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Connect financial statements to inventory planning for better cash flow and growth

Posted on by Amanda Levine

Cash flow pressure in Consumer Packaged Goods (CPG) and eCommerce businesses often results from inventory decisions made at the wrong time, in the wrong quantity, or without financial context.

When inventory management operates separately from financial statements, businesses either overstock and lock up working capital or understock and lose revenue momentum. In both situations, the problem is usually the lack of connection between inventory decisions and the P&L numbers.

This guide shows you how to connect your financial statements to inventory planning, so inventory decisions strengthen cash flow rather than quietly drain it.

Why should you connect financial statements to inventory decisions?

You should connect the two because your financials tell you exactly what you can afford to buy, which products are worth restocking, and when you’re about to run out of cash.

Without that connection, you’re guessing. And guessing is expensive. Inventory distortion (stockouts plus overstock) costs global retailers $1.73 trillion in 2025, according to IHL Group. Yet 34 percent of SMBs still track inventory manually or not at all.

When you connect your financials to your inventory decisions, you buy the right products in the right quantities. You avoid tying up cash in stock that won’t move. You know when you have room to order more and when you don’t. 

Then, you can plan your financing around your actual cash position instead of reacting to a crisis. 

How to read your P&L before you place purchase orders

Your P&L should answer one question before any major order: do we have the margin and momentum to support this buy?

Here’s what to look at:

  • Gross margin: A healthy eCommerce range sits between 45 and 70 percent. According to NYU Stern data, general retail averages 33.18% and specialty retail 35.30%. If your margin is healthy and stable, you have room to invest in inventory. If it’s declining, find out why before placing another order.
  • COGS as a percentage of revenue: Should stay consistent month over month. An unexplained increase of more than 2 to 3 percent signals rising input costs, freight changes, or a product mix shift toward lower-margin items.
  • Operating cash flow: Positive net income doesn’t mean cash is available. If your P&L shows a profit but your cash flow statement shows negative operating cash flow, money is locked in inventory or receivables. Adding more stock in that position compounds the problem.

One practical framework that ties your P&L data directly to purchasing is Open-to-Buy (OTB) planning. 

It tells you exactly how much new inventory you can afford to buy in a given period without overextending your cash.

The formula is:

OTB = Planned Sales + Planned Markdowns + Planned End-of-Month Inventory – Beginning-of-Month Inventory

Say you’re planning $50,000 in sales next month, expect $2,000 in markdowns, want $10,000 of inventory left at month’s end, and you’re starting with $20,000 already in stock. 

Your OTB is $42,000. It means that’s the maximum you should spend on new inventory this month.

If your planned sales drop to $30,000, your OTB shrinks to $22,000. 

That’s the point. It turns your financial data into a hard purchasing limit instead of a loose guideline.

Stop and wait before placing a large PO (purchase order) if you see gross margin declining, COGS growing faster than revenue, or inventory levels rising faster than sales velocity. 

For eCommerce sellers building this habit from scratch, EcomBalance offers monthly bookkeeping that ensures your P&L is clean, current, and ready to guide every purchasing decision.

Ways to turn gross margin insights into smarter inventory allocation

Gross margin tells you how profitable a product is. But to make smarter inventory decisions, you need to know which products are worth putting your money behind and how much.

Two frameworks help with this:

Use GMROI to compare products fairly

Gross Margin Return on Investment (GMROI) tells you how much gross profit you earn for every dollar invested in inventory.

GMROI = Gross Profit ÷ Average Inventory Cost

A GMROI above 1.0 means you’re making money on that stock. Target above 3.0. Use it to compare products directly and allocate more budget to what’s working hardest.

Rank your products with ABC analysis

Once you know your GMROI by product, ABC analysis helps you act on it:

  • A products (20% of SKUs, 80% of gross profit): Stock aggressively. These are your priorities.
  • B products (30% of SKUs, 15% of gross profit): Maintain, but don’t over-invest.
  • C products (50% of SKUs, 5% of gross profit): Cut back or clear out. They’re tying up cash without contributing much.

Also, watch for any product that hasn’t sold in 90 days. The longer slow-moving stock sits, the more it costs you in storage, insurance, and tied-up cash. Clear it out before it becomes a liability.  

How to fund purchase orders without straining cash flow

Even with clean financials and solid purchasing decisions, there’s still a timing problem. You may pay for inventory months before revenue comes back.

