Running a CPG isn’t an easy job. Managing the costs of production, distribution and marketing can seem like a losing battle. What if I said that your bottom line was not at risk from rising costs for materials, or even stiff competition? Actually, it’s the deductions that gradually reduce your revenue.
It’s not the most exciting aspect of running a CPG brand, but deduction management is one of the most important. Profits are wiped out every time a retail store fails to pay their invoices. This can be due to promotions, chargebacks or a lack of understanding about compliance. When cash flow is already tight these deductions could make all the difference between growth and struggling.
Poor Deduction Management The Actual Cost
Let’s be real: no one launches a CPG brand with the intention of spending hours battling about deductions with distributors. These deductions are not small, as many businessmen quickly discover.
You may be left wondering how certain payments are not matching invoices. It is also possible to struggle to contest unfair chargebacks and continually feel that your business is losing money. It’s stressful, time-consuming and most importantly, it takes your focus away from what really matters: growing your brand.
This is made more complicated due to the lack of transparency. There are a lot of deductions that are not clarified, and it may be difficult to figure out which ones really are. Certain brands do not realize they are losing money until they review their books. In the end, it could be too late. Many thousands (or even million) of dollars may have already gone through the cracks.
How does Deduction management software affect the game
What’s the positive thing? You don’t need to deal with this issue manually. Deduction management software eliminates the guesswork of the process by monitoring, analyzing and solving deduction issues.
Companies can now track where their money goes and the reason why certain deductions have been made, without having to sift through spreadsheets. Software solutions enable brands to contest incorrect claims more quickly which saves time while recovering more revenue faster.
Automation also results in fewer human errors and more precise financial reports. This kind of clarity is crucial when you are running an CPG company. It provides you with the confidence to grow, invest and negotiate with retail partners.
Food & Beverage Consulting: The key to profitability
While software is an excellent tool but having experts on your team can help. A food and beverage consultant can be of assistance.
Consultants with experience in food industry consulting can assist CPG brands develop smarter deduction management strategies, train teams on best practices, and negotiate more favorable terms with distributors. They are knowledgeable about the ins and outs of the industry that involves food and can provide insights that might otherwise take a long time to uncover.
Expert advice can make the difference in a growing brand’s ability to stay clear of endless arguments regarding deductions and make deduction management an efficient and profitable process.
Last Thoughts
It’s not just about recovering lost money and ensuring the health of your financial business. Controlling deductions is the most important factor to ensuring your cash flow is controlled and the future.
Don’t let deductions rob you of your profits. Be proactive and make what was a burden turn into a chance to grow more efficient. Your bottom line will be grateful to you.