It is not easy to run an CPG company. Between managing production costs, distributor relationships, and marketing, keeping profits in check can be an uphill struggle. What if you were assured that your bottom line was not threatened by rising costs of materials or tough competition but rather the deductions which slowly reduce your income.
The administration of deductions isn’t exactly the most pleasurable aspect of running a business however it is essential to CPG brands. If a retailer is unable to pay a bill or chargeback, regardless of promotions, chargebacks or ambiguous compliance issues, you’ll lose your hard-earned revenue. These deductions are particularly important in times when cash flow has been strained.
The real Cost of Poor Deduction Management
Let’s not kid ourselves that nobody starts an CPG company with the intention of fighting with distributors over deductions. But as many entrepreneurs quickly discover that these deductions add up quickly.
Without proper deduction management, you’re left guessing why certain payments don’t match invoices, struggling to dispute unfair chargebacks, and constantly feeling like your business is bleeding money. It’s frustrating, time-consuming, and worse of all, it diverts your attention of what’s important in building your business’s reputation.
This is made more difficult by the lack in transparency. It can be difficult to know the validity of deductions since many deductions are not explained. Many companies don’t realize how much money they’re losing until they look to their books. When they do, they may have lost thousands (or millions).
How Deduction management software changes the game
The best part? It’s not necessary to solve this problem manually. Deduction management software automates the process of tracking, analyzing, as well as resolving, deductions.
Instead of getting lost in spreadsheets, businesses are able to understand exactly where their cash is going and the reason for which deductions were made. Software solutions can help companies contest inaccurate claims faster in order to reduce time and recuperating revenue more efficiently.
Automation also means less human errors and greater accuracy when it comes to financial reporting. If you’re an CPG business, that kind of clarity is invaluable it gives you the confidence to expand, invest and negotiate with retailers from the position of strength.
Food & Beverage Consultancy: A Key to Profitability
Software is an amazing instrument, but at times you’ll need an expert to guide you. That’s where a food & beverage consultant comes in.
Experts with knowledge of the food industry can help CPG companies set up better strategies for managing deductions. They can also train their teams and negotiate better terms with distributors. They are knowledgeable about the ins and outs of the industry and can offer insight that might take years to understand.
The right advice for brands that are growing could mean the difference between endless disputes over deductions and a process that is simple and efficient, which can save money.
Final Thoughts
Deduction management isn’t just about recouping money lost, it’s also about protecting your company’s financial health. It doesn’t matter if it’s via deduction management software or an expert food and beverage consultant, taking control of your deductions requires taking control of your cash flow, your growth and even your future.
Don’t let deductions deprive you of your earnings. Instead, you should take charge and turn what could be a headache into a method for better growth for your business. Your bottom line will thank for your efforts.