You're in a difficult spot here as a working mom, S.. I am totally in accord with Margot B. and Jeanine R. I had the following immediate thoughts as I read your request.
1. I wondered whether your reward system was set up for a whole week before the reward could be earned. An immature child of even 6 or 7 would probably not find such "long term" goals reachable, and would lose interest. A more mature child might make it, but your goals might simply be too long for your daughter to think she has much of a chance of succeeding. So you might try daily goals for awhile and see whether that makes a difference.
It might also help if your daughter sits down with you and helps set the goal and the reward. It will be more meaningful for her.
2. Time outs are best not used for punishment, but rather as a period of calm to help children having emotional episodes. And time outs more than a few minutes after the fact would have little or no impact on the undesirable behavior.
3. I'm so glad you're not spanking your little girl. She's probably already unhappy about her school experience, and that would compound the problem. Plus, it's not a natural consequence, a direct outcome of the behavior. It's an act of force and imposing shame, and kids subjected to that kind of discipline may eventually start practicing force against others, or rebel, or break emotionally. (Not all kids, but you don't know until too late if your child is one who'll be so affected.)
4. Most educational programs, and the timing they impose on all children, are artificially "one-size-fits-all." Your daughter may truly be too young for Kindergarten. Some kids are. And related to this, too much focus on academics at this age, at the expense of time for free, imaginative play, has been shown to negatively affect children's love of learning. It can actually backfire, making kids even more resistant education. They no longer "own" their own free and natural impulse to explore and learn.
5. Having your daughter repeat probably won't scar her emotionally. If it is simply presented as an opportunity to learn more comfortably, and not to be pressured into trying to succeed where the work or social expectations are too much for her, she'll be fine. It might scar YOU emotionally, though, if you have dreadful thoughts about social stigma or lost opportunities. Those things are worst-case-scenarios, and are unlikely to happen. So if her being retained is a source of suffering for you, I hope you'll try reexamining your assumptions. Kids pushed ahead usually do much worse than kids appropriately held back.
6. Finally, your daughter needs someone to advocate for her, and you are the person in the best position to understand and act on your daughter's unique needs. Has she been evaluated for behavioral challenges, autism spectrum, or sensory disorders (even very bright kids can have these issues)? And I'm not a fan of medicating children for what is really natural behavior (for them), but I have known a few children who do MUCH better on carefully-targets meds. All this might be good to talk over with her pediatrician. If there is an actual problem, it's better to identify it early so you know what your options are.
7. It also occurs to me that your daughter could be completely normal, considering her particular genetics, early training, impulsivity level. This brings me back to point number 4. Kindergarten is really not a good fit for every child, and I wonder whether any optional programs are available for you.
Good luck, S..