CPG Accounting & Finance Key Questions

CPG Accounting & Finance Key Questions

cpg accounting

Whether a client’s business is in their kitchen or they have multiple co-packers, engagements can be as simple or complex cpg accounting as needed. Inventory-related bookkeeping needs that most general bookkeepers aren’t able to serve. Unlike traditional general bookkeepers, Accountfully has in-depth industry experience and can therefore act as a strategic partner. While the health and beauty market may always be unpredictable, your businesses spend doesn’t have to be. With Medius, health and beauty brands can avoid costly surprises and stay on top of costs, forecasts and cashflow with real-time visibility into key operational data that affect the bottom line. Now your AP team can go home and rest easy knowing exactly what’s pending and what’s paid, they know exactly what they’re spending and how much they’re saving with automation.

cpg accounting

A chart of accounts is a categorization of your company’s general ledger for both the Income Statement and Balance Sheet. As required by any accounting software, they include your cash on hand, inventory information, revenue sales, equipment, accounts receivable, accounts payable, and other types of business transactions and assets. 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.

Key Accounting Considerations for Consumer Packaged Goods (CPG) Companies

Bob has 25 years of finance and accounting leadership experience serving companies from the Fortune 500 to the middle market. Prior to 8020 Consulting, Bob led finance and accounting as the Vice President of Finance for Ardmore Home Design, a high https://www.bookstime.com/ growth wholesale luxury furniture company. He has leadership experience with TechnipFMC (oil and gas equipment and technology), Panasonic (in-flight entertainment and communication), Hawker Beechcraft (general aviation) and Ford Motor Company.

  • Consumer packaged goods (CPG) are items used daily by average consumers that require routine replacement or replenishment, such as food, beverages, clothes, tobacco, makeup, and household products.
  • Be sure to adequately staff your accounts receivable and deductions teams, so they can provide timely and relevant data that enables management to effectively evaluate trade spend.
  • The Infosys BPM master data management solutions creates a robust and responsive master data foundation.
  • Below, we’ll look at some of the best practices CPG companies should use to set themselves up for success.
  • This mountain of information can create a challenge for deduction teams tasked with sorting and validating the data.
  • The visibility of most manufacturers is limited to retail-level transactions, preventing the benefits of supply chain visibility, cost containment, increasing customer demands, and globalization.

As specialists in the Consumer Products industry, the Branded CPG Group at Anchin has the unique combination of professional accounting experience and industry knowledge to help you reach your business goals. The Branded CPG Group at Anchin has worked together with fast growing consumer packaged goods brands for decades and has had the good fortune of working with many companies through their successful acquisition. Today we work with more than 100 brands, many of which started working with us in their first years of business and have grown tremendously since then. They have benefitted from leveraging our experience and guidance to best navigate attracting and retaining key employees, capital raises, successful exits or other desired transitions.

Demand & Supply Specialist (Supply Chain)

From small startups to large organizations, our solutions give businesses a modern way to win at finance. CPG brands are faced with tremendous pressure to control spend and identify cost savings to ensure profitability. With Medius, consumer packaged goods manufacturers, distributors, and retailers can achieve transparency into their entire invoice-to-pay workflow. Inventory management is another important accounting consideration for CPG companies.

cpg accounting

We understand the complicated inner workings of your business, from daily operations to the larger financial challenges you face, and we have developed our practice to meet your varying needs throughout the life cycle of your business. Trends in the health and beauty industry are changing faster than ever, forcing brands to adapt on a moment’s notice. Meanwhile, health and beauty manufacturers are faced with the burden of sourcing packaging and raw materials amidst supply chain disruptions and the rising costs of goods. To properly account for returns, a business needs to maintain accurate records of all returns, including the reason for the return, the date, and the value of the returned product. This information is important for tracking patterns of returns and identifying potential issues with products or the sales process.

Target Marketplace

Dig into any line item on the income statement or balance sheet, and make sure everyone understands it – not just finance and accounting. This information takes time to set up, but once you do, it pays dividends in the long run. It will help you keep your business ledger organized and reduce the work necessary to make sense of your finances. 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. Without knowing where your cash is coming from, where it’s going, and how much you have on hand at any given moment is essential for understanding other important metrics of your business, including the profitability of your products.

