Three financial checks before your next promotion or retail listing
By Philip Wilson CA | CFO On-Call Partner
A new retail listing or a strong month of online sales should be good news for a beverage business. Yet it can also leave you with a difficult question: why is the bank balance still under pressure?
The answer may sit in the costs of making and servicing those sales, the mix of products you are selling, or the stock you need to fund before customers pay.
During almost nine years in senior finance roles at SodaStream Australia, I saw how better cost classification and product margin reporting could help management make more informed commercial decisions. Smaller beverage businesses can apply the same discipline without needing a large finance team.
Here are three checks worth making before you commit to your next growth opportunity.
1. Look beyond the selling price
A carton sold through a distributor and the same carton delivered to an online customer can produce very different returns.
Start with what you actually receive after discounts and rebates. Then look at product and packaging costs, freight, fulfilment, payment fees, returns and any agreed promotional support. Use consistent definitions and take care not to deduct the same item twice.
You may already know your accounting gross margin. A separate contribution view can help you understand what remains after the additional variable costs of making and servicing a sale, before overheads and profit.
Try this: choose one major customer and ask your finance team to show its contribution after the relevant costs. If the answer is unclear, you have identified a useful place to start.
2. Check what extra volume will earn
A promotion can lift sales while reducing the contribution from every carton. The additional volume needs to compensate for that reduction before the business is better off.
For example, if contribution falls from $20 to $15 per carton, you need about one-third more volume to preserve the same total contribution, assuming other costs stay unchanged. Additional promotional costs or displaced full-price sales would increase that requirement.
This is an illustration, not an industry benchmark. The question for your business is whether the likely extra contribution justifies the costs, capacity and cash required.
Before approving a promotion or new listing, agree what a successful result would look like and when you will review it.
3. Map the cash gap before committing
Ingredients, packaging or finished goods may need to be paid for well before a customer settles the invoice. More sales can mean a larger funding requirement during that gap.
Map the expected payment dates for a proposed order, alongside the timing of customer receipts. Include the business’s existing commitments. Then test what happens if sales are slower or payment arrives later than planned.
A rolling short-term cash forecast helps you anticipate pressure, while a longer monthly view helps you plan for seasonality and larger commitments. Both become more useful when you compare actual cash movements with the forecast and update the assumptions.
Ask yourself: if we won a major listing tomorrow, would we know how much cash we needed to deliver it?
Give your next decision a clearer financial basis
These checks connect three questions that are often reviewed separately: what are we selling, what does it contribute, and when does it produce cash?
You do not need to analyse every product immediately. Start with a significant customer, a planned promotion or your next major stock purchase. Make the assumptions visible, investigate the largest uncertainties and use the findings to guide the decision.
Download the practical guide
Our eBook, Growing a Profitable Beverage Business, takes you through product and customer contribution, promotional decisions, stock funding and useful management reporting.
It includes worked examples, ten financial visibility questions and a practical first-month action plan to help you review the areas that matter most to your business.
Download your free copy: Growing a Profitable Beverage Business
Philip Wilson CA is a CFO On-Call Partner and fractional CFO. His experience includes senior finance leadership roles at SodaStream Australia and more than 14 years in Big Four audit across multiple countries.
