Clothing brand | Online, retail and international wholesale
Understanding what every sales channel really earns
Selling through an online store, physical shops and international wholesale gives a clothing brand several routes to market. It also creates a complicated financial picture. Each channel has different costs, and selling into different countries adds another layer.
We run this business’s outsourced finance function, bringing the everyday finance work, management reporting, forecasts and cash planning together. A major part of that work has been getting much closer to the costs behind its sales.
Getting underneath the headline numbers
The existing reporting did not give the business enough detail about its direct selling costs or how those costs varied between markets.
Warehousing, freight, duties and overseas sales taxes all affect what is left from a sale. When those costs are grouped too broadly, or estimated using large allowances, it becomes harder to understand the margin the business is actually making.
The timing matters too. A cost appearing in a different month from the related sale can make one month look stronger and another weaker, without reflecting a real change in performance.
The business needed a clearer, more consistent way to see what was happening.
Building the detail behind the reporting
We expanded the supporting calculations behind the monthly accounts, using detailed order information to build a more accurate picture of direct costs.
We account for those costs in the periods they relate to, including costs still to be invoiced and payments covering future months. That gives the business a more meaningful comparison between its sales and the costs of making them.
We also replaced broad allowances with calculations that reflect the underlying activity. This strengthened the forecasts across different regions and made the assumptions behind them easier to follow.
One monthly cost forecast came within half a percent of the actual figure. Under the previous approach, broad estimates and large buffers could leave the figures out by five figures.
Supporting the whole finance function
Our work extends well beyond producing the monthly reports.
We maintain the financial forecasts and cash flow models, coordinate with overseas tax representatives, and review the calculations behind commercial decisions.
That includes checking stock costs for sample sales and reviewing wholesale pricing across different regions. These details feed back into the wider financial picture, helping the business understand how its pricing, costs and sales activity fit together.
What changed
The business now has a more connected finance function and a stronger basis for planning.
Its reporting gives more detail about the costs behind revenue. Its forecasts rely on clearer calculations. Its monthly margins are less distorted by broad estimates or costs falling into the wrong period.
For the people running the business, that means a better starting point for conversations about pricing, regional performance and future sales. They can look beyond the turnover figure and understand more about what the business keeps.
Standout result
A detailed monthly cost forecast landed within half a percent of actual costs.