CPG companies may earn sales through multiple revenue streams like direct-to-consumer, wholesale, and e-commerce, each at different terms. While effective for revenue diversification, this can make it difficult to ensure accurate revenue recognition.
As CPG businesses scale and see the volume of sales grow, this can only become more challenging as teams need to accurately track the timing and amount of each transaction
Improper inventory management can be a costly mistake for CPG brands. Inventory is often one of the biggest assets on a CPG company’s balance sheet. But, businesses in the industry often struggle with its management and knowing how to record its value correctly.
CPG businesses strive to have enough inventory on hand to take advantage of customer demand without over-purchasing and ending up with shelves of unsold inventory
Trade spend and promotions tend to be sizable expenses for CPG brands, requiring a sophisticated accounting approach to maintain accurate records and meet financial reporting requirements.
While trade spend helps brands increase exposure and promote their goods, teams also need to engage in diligent accounting to make informed decisions. Teams need a way to budget and forecast spend across channels and track and analyze the financial impact of different promotional activities
The CPG industry can be quite capital-intensive. Businesses that don’t properly manage inventory can find their capital tied up in unsold goods, and dealing with unfavorable payment terms from suppliers can put a pinch on cash flows in the near term.
Brands need to properly manage working capital across inventory, accounts payable, and accounts receivable to support ongoing operations and have the cash to fuel further growth initiatives
CPG businesses can leverage emerging technologies and software systems to their advantage, but it can be difficult to know exactly what solutions to implement and how to ensure they integrate properly with existing systems.
From ERP systems to accounting software and data analytics solutions, teams need to choose tools that are compatible with their current software to avoid data silos that only create further inefficiencies
