It’s not easy to manage a CPG company. Between managing production costs as well as distributor relationships and marketing efforts, keeping profits steady can be a difficult task. What if I said that the greatest danger to your bottom line isn’t the increase in material costs or stiffer competition however, it’s the deductions that are quietly eroding your revenue?
It’s not the most thrilling aspect of managing the CPG brand and yet, it’s among the most important. If a retailer fails to pay an account because of chargebacks (or other problems) promotions, or other vague questions about compliance, it will take a bite out of your profits. These deductions are particularly important when cash flow has already been strained.
Deficit management that is not properly managed can cost far more than you think
Let’s be real: no one launches a CPG brand with the intention of spending endless hours fighting over deductions distributors. As many business owners soon discover, these deductions can add up quickly.
Without proper deduction management, you’re left guessing why certain payments don’t match invoices, struggling to dispute unfair chargebacks, and constantly feeling like your business is bleeding money. It’s aggravating, time-consuming and, worse of all it takes your focus away from what’s really important expanding your business.
What makes it even trickier is the inability to communicate. The reasons for a variety of deductions can be vague which makes it hard to know which ones are true. Some brands don’t even realize how much they’re losing until taking a closer look at their accounts, and by then many thousands (or even millions) may have already slipped through the cracks.
How does Deduction management software affect the game
What’s the good news? You don’t have to address this issue manually. Deduction management software can automatize the process of tracking, analyzing, as well as solving, deductions.
Instead of being drowned in spreadsheets, managers can easily see where money is spent and why certain deductions are taken. Furthermore, modern software allows companies to challenge incorrect claims more quickly, saving time and recovering the revenue lost more effectively.
Automation also means fewer mistakes made by humans and more precision when it comes to financial reporting. When you’re running the CPG company, this kind of clarity is invaluable it gives you the confidence to grow, invest and negotiate with retailers from an vantage point of strength.
The Role of Food & Beverage Consultants in keeping your business profitable
While software is a powerful tool, sometimes it’s helpful to have a professional to help you. That’s where a beverage consultant can help.
Consultants with expertise in food industry can assist CPG brands develop smarter deduction management strategies, instruct teams on the most effective practices, and negotiate more favorable terms with distributors. They are knowledgeable about the complexities of the food industry and are able to offer useful insights.
The right advice for brands that are growing can mean the difference between endless debates over deductions and a system that is simple and efficient, which can save money.
Final Thoughts
It’s more than just finding the missing dollars and ensuring the health of your financial business. Controlling your deductions is the crucial factor to regulating your cash flow and the potential for future.
Instead of delaying deductions that drain your profits Instead, you should take control of the process and transform the problem that was once a burden into an opportunity for business growth. Your bottom-line will thank you.
