus a recovery service that handles disputes for small and mid-size CPG brands. 7 paying customers, all real food/beverage companies between $5M and $150M in revenue. For some of them we've recovered six figures within the first 90 days.

I'm raising a small round and trying to be useful here at the same time, so let me share things that are actually helpful whether or not you ever talk to me.

One- You can dispute almost any deduction under $500 just by emailing your distributor rep and asking for backup. Distributors take thousands of these a month and assume you won't push. Most brands don't. If you start asking, you'll be surprised how much comes back. We've seen brands get 2-3% of revenue back just from doing this consistently.

Two- The 90 day dispute window is real. Most distributor agreements give you 90 days from the deduction date to file. After that the money is gone. If you're not looking at deductions weekly, you're losing money you can never get back. The bigger you grow, the more this hurts.

Three- Your broker is not going to do this for you. Brokers get paid to find new shelf space. Recovery work doesn't pay them. It has to be you, your finance team, or someone you hire.

Four- Trade promotion deductions are the worst category. If a distributor claims you owe them money for a promotion you supposedly ran, and you can't produce the signed authorization, you're going to eat it. Document every promotion in writing, even the verbal ones. This alone saves brands a ton.

I'll answer questions about deductions, distributor disputes, or how we're building the company. Whichever is more useful.

I run a B2B AI company with my co-founder. I'm CEO and run product, she does customer validation and ops. We sell to mid-market CPG brands. We automate two finance workflows that are massive pain points and that nobody has bothered to fix properly because this customer type is well just different.

7 paying customers. Just over $10K MRR. Zero churn. We're 7 months in and raising a seed right now.

Wanted to share some things I got wrong, partly because I see a lot of vertical AI founders making the same mistakes.

The first thing is that for the first 2 months I led every demo with "we use AI agents to..." and lost most of those deals. CPG controllers don't care that you use AI. They care that you'll catch their distributor stealing $20K a month from them. Once I changed the opening line to "we recover deductions, here's how much we got back for X last quarter," conversion went up a lot. The AI part is implementation detail and not the value prop we thought it was going into it.

Second thing. I tried selling to enterprise first because the contract sizes looked good on paper. 9-month sales cycles, every deal stalled at procurement, completely brutal. Mid-market ($20M to $200M in revenue) closes in 3 to 6 weeks because the buyer is the same person as the user. That's the controller or the CFO directly. No procurement, no legal review that takes 4 months. If you're early stage and building vertical AI, do not start at enterprise. The temptation is real and it's wrong.

Third thing, and this is the one I really got wrong. I hired a dev shop to build a part of the product at like $5K MRR. One of the worst decisions we made. And instead decided to build the workflows ourselves using AI tools.

A few other things, faster:

• Cold outbound is soooo DEAD in this space. Reply rate was less than 1%. We sent THOUSANDS of emails when we first started. Introductions from brokers and just full on founder led sales build a referral network through conferences was the move.
• Outcomes beats pure software here. People in CPG finance don't want another dashboard. They want someone to handle the workflow for them. Our pricing reflects that and so does retention.
• The "we have AI" wedge is closing. 12 months ago it was a differentiator. Today every competitor and their moms in the category leads with it. Depth of workflow coverage is the new wedge.

Happy to dig into any of this. Genuinely curious what other vertical AI founders are seeing, especially anyone selling into industries that don't read TechCrunch.