CPG Key Accounting Accounting Services for CPG Businesses

In 2019, accretive growers demonstrated a 5.0 percentage-point differential in organic growth by pulling the right commercial levers and gaining market share within their category (up from 4.6 percentage points in 2018). Compared with dilutive growers, accretive growers delivered a 0.6 percentage-point differential in organic growth as a result of efficient execution. In fact, more than one-quarter of the companies in our database were accretive growers that achieved organic growth and margin expansion at the same time (Exhibit 2). The data were extracted from company annual reports and complemented by panel data on overall category growth by geography during fiscal years 2016–19. By adjusting our analysis for mergers and acquisitions (M&A), foreign-exchange effects, and inflation, the model enables like-for-like evaluation of real organic growth over the period.

Additionally, streamlined financial operations allow for easier access to financial data when making strategic decisions. When you choose emerge Natural Sales Solutions for your CPG key accounting needs, you gain a trusted partner committed to your brand’s financial success. With an understanding of the natural products industry and our personalized approach, we provide brands with the financial guidance they need to thrive.

Partner with emerge Natural Sales Solutions Now!

An ERP-enabled SG&A transformation is best executed in a three-phase timeline that includes quick wins and focuses on specific value levers and business processes. CPG companies should develop a detailed digitization road map and governance structure for their business transformation that will be enabled by their ERP system. A distinct view of the technology elements needed to unlock value for the business translates into clearer, tighter business requirements for the technology implementation.

• As a general rule, FMCG refers to products that consumers use (almost) every day.
• Raising the prices for products could compensate for factors such as inflation and increased transportation costs, but it might not be the best answer.
• In summary, the CPG industry is a complex and fast-paced environment that demands efficient accounting and procurement processes.
• As demand scales up or down, so does the system, enabling easier, faster and more efficient order-taking.
• If you don’t know what products are selling fastest and in what markets, you risk falling behind.
• 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.

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. Before we can talk about the next section, we need to talk about and explain operating leverage. So, USPS tends to hike rates yearly, but that doesn’t mean your cost to produce that lotion increased by 3%. Isolate the variables to determine what is impacting the earnings of the business. The main reason I prefer to organize the COA this way is to enable effective financial analysis & forecasting.

Target direct consumer relationships using the abundance of available data

Many CPG companies have been renovating the brand equity of their large brands, imbuing them with more purpose, more originality, and more relevance. Particularly in the context of COVID-19, delivering on the brand’s promise is necessary but not sufficient. Consumers, especially younger consumers, want brands that understand them and share their values.

The Financial Accounting Standards Board (FASB) has issued Accounting Standards Codification (ASC) 606, which provides guidance on revenue recognition for all companies, including CPG companies. The core principle of ASC 606 is that revenue should be recognized when a company satisfies a performance obligation by transferring a promised good or service to a customer. Learn more about GEP’s procurement and supply chain solutions for consumer packaged goods (CPG) industry. If you have questions about your trade spend approach or need some support with your financial operations, we’re happy to chat.

Track the trade spend like a hawk

As events seem to shift faster and with greater intensity, leaders are starting to realize the value of advanced analytics. CPG businesses no longer have the luxury of reacting to events as they occur; it is now imperative to have insights into the future and to have the ability to analyze data in real time. This surge effectively catapulted the CPG sector three years into the future — and jump-started the previously nascent efforts at direct-to-consumer (DTC) growth strategies. Many companies, however, were caught off-guard by the pace of change, resulting in inadequate DTC commerce models, less-than-optimal customer experience and anemic returns on DTC investment. 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.

• As a leading management consulting firm, we bridge the gaps between finance, technology, operations, and risk management, for companies to thrive during every lifecycle stage.
• Large CPGs acquired small brands successfully in the last few years, often accelerating their growth and helping them over the $100 million scale barrier.
• The new five-part model, which requires building or strengthening 16 individual capabilities, looks like this (Exhibit 5).
• The importance of execution will only grow in the decade ahead, given the influx of new competitors, new technologies, and the accelerated pace of market disruptions.
• They are also partnering with predictive analytics firms to gauge a consumer’s lifetime value even before that consumer buys a product from the company.

Digital (data, mobile, and the Internet of Things [IoT]) has been revolutionizing how consumers and brands learn about and engage with each other. They will need websites cpg accounting to sell online and will need to develop a presence on popular e-commerce sites. CPG data analysis will be a guiding force as businesses undergo these transformations.