Running a CPG is not an easy undertaking. Between managing costs for production along with distributor relationships and marketing initiatives, ensuring that profits remain steady can be a daunting task. What if we told you that your bottom line was not affected by the rising cost of materials or fierce competitors, but by the deductions which gradually decrease your income.
Management of deductions may not be the most exciting part of running a business however for CPG brands this is among the most critical aspects. Every time a retailer short-pays an invoice whether because of chargebacks, promotions or even a vague issue with compliance, it can eat away at the profits you’ve earned. If cash flow is already tight these deductions can be the difference between success or failure.
Poor deduction management costs a lot more than you realize.
We shouldn’t fool ourselves we don’t start a CPG business expecting to fight with distributors over deductions. These deductions aren’t small for businessmen, as many discover.
Without proper deduction management You’re left wondering why certain payments don’t match invoices, struggling to dispute unfair chargebacks and feeling like your company is bleeding money. It’s frustrating, tiring and, most importantly it takes your focus to what’s most important in growing your business.
What makes it even more challenging is the inability to communicate. Many deductions are made with little explanation, and finding out which ones are valid could feel like solving an unending problem. Many companies don’t realize how much money they’re wasting until they have a look at their books. In the end they could have lost thousands (or million).
How Software for Deduction Management Changes the Game
The best part? There is no need to deal with this issue manually. Software that can handle deductions take out the guesswork by tracking their progress, analysing and resolving them automatically.
Instead of being buried in spreadsheets, business owners can easily see where money is allocated and where deductions are made. Software solutions allow brands to challenge incorrect claims more quickly in order to reduce time and recuperating revenue more efficiently.
Automation also results in fewer mistakes made by humans and more precision when it comes to financial reporting. This kind of clarity can be incredibly valuable in the management of a CPG business. It provides you with the confidence you require to expand, invest in and even negotiate with retailers.
The role of Food & Beverage Consultants in making sure your business is profitable
Software is a great tool but sometimes you need someone who can guide you. A food and beverage consultant can assist.
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 know the industry inside and out and can provide ideas that otherwise would take years to uncover.
For companies that are expanding Expert guidance can be the difference between battling endless deduction disputes or turning deduction management into a successful method to save money.
Final Thoughts
It’s more than just finding lost dollars however, it’s also about protecting the health of your financial business. Manage deductions effectively by using software or a consultant in the food and drink sector.
Get control of the situation and turn what was once a problem into an opportunity for your business to grow smarter. Your bottom line will be grateful to you.