The typical CPG cycle: 

  • Pay manufacturer’s deposit.
  • Wait 60 to 120 days for production and shipping.
  • Hold inventory for 30 to 60 days.
  • Then sell to a retailer on Net 60 terms.

That’s a cash conversion cycle of 150 days or more, with your cash locked up the entire time. 82 percent of small business failures involve cash flow problems.

Here are some common funding options to bridge that gap:

funding comparison chart

One option worth knowing specifically for CPG brands is Kickfurther’s Co-Op model. Rather than taking on debt or diluting ownership, Kickfurther connects brands to a community of marketplace buyers who offer inventory financing on a consignment basis. 

Brands access $20,000 to $1,000,000 per order, and payment only starts as inventory sells. Because it’s structured as consignment, there’s no debt added to your balance sheet and no equity given up.

If cash flow is holding back your next order, see how Kickfurther works for CPG brands and check if your brand qualifies.

Common mistakes to avoid when you connect financials and inventory

Connecting your P&L to your purchasing decisions reduces risk, but only if you avoid the following patterns that can undermine the whole system:

  • Ordering based on instinct instead of data: Gut feel is how dead stock gets created. Funko Pop over-ordered collectibles in 2022 and destroyed over $30 million in product in 2023.
  • Booking inventory directly to COGS at purchase: Under accrual accounting, inventory is a balance sheet asset until it sells. Expensing it at purchase makes your P&L unreliable as a planning tool.
  • Ignoring COGS at the SKU level: Blended margins hide a lot. A brand can show a 45 percent overall margin while individual SKUs run at 18 percent. Know your numbers per product.
  • Skipping inventory reconciliation: When physical counts don’t match your records, COGS is wrong, margins are wrong, and your P&L can’t guide purchasing decisions.
  • Mixing up profit and cash flow: A profitable P&L doesn’t mean cash is available. Amazon holds payouts for days or weeks after a sale is recorded. Always check your cash flow statement before placing an order.

Tools and systems that connect accounting, inventory, and cash flow forecasting

Once your purchasing decisions are grounded in your financials, you need systems that keep that data accurate and connected at all times.

Here are the key tools that help:

  • QuickBooks Online and Xero: The standard accounting platforms for eCommerce. Both produce the P&L, balance sheet, and cash flow reports you need and integrate with most inventory tools.
  • A2X: Syncs sales, fees, and COGS from Amazon, Shopify, and other marketplaces directly into QBO or Xero automatically.
  • Cin7 Core: Built for multi-channel brands with 50 or more SKUs. Two-way sync with QuickBooks and Xero keeps inventory and accounting data aligned.
  • Inventory Planner: AI-driven purchasing recommendations at the SKU level for inventory demand forecasting and OTB planning.

All of these tools are only as good as the books behind them. A dedicated eCommerce bookkeeping service ensures your financial data is accurate, closed on time, and ready to act on.

Final thought

Getting your financials and inventory in sync is one thing. Having the cash to act on what your numbers are telling you is another.

That’s where Kickfurther comes in. We help CPG and eCommerce brands fund inventory without taking on debt or giving up equity. You get up to $1,000,000 per order and pay nothing until your inventory sells. Many Co-Ops fund within 24 hours.

Stop letting cash flow hold back your next order. Schedule a call with our team and let’s talk.

Frequently asked questions (FAQs)

Below are a few common questions about connecting financials to inventory planning:

What financial metrics should guide purchase orders?

The core metrics: inventory turnover ratio (target four to six times per year), Days Inventory Outstanding (DIO), Cash Conversion Cycle (CCC), gross margin by SKU, GMROI, and current ratio (1.2 to 2.0 before committing to a large order).

Simplify your purchase order process by keeping these numbers clean, current, and easy to act on.

How often should I review financials before I place orders?

At a minimum, go through your full P&L, balance sheet, and cash flow statement every month. Try to close your books by the 15th so you have clean data before you make any buying decisions that month. 

Before any major PO, check current cash, outstanding payables, and expected inflows over the next 60 to 90 days. Two to three months before peak season, run a full demand forecast.

Can better inventory decisions improve cash flow?

Yes, and faster than most founders expect. When you stop over-ordering slow sellers, that cash is freed up immediately. Preventing stockouts on your best products means you stop losing sales to competitors. 

