Understanding how to report Kickfurther’s funding on your financial statements is essential for maintaining accurate records and presenting a healthy balance sheet to current and potential lenders and investors.

Kickfurther has compiled insight from its customers and outside accountants to give you some insight as to how they manage Kickfurther funding.

Key Points 

• Non-Debt Classification: Kickfurther’s funding is not classified as debt. This is important because it positively impacts your balance sheet, avoiding the negative connotations associated with traditional debt.
• No Debt Obligations: Unlike traditional lenders who scrutinize your existing debt, Kickfurther funding does not fall under this category. This means you don’t need to disclose it as a debt obligation.

Accounting for Inventory

• Inventory Purchases: Instead of purchasing inventory from a traditional vendor, you are acquiring it through Kickfurther.
• Accounts Payable: When you receive funding from Kickfurther, it should likely be recorded in your accounts payable (AP), not as a loan.
• Cost of Goods Sold (COGS): As you sell the inventory, you should likely include the fees paid to Kickfurther in your COGS.

Balance Sheet and Financial Health

• Balance Sheet Metrics: Kickfurther funding does not affect your debt coverage ratios negatively. This means it helps maintain a healthier balance sheet, which is attractive to potential investors and lenders.
• Presentation to the Outside World: Reflecting Kickfurther funding correctly showcases better balance sheet health and enhances access to additional capital.

Accounts Payable Management

• Avoiding Aging AP: Ensure your accounts payable related to Kickfurther funding do not age. This is managed by maintaining long AP payment terms and paying Kickfurther promptly as you sell the inventory.
• Regular Updates: Debit the AP for the balance owed to Kickfurther as you sell the product and ensure cash flow is managed effectively.

Reporting and Expenses

• Pro Fees and G&A: Any pro subscription fees and platform costs (“Kickfurther Fees”) should be classified under General & Administrative (G&A) expenses, not COGS.
• Auditor Considerations: Auditors will review your records to ensure you recognize the amounts owed. As long as these amounts are accurately reflected, you should be compliant.

Practical Steps for Accountants and CFOs

1. Record Kickfurther Funding: Enter the received funding into your accounts payable.
2. Manage Inventory Costs: Include Kickfurther Fees in your COGS as you sell the inventory.
3. Update AP Regularly: Ensure that your AP does not age by setting appropriate payment terms and regularly debiting AP as inventory is sold and payments are made.
4. Classify Fees Correctly: Classify Kickfurther Fees under G&A expenses.
5. Maintain Balance Sheet Health: By accurately reflecting Kickfurther funding, maintain strong balance sheet health metrics.

As a business owner, it's crucial to maintain a healthy balance sheet while ensuring accurate reporting. Kickfurther's non-debt classification for funding is a game-changer for CPG brands. It allows you to acquire inventory without adding debt, which positively impacts your financial health.  By recording it under accounts payable rather than loans, you avoid debt burdens and keep your balance sheet attractive to potential investors. 

Disclaimer: This document was created using insight from Kickfurther customers and outside accountants. Nothing in this document shall be construed as Kickfurther providing any tax or accounting advice, and you should always consult your tax advisor and accountants prior to making any tax or accounting decisions.