The running of an effective CPG brand isn’t an easy feat. Maintaining profits can be a difficult task when you have to control production costs, relationships with distributors, and marketing campaigns. But what do you think if you learned that one of your most significant threats isn’t the increasing costs of materials or the stiff competition but rather the deductions that quietly decrease your income.
For CPG brands, deduction management might not be among the most thrilling aspects of their business. But it is crucial. If a retailer is unable to pay an invoice, regardless of whether because of promotions, chargebacks or vague compliance issues, you’ll are losing your hard-earned profit. When cash flow is already tight, those deductions can make all the difference between growing and struggle.
Poor Deduction Management The Actual Cost
Let’s not kid us: nobody launches an CPG brand with the goal of battling distributors over deductions. But, a lot of business owners are surprised to discover that these deductions can quickly accumulate.
If you don’t have a proper system for managing deductions, you’re left guessing why certain payments don’t match invoices, struggling to dispute unjustified chargebacks, and feeling as though your company is bleeding money. It’s a time-consuming, stressful and, most importantly, it diverts your attention from the most important task: growing your brand.
The lack of transparency can be more problematic. It’s difficult to determine which deductions are valid since many deductions are made without any explanation. Certain brands do not know they’re losing money until they review their books. In the end, it could be too to late. Many thousands (or even million) of dollars may have already fallen through the cracks.
What software for Deduction Management can you use to help
The good new? The good news is that you don’t have tackle this problem by hand. Deduction management software automatizes the process of tracking, analysing and resolving all deductions.
Instead of slogging through spreadsheets or calculating deductions by hand, businesses can track where the money is going and why. Modern software solutions also allow brands to quickly dispute wrong claims, thereby saving time and helping them recover the revenue they lost.
Automation can also result in less human error, and more accurate financial reports. This type of transparency is crucial when you are running an CPG business. It gives you the confidence you need to grow, invest and negotiate with retail partners.
The role of Food & Beverage Consultants in keeping your business profitable
Even though software can be a powerful tool when used correctly, it’s always helpful to have an expert on your side. This is where food and drinks consultants can help.
Food & beverage consultant with expertise in the food industry can assist CPGs in establishing efficient deduction management strategies. They also can train teams on best practice and negotiate with distributors for more favorable terms. They are experts in the ins and aspects of the business and can offer valuable insight that would take years otherwise.
For growing brands, having expert guidance can be the difference between struggling with endless deduction disputes and turning deduction management into a streamlined, profit-saving procedure.
Final Thoughts
Deduction management doesn’t just mean the pursuit of lost money, it’s also about protecting the financial health of your business. Software for deduction management is an excellent way to manage your deductions. Working with a consultant for food and beverages can also be incredibly helpful.
Control the situation and transform the issue that was once a source of frustration into an opportunity to grow your business. The financial results will be thankful.