The job of managing the CPG business is not an easy one. Between managing the cost of production as well as distributor relationships and marketing, keeping profits intact can feel like an uphill fight. What if I said that the greatest threat to your bottom-line isn’t increasing cost of materials or a sluggish competition, but the deducts which are slowly reducing your profits?
This isn’t the most thrilling aspect of managing an CPG brand however, it is among the most important. Profits are lost every time a retail store isn’t able to pay its invoices. This can be due to chargebacks, promotions or a lack of understanding about compliance. And when cash is scarce, these deductions could be the difference in growth or struggling.
Poor Deduction Management: The Real Cost
Let’s get real: No one launches an CPG product expecting to spend countless hours battling with distributors over deductions. But, a lot of business owners are surprised to learn that these deductions could quickly add up.
If you don’t have a good deduction management system, your business will constantly feel as if it’s losing money. It’s a hassle, consumes a lot of time, and, most important, it distracts you from what you ought to be focusing on: growing the brand.
This is made more difficult due to the lack transparency. The reasons for many deductions can be vague, making it difficult to know which ones are true. Some brands may not even be aware of the amount they are losing until they look at their books. At that point many thousands, or even millions could have already been lost.
How does Deduction management software affect the game
The good news is that You don’t have to tackle this issue manually. Software that handles deductions takes out the guesswork by tracking, analyzing and resolving them automatically.
Companies no longer need to sit for hours preparing spreadsheets, and they can understand how their funds are spending. They also can be aware of the reasons why certain deductions are made. Modern software enables companies to easily challenge false claims and recover revenue.
Automation can also result in less human mistakes and more accurate financial reports. This type of transparency is crucial for those who run a CPG business. It gives you the confidence to grow, invest and negotiate with retail partners.
Food & Beverage Experts are important to your business’s success
Software is a great tool but sometimes you need an expert to help guide you. Here’s where food & drink consultants come in.
Consultants in the Food Industry can help CPGs develop better deduction strategies, train staff on best practices, or even negotiate better terms with distributors. They have a thorough understanding of the industry. This lets them give you insights that can take years for you to master.
For growing brands, having expert guidance can be the difference between struggling with endless deduction disputes and turning the management of deductions into a an efficient, profitable process.
Final Thoughts
In the end, managing deductions isn’t just about recovering dollars lost. It’s about protecting your company’s financial health. With the help of deduction management software, or cooperating with a Food and Beverage expert to take charge of your cash flow as well as your growth and future.
Instead of letting deductions eat away at your profits, take charge of this process and turn what was once a headache into a chance for business expansion. Your bottom line will to thank you.