CPG Finance Requires Untangling Interconnected Drivers
Ryan Williams, Founder of Northall, highlights that CPG finance is about untangling a web of interconnected drivers like pricing, promotions, input costs, and channel mix. Developing frameworks to decompose variance and articulate their operational causes is essential for influencing executive decisions.
Northall specializes in serving consumer packaged goods (CPG) brands ranging from $3 million to nearly $100 million in revenue. They offer services from basic bookkeeping and financial statements to FP&A, financial modeling, and help with fundraising. Founder Ryan Williams previously worked in investment banking at Houlihan Lokey and as CFO of a venture-backed coffee brand. CPG finance is complex due to multichannel sales (DTC, marketplaces, wholesale), each with its own pricing, payment terms, and fees. Companies often struggle to reconcile data from these various sources, leading to unclear financials. A centralized financial management platform can help integrate data and automate aggregation. Driver-based models are essential for CPG companies to navigate evolving market dynamics and consumer habits. These models enable real-time cost analytics, optimize operations, and improve forecasting. Leading CPG companies have reduced costs by 20% through streamlined processes, better resource allocation, and automation. Financial modeling for CPGs should include revenue projections, cost analysis, cash flow forecasts, and growth scenarios. Key performance indicators (KPIs) to monitor include Customer Acquisition Cost (CAC) by channel, cash flow needs, and inventory turnover. Trade spend ratio, which evaluates the efficiency of promotional spending, is also crucial.
