It is not easy to run a CPG company. Making profits is an overwhelming task when you need to control production costs, relationships with distributors, and marketing campaigns. What if I told you that the biggest risk to your bottom line isn’t the rising costs of materials or stiff competition. It’s the deductions taking a bite out of your revenues?
For CPG brands, deduct management might not be among the most thrilling aspects of business. However, it is vital. If a retailer fails to pay its invoice in full, whether due to a chargeback, ambiguous compliance issues or promotions, profits are eroded. And when the cash flow is already strained, those deductions can be the difference between growing and struggling.
The True Cost of Poor Deduction Management
There’s no way to be honest: no one launches a CPG brand expecting to spend long hours fighting over deductions with distributors. However, as many business owners quickly realize, the deductions can add up quickly.
If you do not have a good deduction management plan, your company will constantly feel as if it’s losing money. It’s frustrating, time-consuming, and worst of all it takes your focus away from the most important thing building your business’s reputation.
The absence of transparency can make the situation even more complicated. The explanations for many deductions can be unclear, making it hard to know which ones are correct. Many brands are unaware of the amount they’re losing until they look closer at their books. By then they could have suffered losses of thousands (or million).
How Software for Deduction Management can change the game
What’s the good news? This problem doesn’t need to be dealt with manually. The program monitors, analyzes and resolves deductions automatically.
Businesses no longer have to spend hours on spreadsheets and can easily understand how their funds are spending. They also can understand why certain deductions are made. Additionally, the latest software solutions allow brands to dispute incorrect claims faster, saving time and recovering lost revenue more efficiently.
Automation can also result in less human errors and more precise financial reports. If you run a CPG this type of clarity gives you confidence to expand your business, invest and negotiate with retailers.
Food & Beverage consultants are essential to the success of your business
Although software is a great tool but having an expert on your team can help. This is the place where a food and drink expert can help.
Food industry consulting experts in the food industry can assist CPG brands in developing more efficient strategies for managing deductions, train teams about best practices and negotiate more favorable agreements with distributors. They are knowledgeable of the business. This allows them to provide insight that could take a long time to master.
For brands that are growing, expert guidance can mean the distinction between endless disputes regarding deductions and making deduction management a profit-saving, streamlined process.
Final Thoughts
In the end deduction management isn’t only about chasing down lost dollars it’s about protecting your financial health of your business. It doesn’t matter if it’s via deduction management software or working with a food and beverage expert, taking charge of your deductions means controlling your cash flow, your growth, and your future.
Control the situation and transform what was once a hassle into an opportunity to grow your business. You’ll reap the rewards.