It’s even worse on marketplaces, where many states have enacted marketplace facilitator laws. Without clear insight into incoming and outgoing cash flow, it’s easy to lose track of your finances. That can lead to bills and QuickBooks overhead piling up before you realize there isn’t enough cash readily available to pay them (known as a liquidity squeeze). In this newsletter you’ll learn about the common mistakes in CPG accounting, how to optimize cash conversion cycles, and the eCommerce triple threat of marketing, inventory, and finance. Your financial statements should makes sense to anyone else who needs to understand your success. We transform raw numbers into clear insights that help you make better decisions every day.
Financial Support Tailored For You
- This can include sales tax, income tax, and payroll taxes if you have employees.
- For early-stage brands, you might be able to handle basic bookkeeping yourself, but as you grow, you’ll likely need the help of a CPA or accounting firm that specializes in CPG.
- In the CPG industry, deductions are adjustments made to a company’s invoiced amount due to factors such as promotional discounts, allowances, and chargebacks.
- Isolating marketing as a % of sales, MER, or ROAS, or however you choose to assess marketing efficiency, will quickly enable you to identify trends and seasonality within your business.
Lori’s unique value comes from her hands-on experience working in both restaurants and food service, giving her a firsthand understanding of the challenges faced by business owners and employees alike. This unique life experience allows her to connect with clients on a deeper level, providing practical insights and tailored solutions. Her extensive industry knowledge and empathetic approach drive sustainable growth and success for the businesses she supports. CPG companies face unique financial complexities due to the sheer volume of transactions and intricate revenue recognition processes. High turnover in inventory, complex supply chains, and trade spend management add to the challenge, making accounting functions more demanding. Partner with Expertise Accelerated for outsourced CPG accounting led by our CEO with over 25 years of US CPG industry experience.
Examples for Leveraging Trade Spend
When a buy one, get one free coupon is redeemed as part of a sales transaction, revenue is recognized for the price of one product and cost of goods sold is recognized for the cost of both products. For example, if a buy one, get one free coupon is redeemed for an item with a typical sales price of $2.00 and a related cost of $1.00, the company should record $2.00 in revenue and $2.00 in cost of goods sold. We specialize in cleaning up historical data, streamlining workflows, and ensuring GAAP-compliant financials. Our goal is to refine your financial processes, laying a groundwork for accurate reporting and informed decision-making. Remove the $3,000 in marketing costs, and your gross profit margin increases to 53%. If you net the entire trade spend against revenue, you’d end up with 50% gross profit margin.
Simplify trade spend management
- Closely tracking trade will also enable you to understand how much money you have left to put toward programs that could help you achieve your revenue target for the year.
- This process ensures everyone is aware of what is held on the balance sheet and can manage the balances properly.
- Be sure to adequately staff your accounts receivable and deductions teams, so they can provide timely and relevant data that enables management to effectively evaluate trade spend.
- We offer services such as accounting, tax planning, and financial reporting, which streamline operations.
Virtually every product in the sector has many competing brands, and the switching costs for consumers are low. As a leading management consulting firm, we bridge the gaps between finance, technology, operations, and risk management, for companies to thrive during every lifecycle stage. Make leadership responsible for communicating the importance of teamwork between sales, accounting and finance when calculating accruals and managing deductions.
Top 5 Deduction Management Platforms for CPG Brands
From claiming R&D tax credits to accurately projecting cash burn, the Kruze team is ready to support your healthtech company. SaaS Bookkeeping for Veterinarians companies should look for online bookkeeping solutions that are paired with experienced SaaS accountants. That’s because not all accountants know how to correctly recognize SaaS revenue and expenses.
Inventory & Production Costs: Why It’s More Complex Than You Think
In turn, these display your future cash flow needs and empower you to budget smarter. Take time to learn the ins and outs of every category of FBA fees and how they apply to your products. You need to familiarize yourself with the different types of charges, including fulfillment, storage, disposal, and returns. Then, understand how each expense applies to your products based on size, weight, and storage duration. Set up a monthly review process as well to check these fees and ensure they’re recorded correctly in your financial statements.
Accounting Services Built for High Growth Brands…and Brands That Strive To Be
Susanne is a highly accomplished senior accounting professional with experience in finance and operations management across a range of industries, from start-ups to multi-million-dollar organizations. A siloed approach, where departments function independently, creates blind spots and missed opportunities; imagine your marketing team launching a massive campaign for a product with limited inventory. Conversely, your inventory team might overstock slow-moving items, tying up valuable cash flow and storage space. That lack of communication disrupts the harmony of the triple threat and inhibits its effectiveness. A positive cash flow means you have more money coming in than going out, while a negative cash flow means you’re spending more than you’re bringing in, which can be a sign of trouble. For many CPG brands, maintaining a positive cash flow can be a big challenge, especially if you’re paying for inventory upfront but waiting for payments from retailers.
- And when you use us as your bookkeeper, we set up and keep up-to-date a due diligence folder so you can get that next round of fundraising.
- Our pros work with multiple clients throughout CPG, and are always learning new best practices and regulatory changes.
- Demand for consumer packaged goods is relatively steady, in good and bad economic times, but this is still a highly competitive sector of the U.S. economy.
- By putting the right processes and practices in place, you can empower cross-functional teams and departments to work together across your organization to proactively oversee trade spend.
- These are the questions that will guide the business to its next great products with an accurate cost profile as part of the new product business case.
- A properly organized COA enables you to perform a robust business analysis and understand the financial levers at your disposal.
- CPG businesses often face deductions from retailers and distributors, such as chargebacks, slotting fees, and promotions.
At nDepth Consulting, we promise to simplify your financial management and drive sustainable growth for your CPG business through expert, industry-specific solutions and unwavering support. Our services optimize your cash flow, reduce financial errors, and ensure compliance. Kruze’s team has worked with food startups, supplement providers, subscription fashion and more. And we know that high growth comes with its own problems, especially understanding how inventory and manufacturing impact cash flow and getting a handle on customer acquisition costs. The ins and outs of trade spending cpg accounting and other retail and consumer packaged goods issues can make your reporting complicated. Gain confidence in your financials with time-saving support from consumer business specialists.
What Are the Top Companies in Consumer Packaged Goods?
Using this approach, COGS includes product costs and the variable costs incurred for fulfillment and operations. A well-organized COA speeds up bookkeeping and posting of GAAP accrual entries and other adjustments, making month-end reconciliations easier to complete. A poorly organized COA will prevent you from understanding how the variables of your business move together and may make detrimental decisions. A properly organized COA enables you to perform a robust business analysis and understand the financial levers at your disposal.