Skip to main content

Methodology

Preorder Cash & Profitability Planner methodology

Test whether preorder cash timing and fulfilment risk justify the offer.
Duc Nguyen X.By Duc Nguyen X.· Founder, Margin101Last reviewed: View update historyMethodology

Educational only: Business decision support, not accounting, tax or legal advice.

Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.

Update policy: Reviewed when formulas or official dependencies change.

Scope: Market-neutral small-business planning using your own assumptions.

1. Formulas and units

Customer Deposits
customerDeposits = units × price × deposit rate

Where

units
Preorder units (operational units)Source: Business record
depositRate
Customer deposit rate (decimal rate)Source: Business record
customerDeposits
Customer Deposits (currency units, ex tax)Source: Calculated output
Payment Fees
paymentFees = units × price × payment fee

Where

units
Preorder units (operational units)Source: Business record
paymentFees
Payment Fees (currency units, ex tax)Source: Calculated output
Cash Before Delivery
cashBeforeDelivery = customer deposits − payment fees charged on the deposit

Where

customerDeposits
Customer Deposits (currency units, ex tax)Source: Calculated output
paymentFees
Payment Fees (currency units, ex tax)Source: Calculated output
cashBeforeDelivery
Cash Before Delivery (currency units, ex tax)Source: Calculated output
Cash Required Before Delivery
cashRequiredBeforeDelivery = units × supplier deposit

Where

units
Preorder units (operational units)Source: Business record
supplierDepositPerUnit
Supplier deposit (currency units, ex tax)Source: Business record
cashBeforeDelivery
Cash Before Delivery (currency units, ex tax)Source: Calculated output
cashRequiredBeforeDelivery
Cash Required Before Delivery (currency units, ex tax)Source: Calculated output
Funding Gap Before Delivery
fundingGapBeforeDelivery = max(0, required cash − available cash)

Where

cashBeforeDelivery
Cash Before Delivery (currency units, ex tax)Source: Calculated output
cashRequiredBeforeDelivery
Cash Required Before Delivery (currency units, ex tax)Source: Calculated output
fundingGapBeforeDelivery
Funding Gap Before Delivery (currency units, ex tax)Source: Calculated output
Final Contribution
finalContribution = sales − supplier and fulfilment costs − fees

Where

fulfilmentPerUnit
Fulfilment cost (currency units, ex tax)Source: Business record
finalContribution
Final Contribution (currency units, ex tax)Source: Calculated output

Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.

2. Worked example

Input assumptions

The worked rows below come directly from the registered engine and visible default fixture.

Calculation and outputs

Example

The worked rows below come directly from the registered engine and visible default fixture.

Customer Deposits
25,000 currency units
Payment Fees
1,500 currency units
Cash Before Delivery
24,250 currency units
Cash Required Before Delivery
12,500 currency units
Funding Gap Before Delivery
0 currency units
Final Contribution
22,000 currency units

The exact engine-derived outputs are shown in the labelled rows below.

Interpretation

The funding gap before delivery shows whether customer deposits cover supplier deposits after payment fees.

3. Validation and boundary checks

  • All values must be finite and inside the visible validation boundaries.
  • Rates are entered as percentages and calculations retain decimal precision.
  • Money uses one consistent ex-tax currency and planning period.

4. Assumptions and source classification

  • Provider fees, exchange rates, return behaviour and operating performance are user-entered scenarios.
  • No provider plan, jurisdiction, tax rate or market benchmark is embedded.
  • The engine retains full precision and display formatting never feeds back into calculation.

This planner has no current policy-data dependency. Its commercial assumptions are user supplied. Registered family-level regression suites exercise the shared business-logic engine and worked-result reconciliation.

5. Limitations

  • The model does not forecast demand, provider changes, exchange rates or operational performance.
  • It does not replace accounting, tax, legal or financial advice.

This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply to your business and seek qualified advice where appropriate.

6. Update and evidence policy

Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this planner. Commercial inputs remain user-supplied because they vary by business and contract.

Change history

  1. : Initial public release of the Preorder Cash Profitability planner and methodology.

Related reading

Guides to interpret the decision and its assumptions.

Return to the planner