On one hand,studiesreveal a rise in logistic costs for CPG companies owing to the e-commerce boom. On the other hand, small CPG startups areholding their ownin an industry dominated traditionally by large players. This is another area where you can just get started – have the team meet to understand the process for managing discounts and allowances. A handful of expenses fit between gross revenue and net revenue on the income statement. These expenses are related to discounts between the product manufacturer and the retailer that are used to impact sales to the end customer.

• When a coupon that is redeemable against a future purchase is issued as part of a sales transaction, revenue is recognized in the amount of the consideration received less an amount deferred relating to the coupon.
• Fast-moving consumer goods are cheaper products that sell quickly such as milk, gum, fruit and vegetables, soda, beer, and common drugs like aspirin.
• Enable account managers to simulate uplifts in volumes while planning promotion intensity and trade investment to find the ideal mix.
• Let’s assume the joint advertisement will be displayed in a magazine and the CPG company has had direct advertising arrangements with that magazine in the past.

CPGs can be contrasted with durable goods , an industry term for merchandise that is not consumed or destroyed in use and is generally not replaced until the merchandise https://www.bookstime.com/ experiences a problem. CPG solutions boost transparency and simplify the production, warehousing, distribution, marketing and sales of consumable goods.

Data Analytics

Retailers recognize consideration received for slotting fees as a reduction of cost of goods sold. Integrate data from non-financial systems to gain access to production, inventory and sales data. Use a Rough-Cut Capacity Planning approach to enable production managers to set the production plan, aligning capacity and demand quickly. Unify financial figures with strategic and operational data, cpg accounting providing a rapid understanding of the profitability of each product line, from brand level down to individual SKU. Consumer Packaged Goods or Fast Moving Consumer Goods is a very competitive industry. Brands are fighting for shelf-space and the time to market for product launches is shrinking. At the same time fluctuation in raw material prices and economic uncertainty are increasing.

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.

Is our approach to discounts and allowances good for business?

Educate your brokers and establish clear communication and expectations between sales and brokerage firms. For CPG companies, your future balance sheet drives your future cash needs, like capital expenditures and raw material procurements. So, you should regularly forecast your next two years of cash flow to ensure adequate lead times and liquidity. Based on your models, you can address capital needs sooner rather than later. This type of planning is imperative because securing a loan or raising equity takes time — time you wouldn’t necessarily have in the middle of an unexpected liquidity crunch. Because cash basis accounting doesn’t give you holistic oversight of your finances.