Running a CPG is no simple job. To ensure that your business is profitable it is possible to fight a constant battle between managing production cost, distributor relationships and marketing efforts. But what would you say if I said that the greatest threats to your bottom line isn’t rising material costs or stiff competition it’s the deductions that are slowly reducing your profits?
For CPG brands, deduction management might not be one of their most thrilling aspects of their business. But it is crucial. If a retailer is unable to pay an invoice, regardless of whether due to promotions, chargebacks, or unclear compliance issues, you are losing the hard-earned profits. If cash flow is already slow, these deductions can be the key to success or failure.
Poor Deduction Management The Actual Cost
There’s no way to be honest: no one launches a CPG brand expecting to spend long hours fighting over deductions with distributors. But as a lot of business owners realize, these deductions add up fast.
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, takes lots of time, and, most importantly, distracts from the thing you ought to be focusing on: growing the reputation of your brand.
The lack of transparency can be more problematic. A lot of deductions are made with little explanation, and figuring out the ones that are genuine can feel like solving a never-ending puzzle. Some brands don’t know they’re losing money until they go through their books. In the end, it could be too to late. Many thousands (or even million) of dollars could have already gone through the cracks.
How Software for Deduction Management Can Change the Game
The good news? You don’t have to tackle this issue manually. Deduction management software takes the guesswork out of the equation by monitoring, analyzing and solving deduction issues.
Businesses can now see the source of their funds and why certain deductions have been taken, without having to sift through spreadsheets. Software solutions help brands dispute claims quicker, allowing them to get more time to recuperate revenue.
Automation can also result in less human errors and more precise financial reports. This level of clarity, especially when you’re in charge of the operations of a CPG firm, is invaluable. It gives confidence in scaling investment, investing, and in negotiating with retailers.
Food & Beverage consultants are crucial to the success of your company
While software is an excellent tool, having experts on your team can help. This is where food and drinks consultants can help.
Consultants with expertise working in the field of food are able to assist CPG companies set up more efficient deduction strategies. They can also help train their teams and negotiate better terms with distributors. They have a thorough understanding of the business. This allows them to give you insights that can take years for you to learn.
The right advice from an expert can make a difference in the ability to avoid endless disputes regarding deductions and make deduction management an efficient and profitable process.
Last Thoughts
The end result is that managing deductions isn’t only about recouping money that are lost. It’s about protecting your company’s financial health. Take control of deductions, whether it’s with software or an expert in the food and drink sector.
Instead of letting deductions eat away at profits, take charge and turn what was to be a hassle into an opportunity to grow smarter. Your bottom line will be grateful to you.