The running of a CPG brand isn’t an easy job. Between managing the cost of production as well as distributor relationships and marketing maintaining profits is a difficult fight. What would you say if I said that one of the greatest threats to your bottom line isn’t the rising cost of materials or a fierce competition it’s the deductions quietly chipping away at your revenue?
The management of deductions is not the most fun aspect of running a business, but it’s crucial for CPG brands. If a retailer does not pay a invoice in full, whether due to chargebacks, ambiguous regulations or promotions, your profits will be slashed. These deductions are especially crucial when cash flow has already been strained.
Low Deduction Management Costs: What You Pay?
Let’s be real: no one launches a CPG brand with the intention of spending hours battling over deductions with distributors. These deductions aren’t tiny, as many business owners quickly realize.
It’s frustrating to be always losing money and having to figure out why certain payments don’t match up with invoices. It’s frustrating and time consuming and takes away your focus from what matters most to you: growing your business.
Lack of transparency is even more troubling. Many deductions have little or no explanation and trying to identify the ones that are legitimate can seem like a never-ending problem. Some brands don’t even know how much money they’re losing until they take an in-depth review of their financial records and by then many thousands (or even millions) may have already slipped through the cracks.
How Deduction management software changes the game
The good news You don’t need to deal with this issue manually. Deduction management software takes the guesswork out of the process by tracking, analyzing, and resolving deductions.
Instead of being buried within spreadsheets, businesses can see where and why their money was spent. Software solutions enable brands to contest incorrect claims more quickly which saves time while recovering revenue more efficiently.
Automation can also lead to fewer errors by humans and better financial reporting. This type of transparency is crucial for those who run an CPG company. It provides you with the confidence you need to grow, invest and negotiate with retail partners.
Food & everage consultants are essential to the success of your company
Although software is an effective tool when it’s in the right hands, it’s always helpful to have a professional on your side. This is where a food and beverage expert can help.
Experts in the food industry can help CPG brands in developing more efficient strategies for managing deductions, train teams about the best practices, and negotiate more favorable deals with distributors. They are familiar with the business and provide valuable insights that could otherwise take a long time to discover.
The right advice for brands that are growing can make the difference between endless disputes over deductions and a process that is efficient and helps save money.
Last Thoughts
Deduction management isn’t about just chasing lost dollars, it’s also about protecting the financial health of your business. Controlling deductions is the most important factor to controlling your cash flow and future.
Instead of letting deductions drain your profits, take charge of this process and transform the issue that was once a source of stress into a chance for business expansion. You’ll reap the rewards.