But here's a secret most seasoned suppliers already know: growth is only half the equation. If you’re bleeding revenue through unresolved chargebacks, pricing errors, shortages, and compliance fines, your profits and cash flow will suffer no matter how many promotions you run.
So here’s the question: Which delivers more return—Trade Promotion Management (TPM) or Deduction Management (DM)?
Let’s break it down clearly, using real-world data and experience. You’ll probably be surprised.
Before we get into the numbers and results, here’s a quick refresher:
Both are critical to a supplier’s financial health, but they serve different purposes.
Not long ago, both TPM and DM were largely manual processes. Suppliers would plan promotions in spreadsheets and respond to retailer chargebacks one deduction at a time.
But now?
And here's something important: Retailer expectations have evolved, too. Retail compliance standards are now stricter than ever. Fines and chargebacks are increasing. And promotions need to be flawlessly executed to see any return.
Let’s look at what you’re actually spending on promotions.
Trade promotion costs typically include:
That’s a significant financial investment. For most CPG suppliers, trade promotions represent the second largest line item after cost of goods sold, sometimes 15-20% of gross revenue.
But here’s the catch: Studies show 60-70% of trade promotions either lose money or break even.
Why? Execution errors, misalignment with retailers, or simply because the promotion didn’t drive enough sales.
So while TPM is a big investment, the returns are often unpredictable.
Now let’s look at the other side: Deductions.
Retailer deductions include:
The true cost of deductions is massive.
Some suppliers report losing up to 20% of their invoice value due to deductions alone.
Worse, if you’re handling them manually, they can pile up fast. Many suppliers don’t realize how much money is stuck in unresolved or missed claims.
But with automation, you can catch up quickly, file disputes faster, and actually recover the money you’re owed.
Let’s stack TPM and DM side by side using key performance metrics:
Bottom line: Deduction management offers the fastest, most measurable ROI, especially if your organization is already running promotions but struggling with unresolved deductions.
Let’s say you focus only on trade promotions. What happens?
You may grow sales, but if you're still losing 10-15% of revenue to uncollected deductions, your net profit suffers. Plus, cash flow becomes unpredictable, especially when disputes are delayed or denied.
Now flip it. Let’s say you ignore promotions and focus only on deduction management.
Your profit margins may stabilize, and cash flow improves. But without top-line growth strategies, it becomes hard to scale.
That’s why smart suppliers don’t choose—they balance both.
Here’s a common pattern:
Sound familiar?
The most successful vendors invest in both:
That’s how you build a healthy, scalable supplier business.
And thanks to automation, it's easier than ever to tackle deduction management without overloading your team.
Not sure which one deserves your immediate focus?
Ask yourself these yes/no questions:
If you answered “yes” to 3 or more, you’ll get the fastest ROI by automating deduction management first.
Once your recovery systems are in place, you’ll have more cash and bandwidth to invest in smarter trade promotions.
For suppliers selling to large retailers, deduction management is often the low-hanging fruit with the highest return.
It protects profit margins, improves cash flow, and gives you a clearer financial picture. And with AR automation tools like iNymbus, you can resolve backlogs, file disputes faster, and prevent future deductions—all with minimal manual effort.
That doesn't mean trade promotions aren't important. They are. But to win the long game, you need both offense and defense:
So, where should you start?
Need help clearing your deduction backlog or automating retailer disputes?