Running a CPG brand is no easy feat. Between managing production costs as well as distributor relationships and marketing efforts, keeping profits intact can feel like an uphill battle. What if I told you that your bottom line wasn’t at risk from rising costs for materials, or even stiff competition? It’s actually the deductions that slowly erode your revenue.
The management of deductions is not the most fun part of running a company, but it’s crucial for CPG brands. When a retailer fails to pay an invoice whether because of chargebacks, promotions or ambiguous compliance issues, it eats into the profits you’ve earned. And when cash is limited, these charges could mean the difference between the growth of your business or a struggle.
Inefficient deduction management can cost you much more than you think
Let’s be real: no one launches a CPG brand with the intention of spending hours battling about deductions with distributors. Many business owners will discover, these deductions can add up quickly.
It’s easy to get confused as to why payments do not match the invoices. It can be a struggle to contest unjustified charges, and you’ll feel like you’re losing money. It’s frustrating and time consuming and takes away your focus from what matters most: growing your business.
This is made more difficult due to the lack transparency. There are a lot of deductions that are not clarified, and it may be difficult for you to determine which ones really are. A lot of companies aren’t aware of how much money they’re losing until they look closer at their financial records. By then, they may have lost hundreds of thousands (or million).
How Deduction Management Software Can Change the Game
The good news? This problem doesn’t need to be dealt with manually. The software monitors, analyzes and then resolves deductions in a way that is automatic. Instead of slogging through spreadsheets or calculating deductions by hand, businesses can monitor where their the money is going and why. Even better, modern software solutions allow brands to challenge incorrect claims more quickly, saving time and recovering lost revenue more efficiently.
Automation also leads to lower human errors, and more accurate financial reports. When you’re running an CPG company, this kind of clarity is crucial because it gives you the confidence to scale, invest, and negotiate with retailers from a position of strength.
The Role of Food & Beverage Consultants in keeping your business profitable
Although software is an effective tool when it’s when used correctly but it’s always beneficial to have an expert on your side. Here’s where food & drinks consultants can help.
Food industry consulting with experience in the food industry can help CPG companies set up more efficient deduction strategies. They can also help train their teams and negotiate better conditions with distributors. They are familiar with the business and provide valuable insights that could otherwise take a long time to discover.
Expert advice can make the difference in a growing brand’s ability to stay clear of endless arguments regarding deductions and make deduction management an efficient, profit-saving procedure.
Final Thoughts
The purpose of deduct management is to safeguard your financial security and expansion of your company. Software for deduction management is an excellent method to control your deductions. Working with a consultant for food and beverages can also be incredibly helpful.
Don’t let deductions rob your earnings. Take the initiative and make what was a burden turn into a chance to grow smarter. You’ll be rewarded.