Also, when you improve your inventory turnover from three to six times per year, you cut the time your money is sitting on a shelf in half.

About the Author: This blog post was contributed by our partner EcomBalance, the go-to bookkeeper for eCommerce businesses.

Common Inventory Mistakes CPG Brands Make (And How To Avoid Them)

Posted on by Amanda Levine

Most brands that hit $300K-$1M in revenue run into the same inventory challenges. These aren’t failures; they’re predictable growing pains. Here’s what to watch for.

Mistake #1: Ordering just-in-time when you should be thinking ahead

What it looks like: Waiting until you’re almost out of stock to place the next PO. Ordering exactly what you need for the next 60 days, nothing more. Operating on a ‘we’ll figure it out when we get there’ basis.

Why it hurts: When you’re reordering reactively, you lose negotiating power with suppliers. No volume discounts. No flexible terms. You’re paying more per unit right when growth should be lowering your costs. Plus, if lead times stretch (and they always do), you risk stockouts during your best sales periods.

How to avoid it: Build a rolling 6-month inventory forecast. It doesn’t have to be perfect—just directionally right. Order ahead when you can, especially before peak seasons. Think about inventory as a strategic asset, not just an operational task.

Mistake #2: Tying up all your cash in one big PO

What it looks like: Spending 70-80% of your available cash on a single inventory order. Having no cushion for marketing, hiring, or unexpected opportunities. Feeling cash-strapped right after placing an order.

Why it hurts: The most expensive inventory decisions aren’t about overordering; they’re about sacrificing growth because all your cash is locked up waiting for products to sell. When opportunities come (a retailer wants a test order, a wholesale lead converts, Amazon recommends you for a promotion), you can’t take advantage because your money is tied up in inventory that won’t sell for 60-90 days.

How to avoid it: Leave at least 30-40% of your working capital available after placing a PO. If you can’t afford to do that and still order the inventory you need, it’s a signal that you should explore external funding options rather than stretching your cash dangerously thin.

Mistake #3: Accepting bad supplier terms because you need product now

What it looks like: Paying 100% upfront because you don’t have negotiating leverage. Accepting longer lead times than you’d prefer. Skipping quality checks or rushing production to save time. Ordering smaller quantities at higher per-unit costs.

Why it hurts: When you’re desperate, suppliers know it. You end up with worse pricing, worse terms, and more risk. And if quality suffers because you rushed, you’ll pay for it in returns, reputation damage, and lost customer trust.

How to avoid it: Build relationships with your suppliers before you’re in crisis mode. Negotiate terms when you’re in a strong position (like right after a successful order), not when you’re scrambling. If you’re consistently in ‘urgent’ mode, that’s a signal your planning or capital structure needs to change.

Mistake #4: Treating all SKUs the same

What it looks like: Reordering everything equally, regardless of sales velocity. Not tracking which products are actually driving profit. Keeping slow-moving inventory in stock ‘just in case.’

Why it hurts: Not all SKUs are created equal. Some move fast, some sit. When you treat them the same, you end up with too much of the slow stuff and not enough of the winners. This ties up cash in dead inventory while your best-sellers stock out.

How to avoid it: Run an ABC analysis:

  • A items (top 20% of SKUs that drive 80% of revenue): Always keep these in stock
  • B items (steady but not stellar): Order predictably but don’t overstock
  • C items (slow movers): Order minimally or consider discontinuing

Mistake #5: Saying no to growth because timing doesn’t line up

What it looks like: Turning down wholesale opportunities because you can’t afford the PO. Passing on promotional placements because inventory won’t arrive in time. Saying ‘maybe next quarter’ to strategic partnerships.

Why it hurts: The opportunities that come at inconvenient times are often the best ones. Retailers don’t wait. Promotional slots don’t stay open. If you’re consistently saying no because of inventory timing or cash constraints, you’re not operating at your full potential.

How to avoid it: Build optionality into your capital structure before you need it. Know what funding sources you’d tap if the right opportunity came up. Don’t wait until you’re desperate. Set up relationships and understand your options in advance.

Mistake #6: Assuming you can bootstrap forever

What it looks like: Pride in ‘never taking on debt.’ Viewing external capital as a weakness, not a tool. Growing slower than you could because you’re waiting for revenue to fund the next order.

Why it hurts: There’s nothing wrong with bootstrapping in the early days. But at a certain point, self-funding becomes self-limiting. Your competitors who have access to capital can move faster, take bigger swings, and capture market share while you’re waiting for cash to free up.

