The Future Of Deduction Management: How Automation Is Changing The Game

Operating the operations of a CPG brand is no simple task. Controlling manufacturing costs, distributor relationships and marketing can make it seem like an unwinnable battle. What would you say if I said that one of the greatest challenges to your bottom line isn’t cost of materials or a fierce competition it’s the deductions quietly taking away your earnings?

It’s not the most exciting aspect running an CPG brand however, it is among the most crucial. If a retailer fails to pay an account due to chargebacks (or other issues) or promotions, or if there are any vague compliance issues, it could reduce your profit. In a time when cash flow is already tight these deductions could make all the difference between growing and struggle.

A poor deduction management strategy can cost you significantly more than you think

We shouldn’t fool ourselves no one starts an CPG company expecting to fight with distributors about deductions. The deductions involved are not small and many business owners quickly learn.

If you don’t have a proper system for managing deductions, you’re left guessing what the reason is for certain payments not matching invoices, fighting to challenge unjustified chargebacks, and feeling like your business is running out of cash. It’s a hassle, it’s time-consuming and worse of all, it takes your focus away from the things that really matter to build your business’s reputation.

The lack of transparency makes the situation more difficult. It’s often difficult to know what deductions are legitimate and which ones are unjustified. Some brands may not even know how much they’re losing until they examine their books. At that point many thousands, or even millions could be gone.

How Deduction management software changes the game

The good news? This issue can’t be handled manually. Deduction management software removes the guesswork out of the process, by automatically tracking, analyzing, and solving deductions.

Instead of drowning in spreadsheets, businesses are able to see exactly where their money is going and what deductions were taken. Modern software systems also permit companies to swiftly challenge false claims, thus saving them time and helping them recover revenue lost.

Automation is a way to reduce human error and more precision when it comes to financial reporting. If you’re operating the CPG company, this kind of clarity is vital. It allows you to scale, invest, and negotiate with retailers from the position of strength.

Food & Beverage consultants are crucial to the success of your company

Software is an amazing tool, but occasionally you’ll need an expert to help guide you. A consultant in food and drinks can assist.

Consultants who have expertise in the food industry can help CPG businesses develop better strategies for managing deductions. They can also train their teams and negotiate better conditions with distributors. They are familiar with the complexities of the food industry and are able to offer valuable insight.

If you have a brand that is growing, expert guidance can make the difference between having to fight endless deduction disputes or turning deduction management into a successful and profitable process.

Final Thoughts

It’s not only about finding lost funds and ensuring the health of your financial 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.

Take control of the situation and transform the issue that was once a source of frustration into a chance for your business to get more efficient. Your bottom line will thank you.