Operating the operations of a CPG is no simple task. It can seem impossible to make a profit while managing production costs and distributor relationships. What if I told that the greatest threat to your bottom-line isn’t the increase in material costs or stiffer competition, but the deducts which are slowly reducing your revenue?
The management of deductions is not the most fun aspect of running a business, but it’s crucial for CPG brands. If a retailer does not pay a bill in full, whether due to chargebacks, ambiguous compliance issues or promotions, profits are eroded. And when cash flow is already tight these deductions could make all the difference between growing and struggling.
Insufficient deduction Management Costs – The actual cost
Let’s face it There is no one who creates an CPG product with the intention of spending endless hours fighting with distributors about deductions. As many business owners soon realize, these deductions could add up quickly.
It’s frustrating to always losing money and having to figure out why certain payments aren’t matched with invoices. It’s stressful, time-consuming and most importantly, it takes your focus away from the most important thing building your business’s reputation.
This is made more complicated due to the lack of transparency. The reasons for a variety of deductions are unclear, making it hard to determine which are true. Certain brands do not know they’re losing money until they go through their books. Then, it may be too late. Thousands (or even millions) of dollars could have already gone through the cracks.
The Deductions Management Software which changes the Game
The good news? The issue doesn’t have to be handled manually. Deduction management software automates the process of tracking, analyzing, as well as solving deductions.
Rather than drowning in spreadsheets or making deductions by hand, businesses can monitor where their money is being spent and why. Better yet, software solutions allow brands to challenge inaccurate claims faster, saving valuable time and recovering revenue more efficiently.
Automation also means fewer human errors and more accuracy in financial reporting. Clarity is invaluable to a CPG company. It lets you invest, scale and make decisions from a position of strength.
Food & Beverage Consulting: The key to profitability
Although software is a great tool but having an expert on your team can help. Here’s where food & drinks consultants can help.
Consultants from the Food Industry can help CPGs develop better deduction strategies, train staff on best practices, and even negotiate better terms with distributors. They are knowledgeable about the ins and outs of the food industry and are able to provide insights that might otherwise take a long time to uncover.
For brands that are growing and need expert advice, it can be the distinction between endless disputes about deductions, and a more efficient deduction management a profit-saving and streamlined procedure.
Final Thoughts
It’s not just about recovering lost money and ensuring the health of your financial business. With the help of deduction management software or by cooperating with a Food and Beverage expert to take charge of your cashflow, expansion and the future.
Don’t let deductions rob you of your profits. Take the initiative and turn what was once an inconvenience turn into a chance to become more efficient. You’ll reap the rewards.