How to avoid it: Recognize that smart founders use capital strategically. Inventory funding, in particular, isn’t debt. It’s aligning your payments to sales performance. The goal isn’t to avoid all external capital; it’s to use the right capital at the right time to accelerate growth without giving up equity or overextending.

See the pattern here?

Here’s what ties all of these mistakes together: They’re reactive decisions made under pressure. The brands that scale cleanly are the ones that think about inventory before it becomes a bottleneck. They plan ahead, build relationships, and understand their capital options before they’re desperate. You don’t need to solve all of this overnight. But recognizing these patterns early means you can make strategic choices instead of scrambling.

Here’s what to do next

If you’re seeing yourself in 2-3 of these scenarios, it’s worth thinking about how your capital structure could give you more flexibility.

If you’re a US brand with trailing 12-month revenue under $200K, you may not be ready for Kickfurther funding YET, but we work with tons of wonderful partners from funding options to fulfillment and everything in between. See if one could be a fit for you! And when the time is right, we’d love to help you add consignment inventory funding to your capital stack.

A Win-Win-Win for Growth: Introducing Kickfurther’s New Partner Referral Program

Posted on by Amanda Levine

At Kickfurther, we believe partnerships should multiply opportunity, not complicate it.

That’s why we’re excited to announce our new Partner Referral Program, built to reward every level of partner, from agencies to national brokers.

With two earning tracks, you choose what fits best for your business:

  1. Flat Payout Track: Fast, simple, and transparent. Earn up to $12,000 per funded referral
  2. Tiered Revenue Share Track: For high-volume partners who want to share in long-term success. Earn up to 20% of Year 1 revenue as your referred brands grow with guaranteed payouts after onboarding

A structure where everyone wins!

No matter which path you take, every referral is a win for you AND your clients:

  • You get paid when your client gets funded
  • Your clients get flexible, non-dilutive capital that scales with them
  • We all grow together

Kickfurther partners also gain access to exclusive co-marketing opportunities, joint campaigns, and dedicated support to make collaboration seamless.

Ready to grow together?

Get your questions answered and learn more about how to join the program. Book a call with our Partnerships team.

How a Financial Model Can Help You Respond to Tariffs

Posted on by Amanda Levine

Feeling the squeeze from new import duties? You’re not alone. Many businesses are grappling with the challenge of figuring out how to fit tariffs into their financial forecasts. If you’re staring at your spreadsheet wondering exactly how to add tariffs into a financial model, this should be a helpful resource. Follow along to explore the impact to your costs, profitability, and overall financial performance.

Tariffs can seem like an unexpected hurdle, especially if your business relies on international suppliers and global supply chains. One day your costs are predictable, and the next, a new policy or regulation throws a wrench into them. 

With an orderly approach, you can account for these additional costs to make smarter decisions and reduce uncertainty. The good news is that this process will actually strengthen your financial model, so let’s go ahead and get started.

Table of Contents

  • Understanding Tariffs and Their Impact
  • Before You Touch Your Financial Model: Prep Work
  • How to Incorporate Tariffs into a Financial Model: Step-by-Step
  • Beyond the Spreadsheet: Strategic Responses to Tariffs
  • Conclusion

Understanding Tariffs and Their Impact

Before you start editing your spreadsheets, it’s important to grasp what tariffs really are. Knowing these basics helps you see how they ripple through your financial statements.

What Exactly Are Tariffs?

Tariffs are essentially taxes imposed on imported goods. Governments utilize them for different reasons, from protecting domestic industries from foreign competition to simply generating new revenue. Sometimes, they’re used as a lever in trade policies and negotiations. There are several types of tariffs you might encounter.

Ad valorem tariffs are calculated as a percentage of the imported goods’ value. Specific tariffs are a fixed fee per unit, like per kilogram or per container. Compound tariffs combine both ad valorem and specific duties. 

You can usually find detailed information on specific tariff rate structures through government resources like the U.S. International Trade Commission’s Harmonized Tariff Schedule, which details how tariffs are applied to lots of different things.

Why Do Tariffs Suddenly Matter So Much?

Tariffs aren’t a new consideration for companies who move physical products internationally. They frequently crop up in the news when the geopolitical landscape shifts and trade relationships change between countries. They can change rapidly, so it’s important to be agile if they’re a major concern for you.

