Running a CPG brand is no simple job. The management of manufacturing costs, distributor relationships marketing, and distributor relations can make it seem like an unwinnable battle. What did I say to you that one of the biggest challenges for your business’ bottom line isn’t rising costs for materials or fierce competition but the deducts taking away your earnings?
Deduction management may not be the most thrilling element of running a business but for CPG brands this is among the most crucial. Each time a retailer is short-pays an invoice whether due to promotions, chargebacks or other vague compliance issues it eats into the profits you’ve earned. When the cash flow is already tight these charges could be the difference between success and failure.
Deficit management mistakes can result in a significant loss of cash
Let’s face it: nobody is launching an CPG to fight over deductions. Business owners quickly realize, these deductions could be significant.
There will be a lot of confusion as to why the payments don’t match the invoices. You’ll have to fight unfair charges, and feel like you’re losing money. It’s aggravating, time-consuming and, worst of all it takes your focus away towards what’s important to grow your business.
The lack of transparency can make the situation even more complicated. The reasoning behind a lot of deductions can be unclear which makes it hard to tell which ones are accurate. Some companies might not be aware of how much they’re losing until they look at their books. By that time many thousands, or even millions might have already been lost.
How Deduction Management Software Can Change the Game
The good news This issue won’t need to be dealt with manually. Software for deductions can take away the guesswork by capturing, analyzing and resolving the issues in a timely manner.
Businesses can now understand where their money goes and why certain deductions have been made without the need for sifting through spreadsheets. Even better, modern software allows companies to dispute incorrect claims faster to save time and recover the revenue lost more effectively.
Automation also means less human errors and greater accuracy when it comes to financial reporting. This level of clarity can be invaluable for those who run the operations of a CPG business. It gives you the confidence you require to grow, invest and negotiate with retail partners.
Food & Beverage consultants are important to the success your business
Software is a fantastic instrument, but at times you’ll need an expert to guide you. That’s where a food & beverage consultant comes in.
Consultants who have experience in the food industry can assist CPG firms develop effective deduction management strategies. They can also assist in training their employees and negotiate better conditions with distributors. They are knowledgeable about the aspects of the business and offer insights that would otherwise take years to understand.
For growing brands Expert guidance could make all the difference between struggling with endless disputes over deductions and changing the management of deductions into a streamlined, profit-saving process.
Final Thoughts
In the end Deduction management isn’t just about recovering lost funds it’s about protecting the financial stability of your business. Make deductions more manageable using software or with a consultant from the food and drink industry.
Make the most of the situation and turn the issue that was once a source of frustration into a chance for your business to grow more efficient. Your financial results will be much happier.