The running of an effective CPG brand isn’t an easy feat. Between managing production costs, distributor relationships, and marketing efforts maintaining profits can feel like an uphill fight. What if I told that the greatest risk to your bottom line isn’t increasing material costs or stiffer competitors, but rather the deductions that are quietly eroding your profits?
Deduction management might not be the most thrilling part of running a business but for CPG brands, it’s one of the most crucial. If a retailer does not pay its bill in full, whether due to a chargeback, ambiguous regulations or promotions, profits are eroded. This is especially true when cash flows are already in a tight spot, could be the difference between growth or failure.
Poor deduction management costs a lot more than you think
There’s no way to be honest. No one starts a CPG company expecting to spend hours fighting about deductions with distributors. As many business owners soon discover, these deductions can be significant.
It’s easy to get confused as to what the reason for why your payments don’t correspond to invoices. You’ll struggle to dispute unfair charges and feel like you’re losing money. It’s frustrating and time consuming and takes away your attention from what is important most: growing your business.
What makes it even trickier is the inability to communicate. It can be difficult to know which deductions are valid, as many are based on no any explanation. Many brands are unaware of how much money they’re losing, until they examine their books. At that point, they may have lost thousands (or million).
How Deduction Management Software Can Change the Game
What’s the positive thing? The best part is that you don’t have tackle this problem by hand. The program tracks, analyzes, and then resolves deductions automatically.
Instead of drowning in spreadsheets, businesses can see the exact location of their funds being spent and the reason the reasons for deductions. Additionally, the latest software solutions allow brands to challenge incorrect claims more quickly which saves time as well as recovering lost revenue more efficiently.
Automation results in less human error and greater precision in financial reporting. That level of clarity, especially when managing the operations of a CPG company, is a huge benefit. It gives confidence in expanding investment, investing, and in negotiations with retailers.
Food & Beverage Consulting: The key to profitability
It’s beneficial to have an food industry consulting expert in your corner. While software is a very effective instrument, there are times that it is advisable to consult an professional. Here’s where food & drink consultants come in.
Consultants in the Food Industry can help CPGs create smarter deduction strategies, educate staff on best practices, or even negotiate better terms with distributors. These consultants know the ins and aspects of the industry and are able to offer valuable insight that would take years otherwise.
For growing brands, getting expert advice can be crucial to avoid endless disputes on deductions or turning the management of deductions into a lucrative and efficient procedure.
Final Thoughts
At the end of the day, deduction management isn’t just about chasing down lost dollars it’s about protecting the financial health of your business. With the help of deduction management software or by cooperating with a Food and Beverage consultant to take charge of your cash flow, expansion and the future.
Instead of letting deductions drain your profits, take charge of this process and transform the issue that was once a source of stress into a chance for smarter business growth. Your bottom line is going be grateful to you.