Running a CPG-brand is not an easy job. It’s difficult to maintain profits when managing production costs and distributor relationships. What if I told you that your bottom line wasn’t threatened by rising material costs, or even stiff competition? Actually, it’s the deductions that slowly erode your revenue.
Deduction management may not be the most thrilling part of managing a company but for CPG brands it’s among the most crucial. Every time a retailer short-pays an invoice whether because of promotions, chargebacks or ambiguous compliance issues, it can eat away at the profits you’ve earned. If cash flow is already slow,, these deductions could make the difference between success and failure.
Insufficient Deduction Management Costs – The real cost
Let’s be honest: no one begins an CPG company expecting to spend hours fighting about deductions with distributors. These deductions are not tiny, as many business owners quickly realize.
It’s easy to get confused as to why payments do not correspond to invoices. It can be a struggle to contest unjustified charges, and you’ll feel that you’re losing money. It is frustrating, taking up a lot of time and distracts your attention from what is important most: growing your company.
Lack of transparency is even more troubling. Many deductions have little or any explanation, and trying to identify the ones that are legitimate can seem like a never-ending challenge. Some brands don’t realize they are losing money until they go through their books. In the end, it could be too late. Many thousands (or even millions) of dollars may have already gone through the cracks.
How Software for Deduction Management can change the game
The best part? There is no have to tackle this issue manually. The software tracks, analyzes, and resolves deductions automatically.
Companies no longer need to spend hours on spreadsheets, and they can understand how their funds are spending. They also can be aware of the reasons why certain deductions are made. Additionally, the latest software solutions allow brands to dispute incorrect claims faster, saving time and recuperating lost revenue faster.
Automation can also mean 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 helps you feel confident when expanding, investing, and negotiations with retailers.
Food & Beverage Consultancy: The Key to Profitability
Although software is an effective tool, sometimes it helps to have a professional in your corner. Food & beverage consultants can be of great help.
Experts in the food sector can assist CPG brands in developing smarter strategies for deduction management and train teams on the best practices, and make better agreements with distributors. They are experts in the ins and aspects of the industry and are able to provide valuable insights that could take years otherwise.
Expert advice can make the difference in a growing brand’s ability to stay clear of endless arguments about deductions, and instead make deduction management an efficient and profitable process.
Final Thoughts
It’s not just about recovering lost money and ensuring the financial health of your business. It doesn’t matter if it’s via deduction management software or working with a professional food & beverage expert, taking charge of your deductions means controlling the flow of cash, growth and your 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 an opportunity for smarter business growth. Your bottom line will thank you.