The task of managing the CPG business is no small one. Between managing production costs, distributor relationships, and marketing efforts, keeping profits intact can feel like an uphill fight. But what do you think if you learned that one of your most significant threats isn’t the increasing cost of materials or stiff competition but rather the deductions that quietly reduce your revenue.
For CPG brands, deduct management may not be among the most exciting aspects of business. However, it is vital. Profits are lost each time a retailer isn’t able to pay its invoices. This can be due to chargebacks, promotions or a lack of understanding about compliance. These deductions, especially when cash flows are already tight, can mean the difference between growth or failure.
The Real Cost of Poor Deduction Management
Let’s not kid us: nobody launches an CPG brand with the intention of fighting distributors over deductions. However, as many business owners quickly realize that the deductions can add up quickly.
If you don’t have a proper deduction management plan, your company is likely to constantly feel like it’s losing money. It’s frustrating, time-consuming, and most importantly, it distracts you from what really matters building your business’s reputation.
What makes it even trickier is the lack of transparency. There are a lot of deductions that aren’t clarified, and it may be difficult for you to determine which ones really are. A lot of companies aren’t aware of the amount they’re losing, until they look closer at their financial records. At that point, they may have lost thousands (or millions).
What software for Deduction Management can you use to help
The good news? It’s not necessary to solve this problem manually. The program monitors, analyzes and then resolves deductions in a way that is automatic.
Businesses no longer have to spend hours on spreadsheets and can easily see how their money is spending. They can also be aware of the reasons the reasons behind deductions. Software solutions help brands to dispute claims faster, giving them more time to recover the revenue.
Automation also results in fewer human mistakes and more accurate financial reports. That level of clarity, especially when you’re in charge of a CPG firm, is invaluable. It helps you feel confident when scaling investment, investing, and in negotiations with retailers.
Food & Beverage Consulting: The Key to Profitability
Although software is a powerful tool in the right hands but it’s always beneficial to have an expert to assist you. That’s where a food & beverage consultant comes in.
Consultants experienced in the food industry can help CPG brands to develop smarter strategies for deduction management and train teams on the best practices, and make better deals with distributors. They know the ins-and-outs of the food industry and can provide insights that might otherwise take a long time to uncover.
Expert advice can make the difference in the ability to stay clear of endless arguments regarding deductions and turn deduction management into an efficient and profitable process.
Final Thoughts
The end result is that managing deductions isn’t just about recouping money lost. It’s about ensuring your company’s financial health. By using deduction management software or by working with a Food and Beverage expert, you can take control of your cashflow as well as your growth and future.
Take control of the situation and turn what was once a hassle into a chance to expand your business. Your bottom line will be grateful to you.