It is not easy to run it as a CPG company. managing cost of production, distributor relations marketing and distribution can seem like losing battle. What if I told you that the greatest threat to your bottom-line isn’t rising costs for materials or increased competition or the deductions that slowly diminish the revenue of your business?
The administration of deductions isn’t exactly the most pleasurable part of running a company but it’s vital for CPG brands. If a retailer doesn’t pay their account due to chargebacks (or other issues), promotions or vague compliance concerns, it can reduce your profit. And when the cash flow is already strained, those deductions can make all the difference between growing and struggle.
Poor deduction management costs a lot more than you realize.
Let’s not kid ourselves we don’t start a CPG firm expecting to battle with distributors over deductions. As many business owners soon realize, these deductions could rapidly add up.
You’ll be left wondering what the reason for why your payments don’t match the invoices. It can be a struggle to contest unjustified charges and feel as if you’re losing money. It’s a hassle, time-consuming and distracts you from the things that matter most growing your business’s reputation.
The thing that makes it more difficult is the absence of transparency. Many deductions are applied with little explanation, and figuring out which ones are legitimate could be like trying to solve the ultimate problem. A lot of companies aren’t aware of how much money they’re losing, until they look closer at their financial records. At that point they may have incurred thousands (or million).
How Deduction Management Software Can Change the Game
The good news? This issue can’t be handled manually. Software for managing deductions automatizes the process of keeping track, analyzing as well as resolving, deductions.
Instead of adrift in spreadsheets, businesses are able to be able to see where their money is going, and also why certain deductions were made. Furthermore, modern software allows companies to quickly challenge inaccurate claims to save time and recover revenues lost faster.
Automation also means less human errors, and more precision in financial reporting. If you are a CPG this type of transparency gives you the confidence to expand and invest in your business, and engage with retailers.
Food & Beverage consultants are crucial to the success of your business
Even though software can be an effective tool when it’s in the appropriate hands, it’s useful to have an expert to assist you. This is the place where a food and drink expert comes in.
Experts who have experience in food industry can assist CPG brands develop smarter deduction management strategies, instruct teams on the best practices and even negotiate better deals with distributors. They know the aspects of the business and give insights that could require years of research to determine.
For businesses that are growing seeking expert advice, it can be the difference between having to deal with endless disputes over deductions and making deduction management an easy, cost-saving process.
Final Thoughts
It’s more than just finding the missing dollars however, it’s also about protecting the financial health of your business. Whether it’s through deduction management software or working with a food & beverage consultant, taking control of your deductions means taking control of your cash flow, your growth, and your future.
Make the most of the situation and turn the issue that was once a source of frustration into an opportunity for your company to become more efficient. Your bottom line will thank for your efforts.