Often, we get a call from an emerging Natural-Specialty-Organic (NSO) manufacturer telling us that they have added a new accounting resource to assist in reducing their deduction balance, and sorting out all of these trade spending issues. When we ask how it’s going with the new person, the reaction is typically underwhelming.
THE REASON IS SIMPLE: trade spending deductions are not the problem – they are a symptom of the problem.
An added resource will not address this.The problem lies in not having a clear and accurate understanding of:
- what you were planning to spend,
- what was committed to by your sales team and the distributor or retailer,
- and then not knowing what actually happened in the marketplace.
The deduction is simply a form of payment for the distributor or retailer.When these areas are aligned within small or emerging NSO manufacturers, ‘matching’ the deductions to the spending is a rather simple process – typically addressed by your broker partners. And, yes, there may be a small percentage of these deductions that are not authorized, or someone made an error. But for manufacturers that have accurate plans and agreements documented, these issues typically begin to melt away.