CPG Accounting & Finance Key Questions 8020 Consulting Posts

The lenders and investors want correct revenue figures, sound financial projections, and a clean balance sheet. Economic slumps often trigger flagging durable goods sales because people are more likely to hold onto their cash in times of economic uncertainty. This is especially true with consumers who own older versions of a durable good. A family may opt to squeeze a few more years from an outmoded washing machine rather than upgrade to a newer model. By contrast, sales of consumer packaged goods staples like bread, milk, and toothpaste are less affected by market fluctuations. Consumers consume or run out of these goods faster and must replace them or do without entirely.

• You’ll have multiple partners  —  each with their own promotions, spend calendars, order volumes, and deductions.
• Beyond profit margins, activity ratios can also be important in the consumer packaged goods industry.
• Accounts payable (AP) refers to all the payments that a business owes its suppliers and creditors.
• 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.
• This is primarily due to high market saturation and low consumer switching costs, where consumers can easily and cheaply switch their brand loyalties depending on price or quality (real or perceived).

Do we actively work on a cash receipts and disbursements forecast?

Armed with this knowledge, you can make informed decisions about resource allocation. That could involve optimizing marketing campaigns for high-performing products, adjusting pricing strategies, or even discontinuing low-profit items. Another consideration is your “nexus” — that is, a seller’s connection to a state.

Choosing the Right Audit Management System for Your Organization

During tough economic times, consumers may spend extra on consumer packaged goods in place of more expensive luxuries. During the economic downturn from the 2008 recession, sales of nail polish went up as consumers “splurged” on at-home nail treatments instead of pricey salon manicures. In 2009, though consumer spending on cosmetics overall declined, nail polish sales grew by 14.3%. Consumer packaged goods are items used daily by average consumers that need to be replaced or replenished regularly.

• Whether your focus is on organic snacks or gourmet beverages, CJBS delivers tailored accounting, tax, and advisory solutions that align with your unique business objectives.
• For example, if you put shipping and fulfillment below the cost of goods and marketing and put it into an SG&A category, you have now mixed a variable expense with fixed overhead.
• Let’s say you own a craft beer brand facing fluctuating demand during seasonal events.
• By anticipating consumer needs and staying ahead of competitors, CPG accounting helps businesses stay ahead of the game.
• That means COGS has already eaten 40% of your revenue; at 2.5x MER, that’s another 40% of your P&L.
• 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.

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The retailer would recognize the advertising allowance received as a reduction of cost of goods sold. 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 normal balance a related cost of $1.00, the company should record $2.00 in revenue and $2.00 in cost of goods sold. Make leadership responsible for communicating the importance of teamwork between sales, accounting and finance when calculating accruals and managing deductions. As you get more retail partners for your brand, managing trade spend becomes more critical in your daily operations.

Establish a routine reconciliation process

• Partnering with the right distributor is arguably one of the most essential tasks for a retail company.
• But for this process to work, you need to make sure everyone in your organization is playing their part.
• Understanding accounts payable and accounts receivable is an essential part of business workflow.
• This is especially true with consumers who own older versions of a durable good.
• 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.
• This unique life experience allows her to connect with clients on a deeper level, providing practical insights and tailored solutions.
• Specifically, the COA lists account numbers and account descriptions grouped by account types.

We put our heads together with the folks at IndieCPG to create a guide to the basics of cashflow for new (and maybe even not-so-new) founders. Partnering with the right distributor is arguably one of the most essential tasks for a retail company. Find out what to look for in distribution partners and how to source them. Distribution partners are some of the most important parts of scaling up a small business or cpg accounting startup.

• A typical COA starts with balance sheet accounts (YTD assets and liabilities) and lists revenue and expense account numbers.
• We put our heads together with the folks at IndieCPG to create a guide to the basics of cashflow for new (and maybe even not-so-new) founders.
• With high upfront costs for inventory and demanding production schedules, cash flow is often tricky for CPG brands.
• Given that inventory challenges are prevalent in the CPG / Food & Beverage industries, our hands-on approach includes thorough site evaluations to identify and eliminate inefficiencies.
• Having a clear understanding of inventory, what it is, how to manage it, when to manage it, and how to leverage it to scale your business is a necessary part of business growth.

Marketing on a Budget: How CPG Startups Can Test Paid Advertising

We offer specialized tax planning and compliance services designed for CPG manufacturers. We ensure that companies remain compliant with local and international tax regulations, including sales tax and excise taxes. Our Bookkeeping for Chiropractors experts help minimize tax liabilities through effective planning, assist with audits, and manage all necessary documentation to avoid potential penalties.

Do You Need to Elevate Your Reporting?

In turn, these display your future cash flow needs and empower you to budget smarter. When looking into the data presented by a CPG accountant, you can make informed decisions rather than guesswork. If you want to scale your business, you have financial data, and you can decide accordingly. Having strong financial reporting is key to running and growing a business. You need a CPG accountant if you want to expand your CPG business or are already in the expansion phase. They can help you grow to new markets and increase production while managing all financial processes.