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. CJBS assists in selecting the optimal software solutions tailored to your specific operational needs, from inventory tracking to final product sales, ensuring ease of use for your team based on extensive client feedback. At some point, every brand needs to decide whether to manage accounting in-house or outsource it to professionals.
Data is everything—if it’s consistent
If you don’t know your true production costs, it’s tough to price your products right and protect your margins. Managing business accounting for CPG brands means investing in tools that give you the data—and insights—you need to make intelligent business decisions. Although categorizing transactions is essential in all businesses, it’s even more vital for CPG brands. A chart of accounts is helpful for giving investors insight into your company’s overall performance and financial health to make it easier to secure funding for your business during high growth periods. CPG companies can’t run effective operations without insight into their cash flow.
- A properly organized COA enables you to perform a robust business analysis and understand the financial levers at your disposal.
- Isolate the variables to determine what is impacting the earnings of the business.
- This CPG accounting guide will equip you to identify and avoid common accounting pitfalls and build resilient systems that fuel growth.
- If you’re ready to hand off the accounting so you can focus on sales, check out Accountfully for more details.
- This is especially true with consumers who own older versions of a durable good.
Services
- Discover how Settle’s Accounts Payable (AP) automation fosters robust vendor relationships for inventory-led success.
- 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.
- The Consumer Packaged Goods (CPG) industry thrives on a high-octane mix of rapid sales, tight margins, and constantly moving inventory.
- CPG companies that have adopted a zero-based mindset have identified up to 20 percent in indirect-spend savings in less than six months.
- This includes the cost of the materials used to produce the product, as well as any direct labor or overhead costs.
- Without clear insight into incoming and outgoing cash flow, it’s easy to lose track of your finances.
Learn how accurate AP forecasting and budgeting can improve cash flow management, optimize spending, and strengthen vendor relationships with our strategic guide. Punch partners with eCommerce businesses, offering bookkeeping and CFO consulting services. They work with customers to deliver rolling forecasts and real-time financial insights while modernizing their bookkeeping systems and time-tracking processes. LedgerGurus specializes in inventory, cost of goods sold (COGS), IMS implementations, sales tax, and more for growth-focused consumer product companies. Accounting is often referred to as the “language of business” because financial records and reports tell the story of a company’s financial health. 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.
- Interlinking a CPG company’s overall business strategy, business processes, and IT and ERP teams helps the company synchronize its SG&A transformation with its ERP system implementation.
- Marketing directly to consumers through social media is one of the most important ways businesses can reach out to their audiences.
- Consumers continue to purchase consumer packaged goods even during economic downturns, though they may hold off on buying durable goods during the same time.
- A Chart of Accounts is potentially one of the most boring yet mission-critical tasks you will do as a consumer-packaged goods (CPG) operator.
- Companies with low fixed costs (CPG industry) generally scale expenses as revenue grows.
- Combining AI & machine learning, together with human accounting and e-commerce experts, Finaloop replaces their accounting software & bookkeeper to give updated financials in real-time at a fraction of the cost.
Punch Financial
The real value lies in the ability to forecast each activity and understand spend to guide proper accruals that lead to accurate financials. Without the deep knowledge, you could be spending too much or too little or not have an awareness in a shift in these expenses. When trade planning, it’s crucial to consider and report the different types of trade spend as some may be able to be allocated below gross margin, such as administrative fees or merchandising costs. Lumping together trade spend will cause challenges for your business from a forecasting perspective especially when reflecting on historicals.
It’s not uncommon for some CPG companies to reach over 10% in invalid deductions. To improve your standards and procedures for data collection, use professional tools instead of simple spreadsheets, and automate where possible to avoid data entry errors. But sub-par corporate accounting practices won’t only make handling your finances harder to run your company today—it will also impact your ability to grow and thrive in the future. Since there can be high competition, consumer packaged goods companies often compete on price, which can affect margins. If operating margins are extremely low, it can mean companies are overspending on operating expenses, which may not be paying off or could have a longer-term benefit.
How to Streamline Your CPG Accounting and Procurement Processes
CPG stands for consumer packaged goods, which are products that are purchased frequently and used quickly by law firm chart of accounts consumers. These can include items such as food, beverages, cleaning supplies, personal care products, and more. Debt financing allows businesses to maintain full ownership while providing predictable repayment terms, tax advantages, and improved creditworthiness, making it a strategic choice for growth.
The real value of working with a CPG-focused accountant is the ability to anticipate challenges before they become obstacles by leveraging deep industry knowledge and a network of CPG-savvy cpg accounting contacts. The CPG industry is witnessing massive change in many aspects (do you know many CPG companies are increasingly going digital this year?). Whether you’re a seasoned veteran or a newcomer, navigating these waters can be challenging. They are all major Consumer Packaged Goods (CPG) industry players, facing unique financial statement challenges that require innovative solutions.
A Guide To Inventory Management for CPG
With so much variability in the CPG supply chain, precision is absolutely vital. Behind every successful cash flow CPG company lies a complex web of financial management, inventory valuation, and accounting processes. 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 bank statements with your accounting system’s records every month.
They also offer valuable insights for fundraising, capital investments, and other critical financial decisions. When I work with clients on COGS, I set up enterprise resource planning software. Then, we dive into inventory management tools, cost accounting methods, and automated procurement systems. These systems automate the process of tracking every cost involved in production, from raw materials to logistics. Beyond profit margins, activity ratios can also be important in the consumer packaged goods industry.
