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.
We’d love to discuss this with you in more detail, and share client results.
We get this question all the time, so why not address it upfront?
And there is a rationale…
The answer is rather simple. As we began talking a few years ago, we realized quite a difference between our client-partners, and others that were inquiring about a trade promotion solution.
First, most of our clients were rather relaxed discussing trade. They had a handle on things and were progressing according to their plan and objectives. On the other hand, those using spreadsheets and other systems had quite a different demeanor.
It simply became apparent that what we really do is help CPG small & midsize manufacturers relax about their trade promotion spending.
Secondly, we have a core group of client-partners that like our client conferences, have developed a network, and learn quite a bit from each other. So, we simply thought that a more formal approach to a ‘community’ would be a further benefit to our clients.
What’s more relaxing and community-driven than a Flamingo? And we thought it was also a lot of fun!
So, today, our clients meet at our conferences, don their ‘Adesso-Garitaville’ t-shirt for the reception, discuss whether they are on the Key Largo release yet, and what they think of the next wave of Smart Dashboards. One Director of Finance at one of our clients even wears his flamingo-embroidered seersucker shorts!
And, many of our conferences and training events are at our office just west of Chicago O’Hare Airport. No, not the most tropical location, but we do play Cornhole games and eat fresh popcorn (Jolly Time is a generous client) between sessions. We also host conferences in warm, sunny locations from time to time.
When you’re a company with the right process, practices & system to manage trade spending and effectiveness with your client-partners, it’s rather simple and fun!
Trade Spending is the ‘Pink Elephant’ on Your P&L –
Time to talk about trade spending – a major expense in your P&L. You are a team of professionals, who manage a small business with tenacity and care. You can account for your Cost of Goods, your HR expenses, G&A and others down through the line item level. In some cases, you can even account to fractions of a penny – yes every dollar matters!
Knowing these is critical to managing your business. Furthermore, you also analyze these, make decisions where to invest more, cut back some, or spend the same to get a better bang for the dollar.
In fact, not only does your internal management teams drill into these numbers regularly, but your investors have a keen interest what the returns are as well. We all know the drill at a small or emerging company.
THE BIG QUESTION IS: Can you account the same for your trade promotion spending in your P&L?
Undoubtedly, this area confuses and challenges many Natural-Specialty-Organic manufacturers. They don’t analyze it, and many simply ‘sweep’ all of the distributor deductions into broad categories to clear the short-pays too! Every trade promotion expense has (or should have) a contractual agreement with a distributor or retailer.
Similarly to every other line item on your P&L, your finance team should be able to account for every dollar deducted by a distributor or retailer. You should have the same level of scrutiny & granularity as any other GL area.
In sum, maybe it’s time to address the ‘pink elephant’ on your P&L, a.k.a. trade spending – and have your team make better and more effective decisions with these significant dollars. Our other client partners do!
We can be assisting within weeks with practices, processes and systems. It will save you time and it’s extremely affordable.
To know where your dollars are spent & make them work harder, here are 5 reasons to consider Adesso’s Flamingo Natural-Specialty TPM:
While trade spending may be new to you, we have lived it, collectively, for hundreds of years – it is this experience which has developed our Trade Promotion Management (TPM) system & our supporting services. We have seen it all.
Our client-partners range from $1 million in size to several billion. And through our community, we all learn & grow from each other.
Your pricing would be very affordable; based on your size, with graduated pricing as you grow.
You’ll be up, running & generating results in 4-8 weeks, due to pre-built QuickBooks interfaces & experienced team.
The system is simple for sales & broker partners to use, and evolves with your business growth; immediate results, payback & long-term improved effectiveness.
“Our total lives here are to work with you & your team to measure your trade spending
and help these dollars work harder. We’d love for you to talk to our other client-partners,
and relax about this stressful area like they do.”