With the right financial connections, you can secure better financing options or lines of credit to keep operations moving smoothly without cash flow issues. We help CPG manufacturers optimize inventory management by implementing cost-effective processes, providing guidance on negotiating with suppliers, and identifying opportunities for supply chain consolidation. Lori Johnson-Engelman is a Senior Partner at CJBS, bringing over 20 years of experience in the restaurant, food service, and consumer packaged goods (CPG) industries.

Common pitfalls of CPG accounting

To that end, invest in staff training on accounting, ERP and trade promotional management (TPM) systems. Require cross-functional teams to use systems of record and set clear expectations for each user’s role. 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. At Balanced Business Group, we specialize in providing the CPG accounting expertise and finance services that founders need to stay ahead in a competitive market.

Is our approach to discounts and allowances good for business?

• Recording trade spend accurately makes it easier to compare your company’s gross margin to industry benchmarks.
• 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.
• Unlike brick-and-mortar stores with a single physical location, eCommerce brands can have a virtual presence in multiple states, each with its own sales tax laws, rates, and exemptions.
• I’ve seen brands struggle to maintain profitability because they didn’t have accurate, real-time insight into their COGS.
• At Finatics, your dedicated accounting team will manage your day-to-day accounting activities so you can feel confident in your financial information and focus on running your business.
• It all starts with visibility — robust analytics enable you to dig into the data, right down to individual SKUs, channels and retailers.

I’ve seen brands struggle to maintain profitability because they didn’t have accurate, real-time insight into their COGS. If you don’t know your true production costs, it’s tough to cpg accounting price your products right and protect your margins. With multiple years of specialized experience, CJBS is a leading authority in the Consumer Packaged Goods (CPG) and Food & Beverage sectors. At CJBS, we leverage our deep industry knowledge to identify and rectify operational inefficiencies, optimize resource allocation, and significantly reduce tax obligations, thereby enhancing profitability and performance.

• That way, you can test and measure different strategies to find the most profitable mix for individual products and retailers.
• Although categorizing transactions is essential in all businesses, it’s even more vital for CPG brands.
• Armed with this knowledge, you can make informed decisions about resource allocation.
• For example, a sales change affects accounts receivable and cash flow performance.
• Vividly offers tools that provide visibility into trade promotions to help you understand where your money goes and streamline and optimize trade promotions.

Automate inventory management

• Like the ideology above, tracking all your fulfillment and operational costs is important.
• This is an area of the income statement that is full of activity for a tangible product-driven company.
• Managing business accounting for CPG brands means investing in tools that give you the data—and insights—you need to make intelligent business decisions.
• Distributors like UNFI and Kehe send a great deal of paperwork, sometimes weeks to months late.
• Companies with high operating leverage tend to do better in bull markets and periods of high growth, as profits grow faster than revenue.

Want to take your business to the next level but unsure how best to scale? The growth trajectory can be tricky when new opportunities start to exceed cash. You can start the cash flow forecast today by managing and understanding what is going in and out of the company’s bank account.

Cash Flow Management

Our team of experts has years of experience in the CPG industry and can provide customized accounting solutions that fit your business needs. We also understand the unique financial accounting and reporting requirements of Consumer Packaged Goods (CPG) companies. Finatics has extensive experience supporting CPG businesses, including areas of agribusiness and manufacturing. Our team of sector-specific accountants will help you navigate industry challenges and provide tailored solutions for your accounting needs. 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. Companies that want to develop best-in-class departments can take strides by asking the right questions and taking care to work their way to the right answers.

• If your revenue gets cut in half overnight, so do your product sold and shipping costs, and you can pull down your marketing expense with relative ease – all proportionally.
• Known for its high sales volumes, slim margins, and rapid inventory turnover, the CPG industry poses unique challenges for accounting.
• As required by any accounting software, they include your cash on hand, inventory information, revenue sales, equipment, accounts receivable, accounts payable, and other types of business transactions and assets.
• We manage daily financial tasks and produce financial statements, ensuring precise and prompt data for strategic decisions.
• When a coupon that is redeemable against a future purchase is issued as part of a sales transaction, revenue is recognized in the amount of the consideration received less an amount deferred relating to the coupon.

How Health-Ade Recovered $700K and Transformed Their Deduction Process with Vividly

Or you might see that a higher marketing spend results in higher revenue. B2C startups experience a lot of challenges as they grow and scale, including acquiring funding, managing expenses and cash flow, recognizing revenue, and much more. Whether you’re self-manufacturing or working with co-packers, keeping accurate financial records is essential to understanding your business’s performance, making informed decisions, and managing cash flow. A solid accounting foundation will also prepare you for future growth and investment. Late reports hinder decision-making processes, goal setting, and budgeting.

The Value of Industry-Specific Financial Insights

Our account management team is staffed by CPAs and accountants who have, on average, 11 years of experience. We set startups up for fundrising success, and know how to work with the top VCs. Inventory accounting, build of material calculation and working capital constraints make even early-stage hardware companies complex from an accounting and bookkeeping perspective. As your biotech company is getting ready to head through FDA and government trials and certification, you’ll want to work with an experienced CFO who can help you anticipate the costs and possible bottlenecks. Biotech companies bookkeeping and accounting needs are extremely specialized. Enterprise SaaS, small business SaaS, consumer SaaS, app store SaaS – they’re all different, and we’ve worked with hundreds of SaaS companies, delivering high quality books, tax advice and CFO level advice.

Perhaps you want to adopt more eco-friendly packaging and shipping methods — but these often come with higher price tags. On the one hand, consumers demand sustainable products, and you want to offer them. Finding that balance between sustainability and profitability is something every CPG founder needs to grapple with. It’s not an easy decision, but the brands that ride the wave are the ones that build long-term customer loyalty while retained earnings keeping their financials firmly in check. Running a CPG brand comes with financial challenges that most businesses don’t face.

We’ve Helped Hundreds of Kansas Business Owners Just Like You.

Technology and large-scale cultural forces—including the pandemic—have fundamentally altered how people live and seek to satisfy their needs. Other challenges threatening the industry’s long-term prospects for growth include competition among deep-pocketed incumbents and ever-tighter margins as advertising, raw materials and other costs continue to rise. Distributors like UNFI and Kehe send a great deal of paperwork, sometimes weeks to months late. virtual accountant It’s critical to have a system in place to coordinate the various types of trade spend.