With so much variability in the CPG supply chain, precision is absolutely vital. Trade spend is notoriously complicated, but with a sophisticated analysis and a detailed management plan, you can stay on top of your company’s promotional activities. Over time, this data-driven approach cpg accounting can help you refine the trade strategy and create a healthier P&L.
- By staying up to date on the most recent technology, we can provide you with optimal solutions tailored to your business needs.
- 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.
- CJBS provides comprehensive financial services tailored to the needs of CPG manufacturers.
- The bill, released Thursday, would block textiles and apparel from being imported through what is known as the de minimis provision.
- As your trusted advisor, CJBS supports a wide array of business decisions, from facility leasing or purchasing decisions to succession and retirement planning, ensuring your business not only grows but thrives.
- Implementing accruals for deductions and categorizing them correctly in financial statements can resolve this issue.
Servicing Consumer Packaged Goods (CPG) Accounting
Effective deduction management can help save 1-2% of your total revenue, a considerable sum for a startup. Develop robust systems, clear communication protocols, and unwavering follow-up mechanisms to challenge and recover these funds. Propeller Industries is not licensed by the state of California and the accounting services being offered do not require a state license. Stabilize your cash flow and extend your runway with expert foresight that anticipates future needs.
Small Businesses
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. It will inhibit you from identifying operating leverage in the business (discussed below). Specifically, the COA lists account numbers and account descriptions grouped by account types.
Streamline inventory management
- 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.
- Your CPG pricing strategy should balance consumer expectations with financial goals, allowing you to remain competitive and profitable.
- That inefficiency adds up—missed opportunities, delayed closes, strained capacity.
- Our services optimize your cash flow, reduce financial errors, and ensure compliance.
- Here are the four fundamental types of capital and how they can work for a small business.
It also helps you understand the true gross profit margin for a given product. After all, when you include your marketing costs that are separate from sales agreements in this calculation, it makes your gross profits seem lower than they actually are. 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. After the teams involved agree on the proper method to manage accruals, the accounting team must then manage details surrounding revenue recognition for deducted payments. There are several circumstances that require more nuanced accounting processes.
- Her leadership led SoStocked to significant growth, culminating in its acquisition by Carbon6.
- EA’s deep understanding of the challenges these industries face ensures hassle-free bookkeeping and significant payroll savings.
- These adjustments are made after the sale of the original goods and are based on volume and activity that is not known at the initial time of sale.
- You have to handle product creation, inventory purchases, retail negotiations, and much more.
- They’re not just financial penalties; they’re precise indicators of where your operational machinery needs fine-tuning.
- The Consumer Packaged Goods (CPG) industry is a dynamic and competitive market, where companies need to stay on top of their finances to succeed.
Based on those deals, you will see deductions occur from accounts receivable payments, sometimes without authorization. Expect your sales reps to acknowledge, review and understand any deductions that come through. Trade spend or trade promotion is the amount a company pays to increase demand for its product at the retailer shelf including but not limited to advertisements, coupons, and preferred shelf displays. Reduce your employee costs by over 60% while improving the quality and timeliness of your financial reporting. Just like balancing a scale ensures precise measurements, regular reconciliation is essential to maintain the accuracy and integrity of your CPG company’s financial records. This process involves comparing your payroll bank statements with your accounting system’s records every month.
That leaves you with 10% of revenue to give to all the employees, insurance, rent, benefits, etc, to land at an ‘ok’ net income of 10%. That means COGS has already eaten 40% of your revenue; at 2.5x MER, that’s another 40% of your P&L. Personnel & fixed costs are a small portion of the P & L, as we just said, so you should be looking to leverage the fixed costs as much as possible since there isn’t much to begin with. Those rent and machinery payments don’t go away – but the Online Bookkeeping revenue does, and you’re screwed.