The running of a CPG brand is no simple task. Between managing the cost of production as well as distributor relationships and marketing maintaining profits can feel like an uphill battle. What if i said that the greatest risk to your bottom line isn’t the rising costs of materials or stiff competition. It’s the deductions slowly eating away at your profits?

Deductions management isn’t the most enjoyable part of running a company, but it’s crucial for CPG brands. Your profits get wiped out each time a retailer isn’t able to pay its invoices. This can be due either to promotions, chargebacks or vague issues with compliance. These deductions, especially when cash flow is already tight, can mean the difference between success or failure.

The True Cost of Poor Deduction Management

There’s no way to be honest. No person starts a CPG business hoping to fight for hours over deductions with their distributors. These deductions are not small, as many businessmen quickly discover.

If you do not have a proper deduction management plan, your company is likely to constantly feel like it is losing money. It’s a hassle, consumes a lot of time and most importantly, distracts from what you should be doing: building the brand.

Lack of transparency is even more problematic. It’s difficult to determine the validity of deductions since many deductions are based on no any explanation. Certain brands do not know they’re losing money until they review their books. In the end, it could be too to late. Many thousands (or even millions) of dollars could have already fallen through the cracks.

What Deduction Management software can you use to help

The positive thing? There is no have to tackle this issue manually. Deduction management software eliminates the guesswork of the equation by monitoring, analyzing and resolving deductions.

Instead of slogging through spreadsheets or making deductions by hand, businesses can monitor where their money is being spent and the reasons. Better yet, software solutions enable brands to contest incorrect claims more quickly, saving valuable time and recovering revenue more efficiently.

Automation results in less human error and greater precision in financial reporting. This kind of clarity, when managing a CPG firm, is invaluable. It helps you feel confident when expanding investment, investing, and in negotiations with retailers.

Food & Beverage Consulting: The Key to Profitability

While software is a powerful tool, sometimes it helps to have a professional in your corner. A consultant in food and drink can be of assistance.

Experts in the field of food are able to help CPGs set up more effective deduction strategies for management. They also can help teams learn best practices and negotiate with distributors for better terms. They understand the ins and outs of the business and provide insights that might otherwise take years to figure out.

The right advice from an expert can make a difference in the ability to avoid endless disputes regarding deductions and turn deduction management into an efficient, profit-saving procedure.

Final Thoughts

It’s not just about recovering the money you’ve lost, but also protecting the health of your financial business. Take control of deductions, whether it’s with software or an expert in the food and beverage industry.

Instead of letting deductions eat away at your earnings, take control of this process and transform the issue that was once a source of stress into an opportunity for smarter business growth. The bottom line will be thankful.