FMCG stands for fast-moving consumer goods. An FMCG distributor is any company that buys in bulk from FCMG companies, then resell to small retailers or sub-distributors. Well-known FMCG companies in Nigeria include Unilever, Nestlé, Nigeria Breweries, International Breweries, and The Coca-Cola Company.
As you already know, these types of business are inventory-based and as such, require a time-saving system to manage the movement of inventories in and out, while accounting for cash flow on a daily, weekly, or monthly basis.
Recently, we deployed a cloud-based accounting software solution for a client who is one of the major distributors in Nigeria Breweries and International Breweries, here in Lagos. So, if you’d like to know the scope of the project up to the financial reporting, these tips will give you first-hand information based on our experience and our excellent deliveries.
Deploying QuickBooks Accounting Software in a Wholesale or FMCG Distributor
The first step to deploying QuickBooks in this type of business is to gather the necessary financial data and inventory information at the beginning of the financial year or a chosen date.
- Customers and Receivable Balances: This will help you track all the amount owed by your customers or sub-distributors for previous supplies made.
- Suppliers and Payable Balances: Here, you can monitor all recent cash balances payable to the FMCGs, but sometimes, this may be recorded as credits depending on the situation during setups. We will discuss this later.
- Bank Accounts: Every inflow and outstanding have your bank account at the centre of the transactions, so its best practice to add your bank accounts and their respective balances to the system for reconciliation purposes.
- Inventories: This is the core of your distributorship business. Hence, it requires detailed and accurate input of your inventories – name, quantity on hand, the average cost of your inventories, and selling prices. Without this information, you are running a service-based account with your accounting solutions. Whenever we deploy QuickBooks solutions for inventory-based companies or FMCGs, we always advise them to adopt the one-off pain of a physical count because that is the only way to block loopholes in their inventory reporting. Going forward, the software will always deduct every sale recorded and add new purchases to display current balances.
- VAT Charges: By law, every business is mandated to charge VAT on sales of their products so they can remit all tax to the relevant tax authorities after accounting for claims. This is the reason you need to input VAT payables on previous sales recorded as a starting balance in the accounting software for proper reporting. And if there are other tax charges aside VAT, you can as well let us know.
- Fixed Assets: I am sure every FMCG distributor owns a truck or bus that conveys all inventories from the warehouse to point of supplies. In accounting, such useful property is tagged Fixed Assets and if there are assets like Land, Building, Office Furniture, etc., you are required to present these for proper recording – which could be at cost or fair value.