It’s not easy to manage a CPG business. Between managing production costs as well as distributor relationships and marketing, keeping profits steady can be a difficult task. What if I told that the greatest danger to your bottom line isn’t increasing material costs or increased competition and the hefty deductions that are quietly eroding your profits?
Management of deductions may not be the most thrilling element of running a business however for CPG brands this is among the most critical aspects. Each time a retailer fails to pay a debt for any reason, whether due to promotions, chargebacks or vague compliance issues, you’ll lose out on your hard-earned profit. This is especially true when cash flow has already been squeezed.
The True Cost of Poor Deduction Management
Let’s face it: nobody creates a CPG to fight over deductions. As many business owners soon realize that these deductions add up fast.
Without proper deduction management and deduction management, you’re left wondering the reason why certain payments don’t correspond to invoices, battling to contest unjust chargebacks, and feeling like your business is draining money. It’s tiring, time-consuming and, perhaps most important of all it takes your focus away from the most important thing: growing your business.
It’s made all the more difficult because of the lack of transparency. Many deductions are applied with little explanation, and deciphering which ones are valid is like figuring out an unending problem. Many companies don’t know the amount they’re losing until they take a closer look at their accounts, and by then, thousands (or even millions) might have already fallen through the cracks.
How does Deduction management software affect the game
The best part? This issue won’t need to be dealt with manually. Deduction management software streamlines the process of monitoring, analyzing, and resolving deductions.
Instead of drowning in spreadsheets, businesses are able to know exactly where their money is going and the reason for which deductions were made. Modern software tools also permit brands to quickly dispute wrong claims, saving them time and helping them recover lost revenue.
Automation also leads to less human error and improved financial reporting. This clarity is crucial for those who run the operations of a CPG company. It provides you with the confidence you require to invest, grow and make deals with retailers.
Food & Beverage consultants are crucial to the success of your business
Although software is an effective tool, sometimes it’s helpful to have an expert to help you. That’s where a food & beverage consultant comes in.
Consultants with previous expertise in the food industry can help CPG firms develop more efficient deduction management strategies. They can also help train their staff and negotiate better conditions with distributors. They are familiar with the complexities of the food industry and are able to provide valuable insights.
For businesses that are growing Expert guidance can be the difference between battling endless deductor disputes or turning the process of deduction management into an efficient, profit-saving procedure.
Final Thoughts
It’s not only about finding lost dollars as well as ensuring the financial health of your business. Take control of deductions, whether it’s with software or an expert in the food and drink sector.
Don’t let deductions deprive you of your profits. Instead, control the process and transform what was once thought to be a source of stress into a better growth for your business. Your bottom line will thank for your efforts.