It’s difficult to manage a CPG company. Managing production costs, distributor relations, and marketing can appear like a losing fight. What if I told you that the biggest threats to your bottom line isn’t the rising cost of materials or a fierce competition, but the deducts that are quietly chipping away at your profits?
Management of deductions may not be the most exciting aspect of managing a company, however for CPG brands it’s among the most important aspects. Every time a retailer short-pays an invoice, whether it’s because of chargebacks, promotions or ambiguous compliance issues, it can eat away at the profits you’ve earned. These deductions, especially when cash flow is already tight, can mean the difference between success or failure.
Poor Deduction Management: The Real Cost
Let’s face it: No one launches an CPG product with the intention of spending countless hours battling with distributors over deductions. Many business owners realize that these deductions can quickly add up.
There’s a chance that you’ll be left wondering how certain payments don’t match invoices. It is also possible to struggle to contest unfair chargebacks and continually believe that your company is losing money. It’s stressful, time-consuming and most importantly, it distracts you from the most important thing building your business’s reputation.
This can be made more challenging due to the lack transparency. The reasons for many deductions can be vague, making it difficult to know which ones are correct. Some brands do not realize the loss they are making until they have a closer look at their financial statements.
What Deduction Management software can you use to help
The good news? There is no need to deal with this issue manually. Software that manages deductions takes out the work by analyzing, tracking and solving the issues in a timely manner.
Instead of being buried in spreadsheets, business owners can see where and why their money was used. Modern software tools also permit brands to quickly dispute wrong claims, thereby saving time, and also helping them recuperate the revenue they lost.
Automation can also result in less human error and better financial reports. If you run a CPG, this kind of clarity gives you confidence to grow your business, make investments and negotiate with retailers.
Food & Beverage consultants are crucial to the growth of your company
It is beneficial to have an expert in your corner. While software is an extremely powerful instrument, there are times when it is best to consult an expert. A food and beverage consultant can help.
Consultants experienced in the food industry can help CPG brands in developing smarter strategies for deduction management and train teams on the best practices, and negotiate more favorable agreements with distributors. They are familiar with the industry, and can offer valuable information that would otherwise take many years to find out.
Expert guidance for growing brands can make the difference between endless arguments regarding deductions, and a procedure that is efficient and helps save money.
Last Thoughts
Deduction management isn’t about just chasing lost dollars It’s about ensuring the financial health of your business. Whether it’s through deduction management software or working with a professional food & beverage expert, taking charge of your deductions is controlling the flow of cash, growth and even your future.
Instead of letting deductions drain profits, get in charge and turn what was to be a hassle into a chance to grow smarter. Your bottom line will thank you.
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