Accounting for CPG, Manufacturing and Growth Businesses

From FDA labeling requirements for ingredient disclosures and health claims to food safety regulations like the Food Safety Modernization Act, CPG businesses face strict compliance rules. Even California’s Proposition 65, which mandates warning labels for products containing certain chemicals, can catch brands off guard, leading to costly fines if not properly handled. Expertise Accelerated offers high-quality, affordable offshore professionals resources that provide excellence in accounting, finance and supply chain management to its valued clients.

• For CPG companies, revenue recognition will be dictated by the shipping terms (i.e., FOB shipping destination or FOB shipping point).
• When you implement strong accounting practices, your products fly off the shelves and have sustained growth.
• In addressing their challenges, retailers and CPG companies have in many ways taken on parts of each other’s traditional role with varying degrees of success.
• Working together, they could create and execute more profitable business and promotion strategies, discover tactical opportunities through the year, and maximize return on investment.
• We can help you streamline your accounting processes, ensure compliance with industry regulations, and provide valuable insights into your financial performance.
• The validation process ensures that all deductions are legitimately based on agreed-upon trade deals and terms with customers.

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

First, consider implementing automation tools for repetitive tasks like data entry or invoice processing. Streamlining both accounting and procurement processes also allows for greater transparency within an organization by providing all stakeholders with real-time information about financial transactions. This makes it easier to work collaboratively across departments towards shared goals. By streamlining your accounting process, you’ll Legal E-Billing be able to gain better control over your finances and identify areas where you can save money. This will enable your company to make informed decisions that drive growth and profitability. Make leadership responsible for communicating the importance of teamwork between sales, accounting and finance when calculating accruals and managing deductions.

Marie Kondo Your Finances: 6 Steps to Declutter & Grow Your Business

Finally, for a gourmet chocolate brand looking to expand internationally, I’d leverage financial data to guide your scaling efforts. 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. WNS partners with leading retail and CPG organizations to build insights-led digital finance operations aligned with their business goals. Leveraging 20+ years of domain experience, advanced data and digital capabilities, and a robust partner ecosystem, we enable finance functions to drive hard bottom-line impact, improve free cash flow, plug leakages and enhance controls.

• However, because of production constraints, you are unable to fulfill the whole order.
• In contrast, as engagement with consumers becomes more prized, CPG companies are using technology to reduce the distance and build a connection with consumers.
• Inaccurate COGS can lead to mispriced products, shrinking margins, and poor financial visibility, which makes it difficult to identify where profits are lost or how to adjust pricing to maintain profitability.
• 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.
• By streamlining inventory management, we help you maintain the ideal stock levels, crucial for managing perishable goods effectively.
• Tap into our extensive collection of SOPs, guides and advice for CPG founders, leaders, and managers.Need an industry introduction?
• If you have questions about your trade spend approach or need some support with your financial operations, we’re happy to chat.

Overcoming Financial Statement Challenges in the CPG Industry

Recognizing and planning for the complexities of trade spend and revenue deductions are necessary first steps in establishing processes to manage this critical area of the business. 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 a categorization of your company’s general ledger for both the Income Statement and Balance Sheet. As required by income summary 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. CPG accounting isn’t just about crunching numbers; it’s the engine that keeps your business going.

• So, CPG accounting is all about tracking product costs, managing inventory, and making sure all financials are in order.
• That means COGS has already eaten 40% of your revenue; at 2.5x MER, that’s another 40% of your P&L.
• 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.
• Overstocking can lead to increased storage costs, while understocking can lead to lost sales and reduced profitability.
• Certain retailers’ inventory acceptance practices lead to numerous shortages and shortage reversals.

Finance

For CPG companies, revenue recognition will be dictated by the shipping terms (i.e., FOB shipping destination or FOB shipping point). EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

• Enabled by data and technology, our services and solutions provide trust through assurance and help clients transform, grow and operate.
• You can use your COA to create customized reports that streamline analysis and decision-making.
• Balancing revenue streams, managing expenses, and satisfying both investors and tax authorities can be daunting.
• If you don’t know your true production costs, it’s tough to price your products right and protect your margins.
• Retailers are rethinking the location, size, purpose and design of their stores, so they can maintain footfall while supporting e-commerce effectively.

Start with your sales reps and brokers, and then contact the customer’s AP department for proper routing directions. MyPocketCFO is committed to empowering CPG entrepreneurs with advanced financial tools and expert support. Our platform simplifies complex financial processes, enabling you to focus on scaling your business with confidence. Companies with high operating leverage tend to do better in bull markets and periods of high growth, as profits grow cpg accounting faster than revenue.