It’s not easy to run a CPG business. Managing production costs, distributor relations, and marketing can make it seem like a losing battle. What if I told you that your bottom line wasn’t at risk from rising costs for materials, or even a fierce competition? Actually, it’s the deductions that slowly erode your revenue.
Management of deductions might not be the most thrilling aspect of running a business but for CPG brands it’s among the most crucial. Your profits get wiped out each time a retailer fails to pay their invoices. This could be due to promotions, chargebacks or vague issues with compliance. This is especially true when cash flows are already tight, can mean the difference between growth or failure.
Low Deduction Management Costs: What You Really Pay?
We can’t fool ourselves: no one creates a CPG company with the intention of battling distributors over deductions. However, as many business owners quickly realize that the deductions can add up quickly.
There’s a chance that you’ll be left wondering how certain payments are not matching invoices. You might also be unable to defend against unfair chargebacks and continually feel that your business is losing money. It’s stressful, time-consuming and worst of all it distracts you from what really matters: growing your brand.
What makes it even trickier is the lack of transparency. Many deductions are applied with little explanation, and figuring out the ones that are genuine is like figuring out a never-ending puzzle. Certain brands don’t realize the loss they are creating until they take an examination of their financial statements.
How Software for Deduction Management Can Change the Game
The good news is that The good news is that you don’t have tackle this problem by hand. Deduction management software takes the guesswork out of the process by automatically monitoring, analyzing and solving deduction issues.
Instead of slogging through spreadsheets or calculating deductions by hand, businesses can track where money is being spent and why. Better yet, software solutions enable brands to contest inaccurate claims faster which saves time while recovering more revenue faster.
Automation also means fewer human errors and more precision when it comes to financial reporting. The clarity is essential for the CPG business. It lets you invest, scale up and negotiate from a strong position.
Food & Beverage consultants are crucial to the success of your business
Although software is an effective tool when it’s in the right hands, it’s always helpful to have a professional to assist you. Here’s where food & drinks consultants can help.
Consultants with expertise in the food industry can assist CPG brands set up smarter deduction strategies, train teams on the best practices and negotiate more favorable terms with distributors. They are familiar with the industry, and can provide valuable insights that could otherwise take a long time to discover.
Expert guidance for growing brands could mean the difference between endless disputes over deductions and a process that is efficient and saves money.
Final Thoughts
In the end, managing deductions isn’t only about recovering dollars that are lost. It’s about ensuring your company’s financial health. By using deduction management software, or by cooperating with a Food & Beverage consultant, you can take control of your cash flow as well as your growth and future.
Do not let deductions drain you of your profits. Be proactive and turn what was once a burden turn into a chance to grow more efficient. Your bottom-line will thank you.