Overcoming Financial Statement Challenges in the CPG Industry

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. High growth ecommerce companies require more than just simple financial statement preparation and tax returns. Deduction support provided by the customer can include overwhelming amounts of product data that must be reconciled against certain promotional events and contracts. In terms of disputing deductions, it’s important be both diligent and timely. Start with your sales reps and brokers, and then contact the customer’s AP department for proper routing directions.

Why Outsource Bookkeeping for Consumer Packaged Goods Companies To Us?

Behind every successful CPG company lies a complex web of financial management, inventory valuation, and accounting processes. By focusing on these aspects, CPG companies can develop a robust deduction management process that minimizes the negative impact of deductions on their financial health and ensures long-term success. 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.

Discover a new vision for trade

Our cost effective resources trained by our US-based management team will enable you to verify 100% of retailer chargebacks. This will result in the filing of hundreds of thousands of dollars of claims. EA delivers its CPG accounting services either by augmenting the client’s existing accounting & finance staff or by outsourcing the entire function. In either case, the engagement is led by its Connecticut-based team and executed by handpicked and intensively trained offshore accounting & finance professionals. Your financial statements should makes sense to anyone else who needs to understand your success.

Valuable business insights and resources to empower your decision-making.

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. Companies with low fixed costs (CPG industry) generally scale expenses as revenue grows. For example, if you put shipping and fulfillment below the cost of goods and marketing QuickBooks 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).

At CJBS, our commitment to Consumer Packaged Goods (CPG) which includes food & beverage goes beyond mere advisory; we are your strategic partners in achieving sustained growth and success. Contact CJBS today to harness our expertise for your business’s advantage. Understanding the https://www.bookstime.com/articles/what-is-opportunity-cost critical importance of cash management, we guide you in utilizing your funds efficiently.

• In this article, we will explore these mistakes and emphasize the importance of accurate and timely accounting.
• That could involve optimizing marketing campaigns for high-performing products, adjusting pricing strategies, or even discontinuing low-profit items.
• Despite experiencing a slowdown in growth over recent years, the consumer packaged goods industry is one of the largest industries in North America.
• Our team of sector-specific accountants will help you navigate industry challenges and provide tailored solutions for your accounting needs.
• Kruze’s team has worked with food startups, supplement providers, subscription fashion and more.

The balance sheet is not as exciting as the income statement, but it is where the accuracy in the income statement is derived. Inventory is constantly moving in the CPG sector, so any error in stock count can lead to incorrect financial statements that skew your understanding of product performance. Inaccurate tracking often stems from manual processes that are prone to human error. Navigating the complex world of CPG regulations is another area where a specialized accountant can cpg accounting save you headaches — and money. From FDA labeling requirements for ingredient disclosures and health claims to food safety regulations like the Food Safety Modernization Act, CPG businesses face strict compliance rules. Even California’s Proposition 65, which mandates warning labels for products containing certain chemicals, can catch brands off guard, leading to costly fines if not properly handled.

• It’s crucial for the early detection of discrepancies so you can make prompt corrections and prevent minor issues from snowballing into bigger problems down the road.
• Update accrual estimates based on actual business performance to reflect the most accurate financial position.
• Confido offers live accrual exhaustion, for enhanced visibility into trade promotion performance.
• So, USPS tends to hike rates yearly, but that doesn’t mean your cost to produce that lotion increased by 3%.
• Our ad hoc services also allow us to adapt quickly to any immediate needs or changes in your business.

Effective inventory management is critical for CPG businesses due to the perishable nature of many products. Unfortunately, many business owners struggle to keep track of their stock levels accurately. Failing to update the value of each SKU and not employing dedicated inventory management solutions can lead to inefficiencies and unnecessary costs. Adopting inventory management tools like Fiddle.io, DEAR, CIN7, or Stock and Buy can significantly improve accuracy and reduce wastage.

• Properly estimating and allocating these deductions to the correct accounting categories is essential for accurate financial reporting.
• The core principle of ASC 606 is that revenue should be recognized when a company satisfies a performance obligation by transferring a promised good or service to a customer.
• Based on those deals, you will see deductions occur from accounts receivable payments, sometimes without authorization.
• We offer flexible pricing models tailored to your needs, including fixed, hourly, or Full-time employee (FTE) based options.
• In either case, the engagement is led by its Connecticut-based team and executed by handpicked and intensively trained offshore accounting & finance professionals.
• Our solutions are geared toward streamlining decision-making in real time.
• However, because of production constraints, you are unable to fulfill the whole order.

Another consideration is your “nexus” — that is, a seller’s connection to a state. Without clear insight into incoming and outgoing cash flow, it’s easy to lose track of your finances. That can lead to bills and overhead piling up before you realize there isn’t enough cash readily available to pay them (known as a liquidity squeeze). By taking these steps, you’ll gain better clarity into your finances for proper record-keeping and make informed decisions based on accurate data. The Consumer Packaged Goods (CPG) industry thrives on a high-octane mix of rapid sales, tight margins, and constantly moving inventory. 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.

How to Avoid the Traps of Trade Spending:

For example, a CPG company produces 10,000 units of a product in January for $5 per unit. If the company sells 8,000 units in January and 2,000 units in February, the COGS for January should be calculated based on the 8,000 units sold, not the 10,000 units produced. They are all major Consumer Packaged Goods (CPG) industry players, facing unique financial statement challenges that require innovative solutions. Propeller Industries is not licensed by the state of California and the accounting services being offered do not require a state license.