It is not easy to run an CPG company. Controlling production costs, distributor relations marketing and distribution can seem like losing the battle. What if I told you that the biggest risk to your bottom line isn’t rising costs for materials or stiffer competition, but the deductions that slowly diminish the revenue of your business?
Deduction management might not be the most thrilling part of running a business, but for CPG brands, it’s one of the most vital aspects. If a retailer doesn’t pay an invoice whether due to chargebacks or promotions, or vague compliance issues it can eat away at your hard-earned profits. These deductions are particularly important as cash flow is already been strained.
Poor deduction management costs a lot more than you think
Don’t be fooled no one starts a CPG business expecting to fight with distributors over deductions. As a lot of business owners realize, these deductions could rapidly add up.
If you don’t have a proper deduction management strategy, your company is likely to constantly feel like it’s losing money. It’s a hassle, time-consuming and takes away your focus from the things that matter most growing your business’s reputation.
What makes it even trickier is the lack of transparency. It’s sometimes difficult to determine what deductions are legitimate and which ones are based on no explanation. Some brands may not even realize the amount they’re losing until they go through their books. At that point many thousands, or even millions might have already been lost.
How Software for Deduction Management Changes the Game
The best part? This issue won’t need to be dealt with manually. Software that handles deductions takes away the guesswork by capturing their progress, analysing and resolving the issues in a timely manner.
Businesses can now understand the source of their funds and the reason why certain deductions have been taken, without having to dig through spreadsheets. Modern software solutions also allow firms to quickly contest false claims, which saves them time while allowing them to recuperate lost revenue.
Automation is a way to reduce human error and more precision when it comes to financial reporting. If you’re an CPG this type of clarity can give you confidence to expand and invest in your business and bargain with retailers.
Food & Beverage consultants are important to the success your business
Although software is an effective tool when it’s in the appropriate hands, it’s helpful to have a professional with you. A consultant in food and drink could be helpful.
Consultants with prior experience in the field of food can assist CPG companies set up effective deduction management strategies. They can also train their staff and negotiate better conditions with distributors. They are knowledgeable about the details of the business and offer insights that would otherwise require years of research to determine.
For growing brands seeking expert advice, it can be the difference between struggling with endless dispute over deductions or changing the management of deductions into a simple, profit-saving procedure.
Final Thoughts
It’s not just about locating lost funds 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.
Instead of taking deductions to drain your earnings, take charge of the process and transform the problem that was once a burden into a chance for smarter business expansion. Your bottom line will be grateful.