CPG Accounting Industry Pitfalls

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. Update accrual estimates based on actual business performance to reflect the most accurate financial position. 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.

Navigating Complex COGS Calculations

Our strategies ensure you have the liquidity to meet immediate operations and invest wisely for future growth. This type of accrual is when your current trade promotion budget is based on what you earned in the previous budget period. Everything you earn in the current budget period funds trade promotion next year. This document tracks the movement of money in and out of your business over a certain period.

Nailing retail distribution: 5 Tips for summer-focused brands

Keep reading to learn the ins and outs of why partnering with a CPG accounting expert is nonnegotiable. Armed with this knowledge, you can make informed decisions about resource allocation. That could involve optimizing marketing campaigns for high-performing products, adjusting pricing strategies, or even discontinuing low-profit items.

Follow These Data Best Practices When Switching to NetSuite

Consumers continue to purchase consumer packaged goods even during economic downturns, though they may hold off on buying durable goods during the same time. Returns and allowances can be estimated based on historical data, industry trends, and estimates of future returns/claims. For CPG companies, revenue recognition will be dictated by QuickBooks the shipping terms (i.e., FOB shipping destination or FOB shipping point). By submitting this form, you agree to receive recurring automated promotional and personalized marketing text messages (e.g. cart reminders) from us at the cell number used when signing up. Transitioning from QuickBooks Desktop to QBO can present a learning curve, especially for users accustomed to the desktop interface.

Running a CPG brand comes with financial challenges that most businesses don’t face. The need to track COGS precisely, manage perishable inventory, handle seasonal fluctuations, and navigate the sustainability conundrum makes CPG accounting a whole different game. And if you’re trying to scale, getting a handle on these complexities is imperative. Our team of experts has years of experience in the CPG industry and can provide customized accounting solutions that fit your business needs. We also understand the unique financial accounting and reporting requirements of Consumer Packaged Goods (CPG) companies.

• FlowFi offers a highly curated network of expert CFOs and accountants that they match with their customers so they get accurate books and actionable financial intelligence.
• Rather than simply moving all existing processes—both good and bad—onto the new S/4HANA platform, CPG companies can target specific value pools for process redesign, simplification, and standardization.
• Navigate the dawn of a new year with insights on cash flow management, as we unveil strategies to empower CPG brands for the challenges and opportunities that lie ahead.
• Then use those same inflows and outflows to map out the next week, month and quarter.
• It’s even worse on marketplaces, where many states have enacted marketplace facilitator laws.

QBO offers advanced financial reporting and analytics features that are invaluable for CPG companies. QBO is popular with CPG business owners, and understanding its specific benefits and potential pitfalls can help you decide if it’s the right match for your business. Discover how auditing your purchase order process can lead to improved efficiency and accuracy in your supply chain. Figuring how to find the right accounting firm for your company can be difficult. Discover how Pattern Brands and Flakes used alternative funding strategies to scale their e-commerce brands profitably.

This is because many CPG companies have developed streamlined production facilities with the advantage of economies of scale to lower the overall cost of goods sold and create a higher gross profit margin. The road map should lay out a timeline for building the capabilities needed to realize the CPG company’s strategy and balancing the ERP implementation workload. Overall, the road map will have a clearer focus, better success metrics, and a tighter scope. 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.

• Consumer packaged goods, or CPGs, are goods used daily by average consumers.
• If you don’t know your true production costs, it’s tough to price your products right and protect your margins.
• Whether you’re self-manufacturing or working with co-packers, keeping accurate financial records is essential to understanding your business’s performance, making informed decisions, and managing cash flow.
• For SAP-based systems, CPG companies can optimize processes by making them “fit to standard”—that is, conforming them to SAP standards.
• Accurate and consistent information ensures accurate forecasting and helps prevent overspending.

After cpg accounting 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. Typically the most common process for reporting accruals, this is defined as a rate per case or percent of revenue that’s ‘earned’ on everything that you sell in the current budget period.

• This guide will explain the accounting issues that arise for CPG brands during the complex sales and marketing function to retailers and distributors, and best practices for CPG accounting to improve accuracy and save time.
• Discover 7 actionaable tips on how to prepare for a trade show, including pre-planning and effective promotion strategies for success.
• We offer specialized tax planning and compliance services designed for CPG manufacturers.
• Running a CPG brand comes with financial challenges that most businesses don’t face.
• This eliminates guesswork and guarantees you have the right amount of stock on hand to meet customer demand, which prevents lost sales opportunities and overstocking issues.

These can include goods such as food, beverages, clothes, Bookstime makeup, toilet paper, and other household products. Get accounting & finance operators with an average of 14+ years experience to help solve critical challenges quickly & on budget today. This is an area of the income statement that is full of activity for a tangible product-driven company. As people understand the activity better – what is in and what is out and how it is calculated – it can lead to great insight particularly in an inflationary environment with constant change. Then have a meeting to review and understand the detail behind the accounts with everyone up to the CFO. Any issues can be resolved with others throughout the organization, and cleanup can happen over time.