This volatility makes proactive financial planning and analysis (FP&A) even more critical. Today’s supply chains are incredibly global and interconnected, and long supply chains are vulnerable to frequent changes. 

How Tariffs Mess With Your Bottom Line

The most direct impact of tariffs is an increase in your Cost of Goods Sold (COGS). If you’re importing raw materials or finished products, a new tariff can add directly to those costs. So, you need to determine whether you can or should absorb the higher cost and accept the hit to your gross margin and overall profitability.

Other options include passing the new cost increase on to your customers through your pricing, which will in turn impact customer demand. Obviously, these aren’t simple questions, and the answers depend largely on your specific market, customer base, and the price elasticity of your products.

Understanding complex dynamics like these is a challenge, but it’s important for an effective finance strategy. Increased costs will definitely show up in your financial reporting, so it’s great to take a proactive approach and control what you can.

Before You Touch Your Financial Model: Prep Work

Randomly changing the numbers in your model without laying the groundwork can lead to inaccuracies, and a little preparation will go a long way here. 

Identify Affected Products and Components

First, pinpoint exactly which products and inputs are subject to new tariffs. Get specific and list them out. 

If you’re in manufacturing, this might mean a complete review of your entire bill of materials. If you’re a reseller, you just need to verify the origin and classification of what you’re importing. 

It’s easy to overlook smaller components that could also face new duties, so a comprehensive check is a good idea. This diligence will pay off through quick, surgical updates to your model.

Research Current and Potential Tariff Rates

Tariff rates aren’t static; they can change due to legislation or policy changes from multiple governments. They can be delayed, suspended, or modified, and some eventually expire. You need to find the current tariff rate for your specific goods and their countries of origin.

You should also try to understand potential future changes. Stay up-to-date with industry news, trade publications, and insight reports. In the U.S., the U.S. Customs and Border Protection can help you understand your regulations and risks.

Understand Your Supply Chain Vulnerabilities

Where do your critical supplies originate? If you rely heavily on a single country or region, you’re less exposed, but a change can deeply impact your costs. If you have an extensive and complex global supply chain, map it out thoroughly.

This exercise will help get you thinking about diversification and alternative options if they’re needed. Understanding your vulnerabilities puts you in a position to mitigate the impact well when tariffs happen.

Talk to Your Suppliers

Your suppliers are the front line with you when tariffs are imposed. Keep the lines of communication open and understand how they are responding. Will they absorb some share of the cost, or will they pass it all on to you through price increases?

Getting this information directly and early provides a better vantage point than waiting to see how the costs flow through on your financial statements. Some suppliers might help arrange alternative sourcing strategies that are beneficial to all parties, especially if you have long-term contracts. Keeping the dialogue open will help you keep an accurate forecast for accounts payable.

How to Incorporate Tariffs into a Financial Model: Step-by-Step

When your research is finished, it’s time to start making changes. This section focuses on how to build tariffs into your financial model. We’ll break it down into manageable steps to help.

Step 1: Adjust Cost of Goods Sold (COGS)

This is typically where tariffs have the most direct impact, and there are a couple of ways to show this in your financial model.

If you’re working in a spreadsheet, you might need to directly increase the unit cost of each affected material or product. Back up your model before you start, and keep clear records about the changes you make and the time periods they cover in your model.

Another approach is to add a new line item specifically for tariffs paid within your COGS formula. This tactic can provide better visibility into the total impact of tariffs, but it can also cloud your understanding of unit economics.

If you’re using a premium financial model software like Forecastr, you can apply the tariff as an adjustment to your unit costs and then report it either way, or both ways.

Whichever method you pick, ensure that it’s clear, consistently applied, and supported by sound controls to verify that your actual costs match your projected costs.

Step 2: Model the Impact on Sales Price and Demand

If COGS goes up, you now face a strategic decision about your pricing. You can absorb the increased costs, lowering your gross profit margin. Or you can pass the increase along through your pricing to maintain your margin. So, you’ll need to gauge price elasticity carefully.

How sensitive are your customers to price changes? A significant price hike might lead to a drop in customer demand and sales volume. This is where scenario analysis becomes an invaluable tool for you. Model a scenario where you absorb the cost, another where you pass it all on, and perhaps a third where you share the burden with your customers. Make an educated guess about the impact of each option on demand and volume.

