Running a CPG-brand is not an easy task. To maintain profitability it is possible to fight a constant struggle to manage production costs, distributor relationships and marketing efforts. What if I said that your bottom line was not threatened by rising material costs or even a fierce competition? It’s actually the deductions that slowly erode your earnings.
Deduction management isn’t exactly the most thrilling part of managing an enterprise, but it’s essential for CPG companies. Profits are wiped out each time a retailer fails to pay their invoices. This can be due to promotions, chargebacks or a lack of understanding about compliance. This is especially true when cash flow is already tight, can mean the difference between success or failure.
The True Cost of Poor Deduction Management
There’s no way to be honest. No one starts a CPG business expecting to spend hours fighting about deductions with distributors. As many business owners soon realize, these deductions could be significant.
It’s frustrating to be always losing money and having to guess why some payments aren’t matched with invoices. It’s a time-consuming, stressful and, worst of all it takes your focus away from the most important task: growing your brand.
It’s made even more difficult by the lack of transparency. It’s difficult to determine which deductions are valid since many deductions are based on no explanation. Certain brands do not realize they are losing money until they go through their books. Then, it may be too to late. Thousands (or even millions) of dollars may have already gone through the gaps.
How does Deduction management software affect the game
The best part? There is no have to tackle this issue manually. The software monitors, analyzes and then resolves deductions in a way that is automatic.
Instead of buried within spreadsheets, businesses can see where and why their money was used. The latest software allows brands to more easily dispute false claims and recover revenue.
Automation can also result in less human mistakes and more accurate financial reports. This level of clarity, especially when you’re in charge of the operations of a CPG company, is a huge benefit. It gives confidence in scaling investment, investing, and in negotiating with retailers.
Food & Beverage consultants are crucial to the growth of your business
While software is a powerful tool, it’s sometimes helpful to have an food industry consulting expert to help you. Food and beverage experts can be a great resource. Experts in the food sector can help CPG brands to develop more efficient strategies for managing deductions, train teams about the best practices, and negotiate better agreements with distributors. They know the ins-and-outs of the industry that involves food and are able to provide insights that might otherwise take a long time to uncover.
For growing brands having a professional guideline can be the difference between battling endless deduction disputes and turning deduction management into a streamlined, profit-saving process.
Final Thoughts
It’s not only about recouping the money you’ve lost, but also protecting the financial health of your business. Control deductions, whether it’s with software or a consultant in the food and beverage sector. Instead of letting deductions drain profits, take charge and turn what was to be a hassle into an opportunity for smarter growth. Your bottom-line will thank you.