Running the operations of a CPG is not an easy undertaking. Between managing the cost of production, distributor relationships, and marketing initiatives, ensuring that profits remain in check can be an uphill battle. What if I informed you that the biggest threat to your bottom-line isn’t rising costs for materials or stiffer competition and the hefty deductions that are slowly but surely reducing your revenue?
It’s not the most exciting aspect running an CPG brand However, deduction management is among the most important. Each time a retailer fails to pay a debt regardless of whether it’s because of promotions, chargebacks, or other vague compliance issues, you lose out on your hard-earned profit. When the cash flow is already tight this deduction could make the difference between success or failure.
Poor deduction management costs far more than you realize.
Let’s face it: nobody launches CPGs CPG to argue over deductions. However, as a lot of business owners soon realize that deductions are accumulating quickly.
If you don’t have a proper system for managing deductions and deduction management, you’re left wondering which payments aren’t matching invoices, battling to contest unjustified chargebacks, and feeling like your business is running out of cash. It’s a hassle, it’s time-consuming and most importantly, it distracts you from what really matters in building your brand.
The lack of transparency can make the situation even more complicated. It’s often difficult to determine which deductions are valid, as many are made without explanation. Some brands don’t even realize the amount they’re losing until they look a closer look at their accounts, and by then many thousands (or even millions) could have slipped through the cracks.
What software for deduction management can change the Game
The best part? The issue doesn’t have to be handled manually. Software for deductions can take away the guesswork by capturing, analyzing and resolving the issues in a timely manner.
Businesses can now see where their money goes and what deductions have been made without the need for sifting through spreadsheets. Modern software systems also permit businesses to quickly challenge incorrect claims, which saves them time and helping them recover lost revenue.
Automation also means fewer mistakes made by humans and more precision in financial reporting. This type of transparency is crucial when you are running a CPG company. It gives you the confidence needed to invest, grow and work with retail partners.
Food & Beverage consultants are crucial to the success of your company
Even though software can be an extremely powerful tool in appropriate hands, it’s beneficial to have an expert on your side. That’s where a food & beverage consultant comes in.
Consultants with expertise in the food industry can help CPG businesses develop better deduction management strategies. They can also help train their staff and negotiate better conditions with distributors. They are knowledgeable about the aspects of the business and offer insight that might take years to understand.
For businesses that are growing seeking expert advice, it can be the difference between having to deal with endless tax disputes, and transform deduction management into a streamlined, profit-saving process.
Final Thoughts
Deduction management isn’t just about recouping money lost and ensuring the financial health of your business. Take control of deductions regardless of whether you use software or a consultant in the food and beverage sector.
Instead of letting deductions drain your profits Make sure you are in control of the process and turn what was once a hassle into an opportunity for business expansion. Your financial results will be much happier.