This will show you the potential effects on revenue, gross profit, and net profit, helping you make an informed decision about which alternative presents the smallest downside for your operation. You will still need to measure your metrics carefully and adjust your assumptions over time to reflect reality, but you’ll be able to make the most informed decision about how to manage your pricing strategy and control your position in the market.

Step 3: Forecast Changes in Inventory

Tariffs can also significantly affect your inventory strategy and working capital requirements. If you know tariffs are coming, you might decide to stockpile larger quantities of inventory. This can help you dodge some costs, but it can also tie up your short-term cash and increase your inventory holding costs, such as storage, insurance, and the risk of obsolescence.

Use your financial model to anticipate changes like these. If you pre-buy, inventory will spike on your balance sheet, and your cash outflow will be front-loaded. Alternatively, if tariffs make something prohibitively expensive, you might choose to reduce stock, which would free up cash but negatively impact product availability.

Step 4: Revisit Your Gross and Net Profit Margins

Ultimately, tariffs almost always put pressure on your profit margins. After adjusting COGS and potentially sales revenue, you should recalculate your gross margin (Revenue – COGS / Revenue). Observe how much it changes due to the tariffs. This revised gross profit will then flow through to your income statement, affecting your operating profit and net profit margins.

Understanding this squeeze is fundamental to grasping the true cost of tariffs to your business’s overall financial performance. If profits fall significantly, that can influence investment decisions, expansion plans, and everything from your marketing budget to your hiring plan. 

Without this step, you’re making decisions without a complete picture of the implications.

Step 5: Cash Flow Implications

Don’t overlook cash flows. Tariffs are usually paid when goods clear customs as a direct cash outflow. If you are pre-buying inventory, that can represent a substantial upfront cost. And if you are absorbing those costs, your profit margins will decrease, leading to less cash generated from operations over time.

Your cash flow forecast should reflect the timing and amount of these tariff-related cash movements. Managing working capital requirements becomes even more critical as changes in inventory and accounts payable terms can strain liquidity. Accurate cash flow forecasting is vital for operational stability.

Beyond the Spreadsheet: Strategic Responses to Tariffs

Working tariffs into your financial model is an important first step. However, it’s only part of the solution. You should also think strategically about how your business will adapt to this new cost environment, considering how the changes impact your long-term resilience.

Your financial model can help you evaluate different strategies and understand the best way to mitigate the impact of increased costs.

Here are some common strategies you might consider:

Absorb Tariff Costs
Business absorbs the tariff-related costs, reducing margins.

If tariffs from a specific country make your products too expensive, it might be time to look for alternative suppliers in other countries. This is known as supply chain diversification, a key strategy for managing global supply chains. It’s not always a quick or easy process, but it can be a long-term solution to reduce tariff risk and additional costs.

Pros: Maintains customer price points; potentially preserves sales volume.
 Cons: Reduces gross margin; lower profitability; profits fall.
 Key Financial Model Inputs: Higher COGS; unchanged ARPU

Pass Costs to Customers
Implement price increases to cover tariff costs.

Pros: Preserves gross margin.
 Cons: Risk of lower customer demand; loss of competitiveness.
 Key Financial Model Inputs: Higher COGS; higher revenue per unit.

Alternative Sourcing
Find suppliers in non-tariff or lower-tariff countries.

Pros: Reduces direct tariff-related costs; diversifies supply chains.
 Cons: Time-consuming; potential quality issues; new logistics costs.
 Key Financial Model Inputs: New supplier costs; shipping rates; lead times.

Product Re-engineering
Modify product to change tariff classification or reduce dutiable content.

Pros: Potential for lower tariff rate; long-term cost savings.
Cons: R&D costs; implementation time; may not be feasible for all products.
 Key Financial Model Inputs: R&D expenses; new component costs; updated COGS.

Negotiate with Suppliers
Request suppliers to share a portion of the tariff burden.

Pros: Can mitigate some cost increases without direct customer impact.
 Cons: Suppliers may refuse or increase prices later; relationship strain.
 Key Financial Model Inputs: Adjusted COGS based on negotiation outcome.

Strategic Stockpiling
Buy inventory before tariffs are imposed or increased.

Pros: Avoids immediate higher costs on stocked goods sold.
 Cons: Increased working capital requirements; storage costs; risk of obsolescence.
 Key Financial Model Inputs: Inventory levels; holding costs; cash outflow timing.