  • Expect your sales reps to acknowledge, review and understand any deductions that come through.
  • Gain a 360-degree view of the customer across all sales channels and touchpoints.
  • When establishing an inventory reserve for the first time, you will debit the inventory reserve related account within the Cost of Goods Sold (COGS) section of the P&L and credit your inventory reserve account on the Balance Sheet.
  • With Medius, health and beauty brands can avoid costly surprises and stay on top of costs, forecasts and cashflow with real-time visibility into key operational data that affect the bottom line.
  • This reserve is an estimate and should be recorded based on historical trends, industry trends, or other substantiated data.

CPG manufacturers are devising strategies to improve responsiveness in supply chain management and gain visibility into real-time demand signals from the retail channels. The visibility of most manufacturers is limited to retail-level transactions, preventing the benefits of supply chain visibility, cost containment, increasing customer demands, and globalization. CPG manufacturers must reduce costs, consolidate products and operations, and build responsiveness to enable e-business strategies.

Balance headcount with manufacturing requirements

This mountain of information can create a challenge for deduction teams tasked with sorting and validating the data. This activity can be extremely time-consuming and may include filtering hundreds of line items to extract meaningful financial intelligence for sales and finance teams. To help build appropriate insight on spending expectations, create a framework of trade deals, promotional calendars and forecasting models, and share it across the organization.

Fixed assets that were the literal key to delivering their world changing product. This consumer goods startup was built on the passions of the Co-Founders, namely health, well-being and sustainability. They were determined to make a big impact on the world, but needed to get a handle on their finances (numbers) first. As a leading management consulting firm, we bridge the gaps between finance, technology, operations, https://www.bookstime.com/consumer-packaged-goods and risk management, for companies to thrive during every lifecycle stage. Deduction support provided by the customer can include overwhelming amounts of product data that must be reconciled against certain promotional events and contracts. Hosted by industry experts, our webinars offer a unique opportunity to interact with thought leaders and gain valuable insight to uplevel your financial planning.

Inventory reserves are used to account for potential losses on inventory and are recorded as a contra asset account on the balance sheet. The amount of the discount should be clearly documented and recorded in the company’s financials in a designated account within the revenue section of the P&L. These questions are centered on good behaviors in tracking the cash flow of a CPG business. While cash flow is important in any industry, it is particularly important in CPG because these companies sell to large powerful companies like Walmart and Costco, who will be aggressive in setting the terms for their contracts. 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. Accurate and consistent information ensures accurate forecasting and helps prevent overspending.

What is CPG accounting?

Consumer Packaged Goods (CPG) companies have unique accounting considerations due to the nature of their business. CPG companies typically have high volumes of transactions, which can make accounting challenging.

Lipstick, blush, eye shadow, and foundation are cheaply sold in individual packages, and after using the products, consumers either discard or recycle the empty vessels. CPG companies may be subject to sales tax, income tax, and other taxes depending on their location and the nature of their business. CPG companies must comply with tax regulations and accurately account for any taxes owed.

Accenture & Board: cutting-edge Planning and Analytics in the CPG Industry

You can create a better roadmap, based on tight data sets that guide efficient growth and scaling. Your data will tell you everything currently happening in your business, from your most popular products to underperforming sales channels. The need to reduce costs and achieve process efficiencies in the F&A space drives the CPG industry to outsource the
Finance & Accounting (F&A) function. Infosys’ offerings in this space address issues such as the high costs of F&A services, need for high-quality service, and need for automation through the implementation of technology enablers.

  • You can start the cash flow forecast today by managing and understanding what is going in and out of the company’s bank account.
  • As required by any accounting software, they include your cash on hand, inventory information, revenue sales, equipment, accounts receivable, accounts payable, and other types of business transactions and assets.
  • Infosys’ trade promotions management (TPM) solution maximizes effectiveness across the TPM process – planning, execution and monitoring promotions.
  • My best advice here is again to just get started – significant improvements can happen in small steps with each monthly close.
  • Without knowing where your cash is coming from, where it’s going, and how much you have on hand at any given moment is essential for understanding other important metrics of your business, including the profitability of your products.

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