The job of managing a CPG business is no small one. It’s difficult to maintain profits when managing the cost of production and distribution relationships. What if I said that the greatest risk to your bottom line isn’t the rising costs of materials or a fierce competition. It’s the deductions slowly eating away at your profits?
Deduction management may not be the most thrilling aspect of managing a company, however for CPG brands it’s among the most crucial. If a retailer is unable to settle an invoice, whether it’s because of promotions, chargebacks or vague compliance issues, you are losing your hard-earned profit. This is especially true when cash flow is already tight, can mean the difference between growth or failure.
Insufficient deduction Management Costs – The real cost
Let’s get real: No one launches an CPG product with the intention of spending countless hours battling with distributors over deductions. Many business owners are aware that these deductions can quickly add up.
You’ll be left wondering why payments do not match the invoices. You’ll struggle to dispute unfair charges and feel that you’re losing money. It’s time-consuming and frustrating. Worse, it distracts you from your main objective: building your image.
It’s made even more complicated by the insufficient transparency. It can be difficult to know the validity of deductions since many deductions are based on no explanation. Some companies don’t know how much money they’re losing until they take an in-depth review of their financial records and, by that time many thousands (or even millions) could have already fallen through the cracks.
What Deduction Management Software Can Change the Game
The good news is that The issue doesn’t have to be handled manually. The program tracks, analyzes, and then resolves deductions in a way that is automatic.
Businesses no longer have to sit for hours preparing spreadsheets and can easily see how their money is spending. They also can be aware of the reasons the reasons behind deductions. Software tools help companies dispute claims quicker, allowing them to get more time to recuperate revenue.
Automation can also lead to fewer errors by humans and better financial reporting. If you run an CPG this type of clarity gives you confidence to grow your business, invest, and negotiate better with retailers.
The role of Food & Beverage Consultants in Keeping Your Business Profitable
Although software is an effective tool when it’s when used correctly but it’s always beneficial to have a professional to assist you. That’s where a food & beverage consultant can help.
Experts in the field of food can assist CPGs in establishing efficient deduction management strategies. They also can help teams learn best practices and negotiate with distributors for better terms. They are familiar with the ins and outs of the business and provide insights that might otherwise take a long time to figure out.
Expert guidance for growing brands can mean the difference between endless arguments over deductions and a process that is efficient and helps save money.
Final Thoughts
It’s not only about recouping lost money, but also protecting the financial health of your business. Controlling your deductions is the key to controlling your cash flow and the future.
Don’t let deductions deplete your profits. Make a stand and transform an issue that was once a pain into an opportunity to achieve better, more profitable business growth. You’ll reap the rewards.