
$4M Company, $748 in the Bank: A CFO on CPG Cash Flow
A $4M company finished the year with $748 in the bank. A 100-store retail win would have run another brand out of cash in 5 weeks. Fractional CFO Scotty Palmer breaks down why profitable CPG brands run out of cash, and the numbers to fix first. Scotty Palmer is a CPA and fractional CFO who works with food and beverage brands, including a hot sauce brand, distilleries and breweries. His last corporate job was at Honey Baked Ham. He started his firm by helping a family friend's business that was profitable on paper but had no cash. He breaks a business down into 5 layers: cost of goods, overhead, working capital, pricing and the growth tax. Key takeaways: Profit isn't cash. Slow insurance payments, debt payments and owner draws left a $3.5 to $4M company with $748 [check] in the bank. Model a big retail win before you say yes. A distillery started in 10 stores instead of 100, the first POs funded the next round, and it's now heading to 54 stores. Go through distributor deductions line by line. One company had almost half a million dollars in deductions, about 12% of revenue. Cash conversion cycle: days to get paid, plus days inventory sits, minus days to pay suppliers. 50 to 70 days is pretty good. For late payers, try 2/10 net 30. Never rely on one co-packer. One brand lost its only cheese supplier, then lost Costco, and went from $2M to $600K overnight. Before you scale, hit at least 3 of these 4: 40 cents gross margin on every dollar, more current assets than current liabilities, 12+ months of consistent profit, and at least 4 months of cash runway. Get Scotty as your fractional CFO free for two weeks: callwithscotty.com


















