It’s not easy to manage a CPG company. Managing the costs of production, distribution marketing and distribution could appear to be losing the battle. What if we told you that your bottom line was not threatened by rising costs of raw materials or a fierce competition, but rather by the deductions which slowly reduce your income.
Management of deductions may not be the most thrilling part of running a business however for CPG brands it’s among the most critical aspects. When a retailer underpays an account because of chargebacks (or other issues), promotions or vague issues with compliance, it can eat into your profits. When your cash flow is already strained, this deduction could be the difference between success or failure.
The True Cost of Poor Deduction Management
It’s true that no one is launching an CPG to argue over deductions. These deductions aren’t small that business owners realize.
If you don’t have a proper system for managing deductions it’s difficult to figure out why certain payments don’t match invoices, battling to contest unfair chargebacks, and constantly feeling like your business is bleeding money. It’s time-consuming, frustrating and takes your focus away from the things that matter most: growing your brand.
What makes it even more complicated is the inability to communicate. It’s difficult to identify which deductions are correct and which ones are based on no explanation. Some brands don’t even realize how much they’re losing until they take the time to look over their financial records. By then some thousands (or even millions) could have slipped through the gaps.
How Deduction Management Software Can Change the Game
The good news? It’s not necessary to solve the issue by hand. Software that can handle deductions take away the guesswork by capturing the deductions, analyzing them and solving them in a timely manner.
Instead of drowning in spreadsheets, companies can see exactly where their money is going, and also why certain deductions were taken. Additionally, the latest software tools allow companies to contest incorrect claims quicker to save time and recover revenues lost faster.
Automation also means fewer human errors, and more precision in financial reporting. If you’re a CPG business, that kind of clarity is vital. It allows you to scale, invest, and negotiate with retailers from an vantage point of strength.
The role of Food & Beverage Consultants in Keeping Your Business Profitable
Software is an excellent tool, but occasionally you’ll need an expert to help guide you. That’s where a beverage consultant can help.
Consultants with experience in food industry consulting can help CPG brands set up smarter deduction management strategies, train teams on the most effective practices, and even negotiate better terms with distributors. They know the business inside-out and can offer insight that might otherwise require years of research to find.
A professional’s guidance for companies that are growing could mean the difference between endless debates over deductions and a process that’s simple and efficient, which can save money.
Final Thoughts
At the end of the day deduction management isn’t only about chasing down lost dollars it’s about ensuring the financial stability of your business. Whether it’s through deduction management software or working with a food & beverage consultant, taking control of your deductions means taking control of your cash flow, your growth, and your future.
Instead of taking deductions to drain your earnings Instead, you should take control of the process and turn what was once a hassle into a chance for smarter business growth. Your bottom line will be grateful to for your efforts.
