Running a CPG is not an easy undertaking. Between managing production costs as well as distributor relationships and marketing efforts, keeping profits steady can be a daunting task. What if I informed you that the biggest risk to your bottom line isn’t the increase in material costs or increased competition, but the deductions that are slowly but surely reducing the revenue of your business?
The management of deductions is not the most fun part of running a company but it’s vital for CPG brands. Every time a retailer fails to pay a debt or chargeback, regardless of charges, promotions or compliance issues, it’s a loss out on your hard-earned profit. If your cash flow is already strained, these deductions can be the difference between a successful and failure.
Poor deduction management can result in a significant loss of cash
Let’s face it: nobody creates the CPG to fight over deductions. However, as a lot of business owners soon realize that these deductions add up quickly.
Without proper deduction management, you’re left guessing why certain payments don’t match invoices, struggling to dispute unfair chargebacks, and constantly feeling like your business is bleeding money. It is frustrating, time-consuming and, worse of all it takes your focus away to what’s most important expanding your business.
The lack of transparency can make the process even more confusing. The reasoning behind a lot of deductions aren’t clear which makes it hard to discern which ones are true. Some brands don’t even realize how much they’re losing until it’s time to take a closer look at their books and by then many thousands (or even millions) could have slipped through the gaps.
How software for Deduction management can change the game
The good news It’s not necessary to deal with this issue manually. Deduction management software can automatize the process of analyzing, tracking, as well as solving, deductions.
Companies can now track the whereabouts of their cash and how deductions were made, without having to dig through spreadsheets. Modern software tools also permit brands to quickly dispute wrong claims, thereby saving time and allowing them to recuperate revenue they lost.
Automation can also mean fewer human errors and greater accuracy when it comes to financial reporting. If you are a CPG the kind of clarity gives you confidence to grow, invest in your business, and bargain with retailers.
The importance of Food & Beverage Consultants in keeping your business profitable
Even though software can be an extremely powerful tool in right hands, it’s always important to have a professional with you. That’s where a food & beverage consultant can help.
Consultants with previous knowledge of the food industry can assist CPG businesses develop effective deduction management strategies. They can also train their employees and negotiate better conditions with distributors. They are familiar with the ins and outs of the industry and offer insight that might require years of research to determine.
Professional guidance for businesses that are growing can make the difference between endless debates about deductions and a system that is simple and efficient, which can save money.
Final Thoughts
At the end of the day deduction management doesn’t have to be just about finding lost money it’s about safeguarding the financial health of your business. Controlling your deductions is the key to controlling your cash flow and future.
Instead of delaying deductions that drain your profits Instead, you should take control of the process, and turn the issue that was once a source of stress into an opportunity for business growth. Your financial results will be much happier.
