It is not easy to run a CPG company. Between managing production costs as well as distributor relationships and marketing strategies, keeping profits intact can feel like a daunting task. What if I told you that the greatest danger to your bottom line isn’t rising costs for materials or increased competition or the deductions that are slowly reducing your revenue?
The process of managing deductions isn’t the most exciting aspect of running a business but it’s vital for CPG brands. When a retailer fails to pay a debt for any reason, whether due to promotions, chargebacks or ambiguous compliance issues, it’s a loss your hard-earned revenue. If cash flow is already tight these deductions can make the difference between success or failure.
The True Cost of Poor Deduction Management
Let’s face it: nobody launches CPGs CPG to argue over deductions. Many business owners will realize, these deductions could increase quickly.
There will be a lot of confusion as to how payments aren’t matching the invoices. You’ll be struggling to challenge unfair charges and feel like you’re losing money. It’s frustrating, tiring and, worse of all it takes your focus away to what’s most important expanding your business.
The lack of transparency can make the situation more difficult. Many deductions are made without explanation, and finding out the ones that are genuine could feel like solving a never-ending problem. Some companies don’t realize the amount they’re losing until it’s time to take the time to look over their financial records. By then many thousands (or even millions) could have already passed through the cracks.
How Deduction management software changes the game
The good news? This issue can’t be dealt with manually. Deduction management software helps take the guesswork out of the process by monitoring, analyzing and the resolution of deductions.
Instead of adrift in spreadsheets, businesses can know exactly where their money is going and why certain deductions were made. Modern software tools also permit businesses to quickly challenge incorrect claims, thereby saving time while allowing them to recuperate lost revenue.
Automation results in less errors by humans and better precision when it comes to financial reporting. If you own an CPG the kind of clarity gives you confidence to scale up and invest in your business and bargain with retailers.
Food & Beverage Consultancy: The Key to Profitability
Software is a fantastic tool, but there are times when you require an expert to guide you. This is where a food and beverage expert can help.
Consultants with experience in food industry consulting can help CPG brands set up smarter deduction management strategies, train teams on best practices, and even negotiate better terms with distributors. They are experts in the field from the inside and out and can provide ideas that otherwise would take years to learn about.
Expert guidance for growing brands can mean the difference between endless debates about deductions and a procedure that is efficient and helps save money.
Final Thoughts
Deduction management doesn’t only concern about recouping money lost but also ensuring the financial health of your business. Making sure you control your deductions is essential to regulating your cash flow as well as future.
Take control of the situation and transform what was once a burden into a chance for your business to grow more efficient. Your bottom line will be thankful.