Engaging with Trade Policy

While it might seem out of reach for very early or small businesses, staying informed about trade policy developments is always a good idea. Sometimes, there are processes for requesting exemptions or exclusions from certain tariffs. Industry associations often lobby on behalf of their members and can also provide valuable insights.

The Office of the U.S. Trade Representative (USTR) publishes announcements and newsletters about tariff actions and exclusion processes. Staying aware of these can also help you manage your compliance risk.

Communicating with Stakeholders

Whatever happens, and however you decide to respond to tariffs, always maintain transparency with your key stakeholders. If tariffs are impacting your business and financial performance, your stakeholders should be the first to know. 

Explain the situation to investors, lenders, and even your customers (especially if price increases are necessary). Show them you have a plan and you are addressing changes proactively.

Demonstrate that you have worked through the financial implications and are exploring strategic responses. Clear communication builds trust, especially during periods of uncertainty. This transparency is important for everyone involved and might even impact individuals’ decisions around personal wealth management. Keep those relationships on good terms.

Navigating Uncertainty Around Tariffs

Figuring out how to respond to tariffs in a financial model is much more than a simple numbers exercise. Do it right, and you can build a resilient business capable of adapting to the shifting winds of global trade policies.

By carefully analyzing the impact on your costs, pricing strategies, cash flows, and margins, and by exploring different strategic responses, you’ll put your company in the best possible position.

A financial model is an indispensable tool to understand these new realities and how they affect your operations. It can help you manage your working capital requirements and guide your company forward through uncertainty. When you understand your options, you can make informed decisions with confidence.

This is a guest post from our partner Forecastr. Forecastr helps founders build world-class financial models and achieve stress-free finance. Get in touch with us to add a finance expert to your team.

 

Author: Logan Burchett, Co-Founder and COO of Forecastr

How to Protect Your Margins Amid Rising Tariffs: Tips for CPG & Consumer Brands

Posted on by Amanda Levine

The Tariff Era Is Here. Your Next 90 Days Are Mission-Critical.

The U.S. recently announced sweeping new tariffs:

  • 125% on Chinese imports are effective immediately
  • 10% on all other countries for the next 90 days

If you import packaging, components, or finished goods your margins just got tighter.

For consumer brands already battling rising costs, this latest wave of tariffs means the next 90 days will shape your 2025 performance.

At Kickfurther, we teamed up with ShipBob to create a founder-friendly survival guide and to prepare you, but here’s the bottom line:

Raising prices is just one lever. The strongest brands are building multi-layered strategies to protect their margins without sacrificing growth.

What’s the latest on Tariffs?

U.S. tariff policy has undergone repeated dramatic changes over the last few weeks. As of now: 

  • Most imported goods are subject to a 10% “baseline” reciprocal tariff; 
  • Higher tariffs for imports from dozens of countries are currently paused through July 8; 
  • Higher tariffs for most Chinese goods are not paused, and Chinese goods are now subject to new additional 145% tariffs in addition to pre-existing tariffs [multiple layers of tariffs that can equal up to 245% for some products]; 
  • Currently some kinds of goods – notably some kinds of consumer electronics and pharmaceuticals) – are exempt from the new U.S. tariffs, but the administration has indicated it will announce new tariffs for these products in the coming weeks. 
  • Starting on May 2, Chinese goods valued at less than $800 and shipped through the international postal network will be subject to their own tariff rates – either a 30% tariff or a flat fee per shipment of $25 (from May 2 – May 31) and $50 (from June 1 and after). 

The tariff situation is very fluid, with the Trump administration announcing changes to tariff rates and policy on an almost daily basis. The administration may very likely announce new tariffs for consumer electronics and pharmaceuticals, adjust previously announced tariff rates, and seek trade deals with various countries.

What CPG Brands Are Feeling Right Now

In our April 2025 CPG Tariff Impact Survey:

  • 51.3% of brands said they’ve already been affected by the new tariffs.
  • 63.4% said pricing and margins are feeling the most pressure.
  • 41.5% said tariffs have significantly increased their cost of goods sold (COGS).
  • 65.9% are planning to raise prices but that leaves a lot of room for competitive advantage for brands that can avoid doing so.

The reality? Brands across home goods, apparel, food & beverage, and beauty/personal care are all being hit. No category is immune.

