In such a fast-paced environment, it’s essential to have efficient accounting and procurement processes in place. Streamlining these processes can help CPG companies stay ahead of the competition. CFOx recently worked with a rapidly growing Consumer Packaged Goods (CPG) company that sells its products online and through retailers across the country. Due to recent growth, the CPG-client needed to improve their accounting processes, procedures, and systems to solidify its financials and streamline month-end closes. Accrual accounting gives you a broader picture of your real-time finances and allows you to make better decisions about sales tactics and market trends including better cashflow monitoring.

How can I ensure that we are optimizing our tax impact while also maintaining regulatory compliance?

• Perhaps you want to adopt more eco-friendly packaging and shipping methods — but these often come with higher price tags.
• When looking into the data presented by a CPG accountant, you can make informed decisions rather than guesswork.
• Our experts help minimize tax liabilities through effective planning, assist with audits, and manage all necessary documentation to avoid potential penalties.
• Analyzing sales trends and operational costs empowers us to identify the best markets to enter and adjust your supply chain strategy to minimize costs and increase your reach.
• This analysis is pivotal in managing your finances effectively and planning for future financial requirements.

This analysis is pivotal in managing your finances effectively and planning for future financial requirements. I’ve spent years working with CPG brands, as an advisor and angel investor, and I’ve seen firsthand the transformation possible with a CPG business. The right accountant can help you spot opportunities and avoid costly mistakes. Keep reading to learn the ins and outs of why partnering with adjusting entries a CPG accounting expert is nonnegotiable. We can provide strategic financial advice and guidance to help you make informed decisions and achieve your long-term business objectives.

• Furthermore, streamlining these procedures facilitates transparency across all levels of the organization.
• Dig into any line item on the income statement or balance sheet, and make sure everyone understands it – not just finance and accounting.
• Keeping a close eye on your P&L lets you know whether you’re actually making money.
• With high upfront costs for inventory and demanding production schedules, cash flow is often tricky for CPG brands.
• These expenses are related to discounts between the product manufacturer and the retailer that are used to impact sales to the end customer.
• And they also need to make their offers compelling to an algorithm, so the consumer is made aware of them.

Key Financial Documents for CPG Brands

Secondly, efficient processes enable quicker decision-making in purchasing inventory or sourcing raw materials which eventually enhances supply chain management for a more efficient production process. cpg accounting This allows companies to meet customer demands faster while keeping track of inventories accurately. One of the significant challenges in financial reporting is managing the differences between accrual-based accounting for investors and cash-based accounting for tax purposes.

The Importance of Streamlining Your CPG Accounting and Procurement Processes

At some point, every brand needs to decide whether to manage accounting in-house or outsource it to professionals. For early-stage brands, you might be able to handle basic bookkeeping yourself, but as you grow, you’ll likely need the help of a CPA or accounting firm that specializes in CPG. As a CPG brand, you’ll also need to stay on top of various tax requirements. This can include sales tax, income tax, and payroll taxes if you have employees. 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. This type of accrual is when your current trade promotion budget is based on what you earned in the previous budget period.

They are all major Certified Bookkeeper Consumer Packaged Goods (CPG) industry players, facing unique financial statement challenges that require innovative solutions. Keeping a close eye on your P&L lets you know whether you’re actually making money. ‍Contact us today to see how you can improve your Trade Promotion Management and accounting. A customer orders a given quantity of product using master case as the unit of measure (UOM), but you ship the product on a mixed pallet.

• We know that managing inventory and supply chain costs are some of your biggest concerns in the manufacturing industry.
• Below, we’ll look at some of the best practices CPG companies should use to set themselves up for success.
• Behind every successful CPG company lies a complex web of financial management, inventory valuation, and accounting processes.
• So, even if business goes slow in some months, you get an idea of how much you can make.
• You’ll have multiple partners  —  each with their own promotions, spend calendars, order volumes, and deductions.

Historical Accrual

Isolating marketing as a % of sales, MER, or ROAS, or however you choose to assess marketing efficiency, will quickly enable you to identify trends and seasonality within your business. A poorly organized COA will prevent you from understanding how the variables of your business move together and may make detrimental decisions. When your COA is well organized, you can quickly access metrics for financial reporting and generate financial statements with less effort. Move accounting work to the pros, and get more time and resources for your core business activities. And it’s not just about loans or investments; you have to keep financial records accurate for tax purposes.

Best Practices for Managing Accruals

This reserve is an estimate and should be recorded based on historical trends, industry trends, or other substantiated data. The Financial Accounting Standards Board (FASB) has issued Accounting Standards Codification (ASC) 606, which provides guidance on revenue recognition for all companies, including CPG companies. 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. Generally, revenue is recognized when goods are sold, but CPG companies often offer discounts, promotions, and other incentives to encourage sales, which can make revenue recognition more complex.

Outsourcing your accounting and financial reporting requirements to Expertise Accelerated allows you to concentrate on expanding your CPG business and delivering exceptional customer service. Your P&L statement (also called an income statement) is a snapshot of your revenues and expenses over a given period of time. It shows how much money you’re making, where it’s coming from, and where it’s going.