Operating an effective CPG brand isn’t an easy task. Profits can be an overwhelming task when you’re managing production costs and the relationships with distributors as well as marketing strategies. What if we told you that your bottom line was not threatened by rising costs of raw materials or a fierce competition, but the deducts which slowly reduce your income.
It’s not the hottest aspect running a CPG brand, but deduction management is one of the most important. When a retailer fails to pay an invoice regardless of whether it’s because of promotions, chargebacks or vague compliance issues, you’ll lose all the profits you’ve made. If your cash flow is already in a tight spot and tight, these deductions could be all the difference between growth and struggle.
Inefficient deduction management can cost you far more than you think
Let’s face it: No one creates a CPG brand expecting to spend time fighting over deductions with distributors. However, as a lot of business owners soon realize that deductions are accumulating fast.
If you do not have a proper deduction management system, your business will always feel like it is losing money. It’s a hassle, time-consuming and diverts your attention from what matters most growing your brand.
This is made more difficult by the lack in transparency. The explanations for many deductions can be unclear, making it difficult to know which ones are right. Some brands may not even know the amount they are losing until they go through their books. At that point hundreds or thousands may have been lost.
How Deduction management software changes the game
The good news? This problem doesn’t need to be dealt with manually. Software that can handle deductions take out the guesswork by tracking their progress, analysing and resolving the issues in a timely manner.
Companies can now track the source of their funds and what deductions were made, without having to dig through spreadsheets. Modern software systems also permit brands to quickly dispute wrong claims, thus saving them time and allowing them to recover revenue lost.
Automation is a way to reduce errors by humans and better precision when it comes to financial reporting. This type of transparency can be a huge benefit for those who run an CPG company. It gives you the confidence you need to expand, invest in and even negotiate with retailers.
Food & Beverage consultants are essential to the success of your business
Software is a great tool, but there are times when you require an expert to guide you. That’s where a food & beverage consultant comes in.
Consultants who have prior experience in the field of food can help CPG firms develop more efficient deduction management strategies. They can also help train their staff and negotiate better terms with distributors. They understand the ins and outs of the industry and can offer insight that might take years to understand.
For businesses that are growing, having expert guidance can be the difference between having to deal with endless deduction disputes and changing the management of deductions into a simple, profit-saving procedure.
Final Thoughts
Deduction management isn’t just to recover money you’ve lost, it’s also about protecting your company’s financial health. Controlling your deductions is the crucial factor to regulating your cash flow and future.
Take control of the situation and turn what was once a problem into a chance for your company to become more efficient. Your bottom line will appreciate it.