Margin Protection Playbook for the Next 90 Days

1. Renegotiate With Suppliers Now

Supplier relationships are one of your most powerful margin-protection levers but only if you act early. Waiting until costs spike further could leave you with little negotiating power.

What to do:

  • Lock in longer-term contracts now while costs are still semi-predictable. Offer volume commitments in exchange for price stability or improved payment terms.
  • Explore alternative materials that avoid tariffs for example:
    • Switching from imported aluminum packaging to domestic paperboard.
    • Exploring bio-based or recycled materials produced locally.
  • Consider tiered pricing structures and negotiate a price floor and ceiling based on tariff scenarios to build in flexibility.
  • Be radically transparent with your suppliers. Many of them are facing the same cost pressures and want to retain good customers. A collaborative approach can yield creative solutions like shared freight costs or bundled discounts.

Bonus Tip: Audit all supplier contracts, not just finished goods. Tariffs can sneak in via secondary inputs (packaging, inserts, caps, etc.).

2. Diversify Sourcing Fast

Sourcing diversification is no longer just about “China +1”,  it’s about building operational resilience in a volatile world.

Useful Strategies:

  • Identify nearshore suppliers in Mexico, Canada, or Latin America, especially given USMCA tariff exemptions on compliant goods.
  • Partner with sourcing agents or consultants who already have vetted factory relationships in tariff-free regions. This can shave months off your transition timeline.
  • Pilot dual sourcing: Start by allocating 10-20% of production to a secondary supplier. This gives you leverage in negotiations and provides a backup if geopolitical risks escalate.
  • Map your supply chain vulnerability: Which SKUs are most tariff-exposed? Prioritize diversification there first.

Smart brands aren’t just looking at price. They’re weighing risk, speed, and supply chain continuity.

3. Reevaluate Domestic Manufacturing

17.1% of brands in Kickfurther’s survey are already exploring domestic production or adjusting timelines to mitigate tariff exposure.

How to Approach This:

  • Start with final assembly, kitting, or packaging stateside. This minimizes imported components while leveraging domestic “Made in USA” value perception.
  • Analyze freight savings vs. labor cost increases. For heavy or bulky products, domestic production could offset higher wages simply by avoiding overseas shipping and tariffs.
  • Consider contract manufacturers with excess capacity. Many U.S.-based facilities are seeking CPG partnerships due to shifting global supply dynamics.
  • Leverage the marketing upside: Consumers often associate domestic production with higher quality, sustainability, and ethical labor, all of which can command a price premium.

Reality Check: Domestic manufacturing won’t fit every product, but partial reshoring can offer big wins on margin control and brand positioning.

4. Fund Inventory Strategically to Avoid Overpaying

Timing your inventory purchases around tariff implementation dates is one of the most controllable margin-protection tactics, if you have access to working capital.

Best Practices:

  • Place larger, forward-looking orders now, locking in tariff-free inventory for the next 3-6 months of demand.
  • Use sales forecasting tools to model demand spikes and avoid overbuying deadstock. Look at year-over-year data alongside emerging market trends.
  • Partner with flexible inventory funding platforms like Kickfurther to avoid traditional debt pitfalls. No fixed payments when your cash flow might be volatile.

With Kickfurther, brands can:

  • Buy large inventory runs when pricing is most favorable often before tariffs take effect.
  • Align repayment with sell-through performance preserving cash flow flexibility.
  • Avoid stockouts that could force premium, last-minute airfreight orders (which obliterate margins).

Ways ShipBob Can Help

As a reminder, ShipBob offers: 

  • Intelligent product distribution and replenishment through our Inventory Placement Program in the US
  • DDP shipping for international orders
  • Partnerships and introductions we can make to companies across the ecommerce and supply chain ecosystem

Helpful Resources

For the most reliable, up-to-date information, we suggest going straight to the government sources. Below, we share links to the most recently issued guidance and documents:

Final Thought: The Next 90 Days Matter Most

Tariffs are the new reality but how you respond will define your brand’s trajectory.

Most brands will raise prices. Smart brands will build flexibility, resilience, and funding strategies to protect their margins and their customer relationships.

Need help navigating the next 90 days?

Download the by Kickfurther and ShipBob for actionable strategies, funding solutions, and sourcing best practices.

In the meantime, Kickfurther and ShipBob will continue to monitor the ever-changing landscape closely and help you navigate these challenges as they unfold.