Dedicated to bringing readers the latest trends, insights, and best practices in procurement and supply chain management. As a collective of industry professionals and enthusiasts, we aim to empower organizations with Certified Public Accountant actionable strategies, innovative tools, and thought leadership that drive value and efficiency. Stay tuned for up-to-date content designed to simplify procurement and keep you ahead of the curve. Navigate the dawn of a new year with insights on cash flow management, as we unveil strategies to empower CPG brands for the challenges and opportunities that lie ahead.
Customer Support Concerns
- We could also explore alternative financing options such as invoice factoring or lines of credit, giving you quick access to cash to cover operational costs without slowing growth.
- As consumer packaged goods (CPG) brands grow and increase trade spend across channels (with more complex deductions management processes), managing accrual accounting can become quite confusing.
- Then have a meeting to review and understand the detail behind the accounts with everyone up to the CFO.
- Automated tools can also handle the complex task of inventory valuation to verify the accuracy of your financial statements.
- An intimate understanding of your cash flow will help you maintain enough capital to manage growth and meet consumer demand.
I’d help you with long-term financial planning by forecasting the impact of sourcing sustainable materials, planning for seasonal shortages, and aligning your financial strategy with your growth and sustainability goals. This way, your brand can scale while maintaining a steady cash flow, even during off-peak production cycles. Working with an accountant who specializes in CPG brands gives you access to financial data and industry insights that can help with long-term planning, profitability analysis, forecasting, and pricing.
- For instance, a food and beverage company may have a large inventory of perishable goods close to their expiration date or have become obsolete due to changes in consumer preferences.
- These companies typically have a large amount of inventory on hand, which can be costly to maintain.
- Inventory constantly moves in the CPG sector, so any error in stock count can lead to incorrect financial statements that skew your understanding of product performance.
- Finding the right accounting or fractional CFO firm is crucial for a CPG brand’s financial success – find the right one for you that specializes in scaling eCommerce and consumer brands.
- In summary, the CPG industry is a complex and fast-paced environment that demands efficient accounting and procurement processes.
- In this blog post, we’ll explore some of the most common accounting issues that CPG companies face, including inventory valuation, impairment of assets, and outsourced accounting services.
Non-Dilutive Funding Guide for CPG Brands
Detailed financial records allow you to conduct insightful profitability analyses. Financial statements are the foundation of informed decision-making, tax filing, and building trust with investors and stakeholders. Reconciliation ensures the accuracy of those records, providing you with reliable data you can depend on.
Overcoming Financial Statement Challenges in the CPG Industry: Key Issues and Solutions
The accruals are like deposits cpg accounting in the bank, while deductions for operational issues or trade promotion activities are withdrawals or credit. The main advantage to live accruals is that if sales are coming in lower than expected, sales teams can adjust the budget lower to maintain profitability. They understand the unique challenges of the CPG industry and can support your business as it scales, allowing you to focus on growing your brand. If you’re ready to hand off the accounting so you can focus on sales, check out Accountfully for more details. They specialize in helping companies like yours navigate complex financial landscapes, from managing trade spend and deductions to setting up proper bookkeeping and ensuring compliance.
Running a CPG company is a whirlwind of managing production schedules, navigating supply chains, and staying on top of regulations. Efficient and accurate accounting processes are the backbone of your ongoing success, helping you stay compliant and profitable at all times. The foundation of repeatable zero-based processes in areas such as procurement can be integrated into a budget-creation software tool, automatically applying zero-based policies. Typically, capabilities for spend visualization, forecasting, and systems integration are included. Zero-based templates that cover the analyses, processes, efficiency levers, and organizational structure are required to fully unlock the potential. Zero-based processes are supported by standard procedures to build and negotiate budgets, including knowledge, guidance, and practices that equip organizations with thetools to negotiate at scale.
Understanding Landed Costs for CPG and DTC Companies
Our experts help minimize tax liabilities through effective planning, assist with audits, and manage all necessary documentation to avoid potential penalties. Beyond immediate cash flow management, our financial projections and operating budgets focus on achieving your long-term objectives. This strategic planning covers major investments in facilities and advanced equipment. Accrual accounting is the principle that financial transactions should be recorded when goods and services are provided, rather than Bookkeeping for Chiropractors when the payment is made or received. This practice combines current and future cash inflows and outflows to provide a more accurate representation of a company’s financial and cash flow situation.
Choosing the right accountant or fractional CFO to partner with can be a daunting task – that’s where Settle can help. Whether you’re just getting started or scaling your brand, our team can help you find the right partner that fits your needs – get connected with our team to find out more. With high upfront costs for inventory and demanding production schedules, cash flow is often tricky for CPG brands. It allows brands to offer slight discounts in exchange for faster payments, which can drastically improve liquidity without impacting long-term profitability.
- By carefully managing these factors, CPG companies can maintain profitability and succeed in a highly competitive market.
- Taking these initial steps will set CPG companies up for success in implementing ERP systems that transform SG&A processes and generate new value.
- Your balance sheet helps you see how much liquidity you have, which can help with decisions like whether you can afford to make a big investment in new equipment or scale up production.
- It is imperative during this period to keep a traced audit trail and backups for documentation of every promotion for reference during disputes and for the accounting team to ensure compliance during audits.
- A handful of expenses fit between gross revenue and net revenue on the income statement.
- This strategic planning covers major investments in facilities and advanced equipment.
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. One step further, consider reporting financials that are GAAP (Generally Accepted Accounting Principles) compliant. While not required for certain types of companies, standardizing the reporting merely allows for credibility within your organization. Learn how the Suez Canal crisis exposed supply chain vulnerabilities and discover essential strategies to prepare for the holiday season.
Vendor management
Despite experiencing a slowdown in growth over recent years, the consumer packaged goods industry is one of the largest sectors in North America. The sector contributes approximately $2 trillion to the United States gross domestic product (GDP). It is led by well-established companies like Coca-Cola, Procter & Gamble, and L’Oréal. A handful of expenses fit between gross revenue and net revenue on the income statement. These expenses are related to discounts between the product manufacturer and the retailer that are used to impact sales to the end customer.
