The task of managing the CPG business is no small one. It can seem impossible to make a profit while managing the cost of production and distribution relationships. What if you were told that one of your biggest threats isn’t the rising cost of materials or stiff competition but rather the deductions that quietly decrease your income.
It’s not the most exciting aspect of managing an CPG brand, but deduction management is one of the most important. When a retailer underpays an account due to chargebacks (or other problems), promotions or vague compliance concerns this can impact the profits. These deductions are particularly important in times when cash flow has been strained.
The Real Cost of Poor Deduction Management
We can’t fool ourselves: no one creates a CPG brand with the intention of fighting distributors over deductions. As many business owners soon discover, these deductions can add up quickly.
If you don’t have a proper system for managing deductions You’re left wondering why certain payments don’t match invoices, struggling to dispute unjustified chargebacks, and feeling as though your company is bleeding money. It’s stressful, time-consuming and worst of all it distracts you from the most important thing: growing your business’s reputation.
The lack of transparency can be more problematic. It’s difficult to determine which deductions are valid, as many are made without explanation. A lot of companies aren’t aware of how much money they’re losing until they look closer at their financial records. By then they could have suffered losses of hundreds of thousands (or millions).
How Deduction Management Software can change the game
The best part? You don’t need to deal with this issue manually. Deduction management software takes the guesswork out of the process by monitoring, analyzing and resolving deductions.
Rather than drowning in spreadsheets or making deductions by hand, businesses can monitor where their money is being spent and why. Software solutions help brands dispute claims quicker, allowing them more time to recover the revenue.
Automation also means less human error and greater precision when it comes to financial reporting. This kind of clarity is crucial for those who run a CPG business. It provides you with the confidence to expand, invest in and negotiate with retail partners.
Food & Beverage consultants are essential to the growth of your company
Although software is a great tool, having experts in your team can be beneficial. Food and beverage experts can be a great resource.
Consultants who have expertise in the food industry can assist CPG companies set up better deduction management strategies. They can also train their employees and negotiate better terms with distributors. They are knowledgeable of the business. This allows them to give you insights that can take a long time to learn.
For companies that are expanding, expert guidance can mean the difference between endless arguments about deductions, and a more efficient deduction management a profit-saving, streamlined process.
Last Thoughts
Deduction management doesn’t just mean the pursuit of lost money It’s about ensuring the financial health of your business. Controlling your deductions is the key to controlling your cash flow and the future.
Don’t let deductions deplete your profits. Make a stand and transform an issue which was once a source of frustration into an opportunity for smarter, more profitable business growth. You’ll reap the rewards.