Being the operations of a CPG brand is not an easy task. Managing production costs, distributor relations marketing and distribution could appear to be a losing battle. What if I told you that one of the biggest challenges to your bottom line isn’t cost of materials or a fierce competition it’s the deductions quietly reducing your income?
Deductions management isn’t the most exciting part of running a company however it is essential for CPG brands. Each time a retailer is short-pays an invoice, be it because of chargebacks, promotions or other vague compliance issues it can eat away at the profits you’ve earned. This is especially true when cash flow has been in a tight spot.
The True Cost of Poor Deduction Management
Let’s face it: Nobody launches a CPG brand with the intention of spending time fighting over deductions with distributors. Business owners quickly realize, these deductions could be significant.
Without proper deduction management it’s difficult to figure out the reason why certain payments don’t correspond to invoices, trying to fight unjustified chargebacks, and finding yourself bleeding money. It’s exhausting, stressful and distracts you on what’s most important growing your business’s reputation.
The thing that makes it more difficult is the lack of transparency. A lot of deductions are made with no explanation. Trying to figure out what ones are true could be like trying to solve an unending problem. Certain brands don’t realize how much they’re losing until they take a closer look at their books, and by that point the thousands (or even millions) might have already fallen through the cracks.
How Deduction Management Software Changes the Game
The good news? It’s not necessary to solve the issue by hand. Software for managing deductions automatizes the process of analyzing, tracking, and finally, resolving deductions.
Instead of suffocating themselves in spreadsheets, businesses are able to be able to see where their money is going and what deductions were taken. Additionally, software solutions enable brands to contest inaccurate claims faster which saves time while recovering more revenue.
Automation also means less mistakes made by humans and more precision when it comes to financial reporting. If you are an CPG, this kind of clarity will give you the confidence to expand, invest in your business and engage with retailers.
Food & Beverage consultants are crucial to the success of your business
While software can be a very powerful tool, it’s sometimes helpful to have a professional at your disposal. That’s where a food & beverage consultant comes in.
Consultants with experience in the field of food industry can assist CPG companies develop better deduction management strategies, train teams on best practices, and negotiate more favorable terms with distributors. They are familiar with the intricacies of the food industry and give valuable information.
For companies that are growing seeking expert advice, it can be the difference between having to deal with endless deduction disputes and making deduction management an easy, cost-saving process.
Final Thoughts
It’s not just about locating lost money and ensuring the financial health of your business. Whether it’s through deduction management software or an expert food and beverage expert, taking control of your deductions requires managing the flow of cash, your growth, and even your future.
Don’t let deductions take away of your earnings. Instead, you should take charge and transform what was once thought to be a source of stress into a strategy for the better growth for your business. Your bottom line will be grateful.