Companies with high fixed cost structures (SaaS, Manufacturing) can grow revenues without growing expenses as much, meaning the net income expands faster. 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 well-organized COA speeds up bookkeeping and posting of GAAP accrual entries and other adjustments, making month-end reconciliations easier to complete. A poorly organized COA will prevent you from understanding how the variables of your business move together and may make detrimental decisions. A properly organized COA enables you to perform a robust business analysis and understand the financial levers at your disposal.
CPG Accounting Industry Pitfalls
Together, we’d develop a pricing structure that balances competitive pricing with healthy profit margins, helping you stay profitable and competitive. I’ve helped brands connect with trusted vendors that provide better rates and support long-term growth for CPG brands. At Expertise Accelerated (EA), a trusted CPA firm, we follow a team-based approach when you outsource accounting services to us. This ensures that your bookkeeping needs cpg accounting are always met with accuracy and efficiency.
Understanding CPG Finance: The Importance of Managing Deductions
A slotting fee can be defined as an amount paid to retailers by CPG companies to have their products featured on its store shelves. Retailers recognize consideration received for slotting fees as a reduction of cost of goods sold. Our cost effective resources trained by our US-based management team will enable you to verify 100% of retailer chargebacks.
Linking Trade Spend Analysis to Financial Performance
- In order to spend wisely, you need to be able to anticipate deductions coming in from every possible avenue, from the deals made by sales reps and brokers to deductions taken for prior-year events.
- 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.
- Propeller Industries is an enterprise-grade financial partner that empowers the most ambitious companies to reach their full potential.
- For instance, one of the biggest advantages of working with CPG is access to better financing deals.
- Resources like government websites, industry publications, and tax professional newsletters can inform you about the latest developments.
- Neglecting this can lead to distorted profitability analysis and challenges in expense management.
- 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.
Consumer packaged goods generally have short lifespans and are intended to be used quickly. The name originates in their packaging, which traditionally is easily recognizable wrapping that consumers can quickly identify on store shelves. We specialize in executing business transformations, driving improved business operations, helping carve–outs become self-sufficient and creating platforms for roll-ups. A customer orders more product than usual to take advantage of a trade deal. If the customer cannot sell all of the product and it ages Bookkeeping for Veterinarians in their system, a deduction may occur.
Trade Spend Analysis: Optimizing Your P&L for Better Financial Health
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%. Think if you have 60% margins (pretty good) and a 2.5x MER (pretty good). 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.
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. The problem with this accounting method for CPG companies is that it doesn’t track unpaid invoices, which makes it difficult to get a complete picture of your finances. These startups are taking advantage of the convenience, security, and portability of crypto assets for vendor and contractor payments, smart contracts, decentralized applications, and more. Increasing numbers of startup companies are using cryptocurrencies for operational, transactional, and investment purposes, and the wide range of these transactions creates a need for crypto accounting. Building a startup is hard enough – but layering on the complex regulatory environment and difficult purchasing cycles of the healthcare industry adds a whole new level of complexity. And your online bookkeeping needs to be both fast and accurate, so you can carefully manage your burn rate as you develop your drug.
Yet, most brands struggle with optimizing their pages, accounting leaving money on the table. 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. 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.
How We Work – Our Process
In this chapter, I’ll break down the key elements of accounting for a CPG business, the important financial statements you’ll need, and how to manage costs like trade spend and deductions. We know that managing inventory and supply chain costs are some of your biggest concerns in the manufacturing industry. At CJBS we partner with you to determine best practices for your business. By staying up to date on the most recent technology, we can provide you with optimal solutions tailored to your business needs. Managing business accounting for CPG brands means investing in tools that give you the data—and insights—you need to make intelligent business decisions. It allows businesses to access expert services while reducing costs and improving efficiency.