Here is a pattern we see constantly at early-stage CPG brands. The founder closes a round, promises monthly financial updates, and then sends a QuickBooks P&L export attached to a brief email. The investors glance at the top and bottom lines and file it away. Nobody gets real value from the exchange.
Board-ready financials are not about producing more numbers. They are about producing the right numbers with the right context so that both you and your investors can make better decisions, faster.
The Core Financial Package
Every monthly financial update should include four components:
1. Income Statement (P&L) with Budget Comparison
Your P&L should show:
- Actuals for the current month on an accrual basis
- Budget or forecast for the current month so investors can see performance against plan
- Variance (actual vs. budget) in both dollars and percentage
- Year-to-date actuals vs. year-to-date budget for the broader trend
Break out revenue by channel (DTC, wholesale, Amazon) and show gross margin by channel if possible. Cost of goods sold should reflect true landed costs, not just manufacturer invoices.
Below gross profit, operating expenses should be categorized clearly: payroll, marketing and advertising, fulfillment and shipping, rent and warehousing, software and tools, professional services, and general administrative.
2. Balance Sheet
The balance sheet shows the financial position at month-end:
- Assets: Cash, accounts receivable, inventory (broken out by raw materials, finished goods, and in-transit if applicable), prepaid expenses
- Liabilities: Accounts payable, accrued expenses, deferred revenue, debt
- Equity: Contributed capital, retained earnings
Investors pay close attention to cash, AR, inventory, and AP. These working capital items tell the story of how efficiently you are managing the business.
3. Cash Flow Statement
The cash flow statement reconciles your net income to actual cash movement. It separates cash flows into:
- Operating activities: Cash generated or used by the core business
- Investing activities: Capital expenditures, equipment purchases
- Financing activities: Debt draws, equity raises, loan repayments
For CPG brands, operating cash flow is almost always less than net income because of inventory purchases. You are buying product before you sell it. That is normal and expected. But investors want to see that you understand and manage this dynamic.
4. KPI Dashboard
Beyond the financial statements, investors want to see the key performance indicators specific to your business. For CPG brands, the most important metrics include:
- Gross margin by channel: Are your DTC, wholesale, and Amazon channels each profitable at the gross margin level?
- Customer acquisition cost (CAC): What does it cost to acquire a new DTC customer?
- Lifetime value (LTV): What is a customer worth over their relationship with your brand?
- LTV:CAC ratio: Is your unit economics sustainable? Investors generally want to see 3:1 or better.
- Burn rate: How much cash are you consuming per month?
- Runway: At current burn, how many months of cash do you have left?
- Inventory turnover: How quickly are you selling through your inventory?
- Days sales outstanding (DSO): How long does it take to collect wholesale receivables?
The Narrative: Numbers Need Context
This is what separates a good financial update from a forgettable one: the narrative.
A two or three paragraph summary at the top of your update that explains:
- What happened this month. The key business events that drove financial performance. A new retailer launch, a major promotional campaign, a seasonal spike or dip.
- What the variances mean. If you missed your revenue target by 15%, explain why. Was it a delayed wholesale shipment? Lower-than-expected DTC conversion? Do not make investors guess.
- What is coming next month. Any known events that will impact financials. A large inventory purchase, a new hire, a planned promotion.
This narrative transforms your financial package from a data dump into a communication tool. It shows investors that you understand your own numbers. Not just that you can produce them.
Common Mistakes
Sending Raw QuickBooks Exports
A QuickBooks P&L export is not a financial report. It typically has hundreds of line items with no hierarchy, no subtotals for gross margin, and no comparison to budget. It tells an investor nothing about how your business is performing relative to plan.
No Variance Explanations
Showing actuals vs. budget without explaining the variances is like giving someone a map with no legend. A 20% miss on revenue could mean a dozen different things. Investors should not have to ask.
Mixing Up Gross and Net Revenue
This is especially common with Amazon and wholesale. If you report gross revenue in some months and net revenue (after fees and deductions) in others, your trend data is meaningless. Pick one convention. Net revenue is almost always the right choice. Apply it consistently.
Not Tracking Channel-Level Economics
A blended gross margin of 55% tells you very little. If DTC is at 72% and Amazon is at 28%, those are two very different businesses with very different strategic implications. Investors want to see the breakdown.
Irregular Timing
If you commit to monthly updates, send them monthly. The best practice is to close your books by the 15th of the following month and send the update within a few days of close. Investors notice when updates are late, irregular, or skipped. It erodes confidence quickly.
How This Connects to Fundraising
Monthly financial reporting is not just about keeping current investors informed. It is about building the muscle and the data set that makes your next fundraise dramatically easier.
When you go to raise your next round, investors will ask for 12-24 months of historical financials. If those months are consistently formatted, accrual-based, compared against budget, and accompanied by narrative, you have essentially pre-built your data room. Due diligence becomes a formality instead of a fire drill.
More importantly, the discipline of producing monthly financials forces you to understand your business at a depth that makes you a better operator. The founder who can walk an investor through their channel-level margins, explain their working capital cycle, and forecast their cash needs with precision is the founder who gets funded. The financial package is the proof.