It’s not easy to manage it as a CPG business. managing cost of production, distributor relations marketing and distribution can make it seem like losing the battle. What if I informed you that the biggest danger to your bottom line isn’t a rise in costs of materials or competition that is more ferocious, but the deductions that are slowly but surely reducing your revenue?
The process of managing deductions isn’t the most exciting aspect of running a business however, it’s essential for CPG brands. If a retailer is unable to pay its account because of chargebacks (or other problems), promotions or vague issues with compliance, it can reduce your profit. If your cash flow is already strained, these deductions can be the difference between success and failure.
The Actual Cost of Poor Deduction Management
Let’s face it: nobody creates a CPG to argue over deductions. Business owners quickly realize, deductions for these can be significant.
There will be a lot of confusion as to what the reason for why your payments don’t match the invoices. You’ll have to fight unjustified charges and feel as if you’re losing money. It’s frustrating, tiring, and, most important of all, it takes your focus away from the things that really matter in building your business’s reputation.
It’s made even more difficult by the lack of transparency. The explanations for many deductions can be unclear and make it difficult to discern which ones are right. Some companies might not know how much they’re losing until they look at their books. In the meantime the thousands or even millions could be gone.
How Deduction Management Software Can Change the Game
The good news? You don’t need to take on this issue manually. Software for managing deductions automatizes the process of monitoring, analyzing, and finally, resolving deductions.
Instead of suffocating themselves in spreadsheets, businesses can know exactly where their money is going and why certain deductions were made. In addition, modern software applications allow businesses to contest incorrect claims quicker while also recovering the revenue lost more effectively.
Automation can also mean lower human errors and better financial reporting. If you’re in charge of the CPG business, that kind of clarity is invaluable it gives you the confidence to expand, invest and negotiate with retailers from a position of strength.
Food & Beverage consultants are important to the success your company
Even though software can be a powerful tool in the appropriate hands, it’s beneficial to have an expert in your corner. That’s where a food & beverage consultant comes in.
Consultants with previous expertise in the food industry can help CPG firms develop better strategies for managing deductions. They can also train their staff and negotiate better conditions with distributors. They know the industry inside out and can offer insights that would otherwise take years to discover.
Professional guidance for businesses that are growing can mean the difference in endless debates about deductions and a process that is streamlined and saves money.
Final Thoughts
At the end of the day deduction management isn’t only about chasing down lost dollars it’s about safeguarding the financial stability of your business. The ability to control your deductions is the key to controlling your cash flow and future.
Make the most of the situation and transform the issue that was once a source of frustration into a chance for your business to grow smarter. Your financial results will be much happier.