So, deductions are driving you crazy. How do you know if it's worth getting help from a deduction management service to manage chargebacks and short pays?
An outsourced deduction management service can take over many or all aspects of organizing, cataloging, validating, and disputing short payments that a CPG brand’s customers (retailers and distributors like KEHE and UNFI, for example) make every month. A comprehensive service like DeductionGenius from Promomash can even seek repayment and recover those deductions found to be invalid.
Most brands already know that getting arms around their deduction management processes can be a headache, because they have been doing (or trying to do) it all on their own. From a revenue perspective, in general, deductions really start becoming a pain at around the $2M mark - but this can vary depending on the number of customer accounts you're managing and other factors. So, how does a brand objectively decide when they should consider handing the task off to an outside expert?
Here are six signs that your business process will benefit from outsourcing Deduction Management services.
-
You don't have a deductions specialist on your team.
Let's face it: Few get into consumer products for the fun and ease of managing deductions. It’s a hassle. Experienced deduction managers are hard to find, and there is inevitable turnover. Promomash can provide deduction management services long-term, or until your team is ready to assume responsibility. -
You don't have a deduction management strategy.
Even when you know your end goals, you may not know the best path to get there from where you are right now. The Promomash “digitize-reconcile-recover” model covers all the bases and will quickly deliver value to your brand. -
You have a growing backlog of deductions to process.
Some brands just don't have the resources to properly and expeditiously process all of the deductions they receive. Promomash can add the extra hands required to get get caught up with deductions and get the job done in a timely manner. -
Managing deductions is taking away from strategic activities.
It is a good business move to bring in help when your team (or even you) need to focus on more important matters than the time-consuming activity of validating deductions. If you're a founder, for example, and find you're spending too much of your time on this, that's a clear sign. -
Lack of Deduction Management is costing you margin and time.
Not only do invalid deductions cost brands in the form of leaked profit margins, but they also cost a lot in terms of internal time spent on them. In addition to helping you minimize invalid deductions, an outsourced service like DeductionGenius creates cost savings by reducing steep learning curves and staffing needs. At Promomash, our combination of technology and human expertise does the work more cost-efficiently than even the most seasoned in-house expert due to the infrastructure and the economies of scale we've built and improved upon over years. -
Deductions are preventing a healthy (35-40%) gross margin.
Gross profit/net sales...a pretty simple equation. But how much do you know about the cost of goods sold part of gross profit...or the trade spending costs that drive net sales? An outsourced service like DeductionGenius will help you understand the customers, products, and reasons for the costs that erode margin so that you can do something about them.
Whether your need is for a specific part of the process or all-encompassing, Promomash has an option to serve your needs. Our managed service for deductions delivers a high-quality process at a lower cost than employing your own full-time resources – providing you with an excellent investment/payback balance. Learn more about our services or schedule a time to meet with us and explore how we can help.
