By: Jennifer Brazer

Jennifer is the author of From Cubicle to Cloud and Founder/CEO of Complete Controller, a pioneering financial services firm that helps entrepreneurs break free of traditional constraints and scale their businesses to new heights.

Fact Checked By: Brittany McMillen

Payment Card Industry Information Security Best Practices

Payment card industry information security encompasses the protocols, technologies, and standards that protect cardholder data from breaches and fraud. These security measures include network protection, data encryption, access controls, vulnerability management, and compliance with the Payment Card Industry Data Security Standard (PCI DSS), which major card brands like Visa and Mastercard enforce to safeguard payment transactions.

I’ve spent over 20 years as CEO of Complete Controller working with businesses across every sector imaginable, and I’ve witnessed firsthand how payment security can make or break a company. With only 43% of U.S. businesses achieving PCI compliance according to Verizon’s latest report, the stakes have never been higher. Data breaches now cost companies an average of $4.88 million globally—that’s a 10% increase from last year alone. This article arms you with the concrete strategies, tools, and insights you need to protect your payment systems, avoid devastating breaches, and build customer trust through rock-solid security practices.

What is payment card industry information security?

• Payment card industry information security protects cardholder data through protocols, technologies, and PCI DSS compliance standards
• Network security creates barriers against unauthorized system access
• Data encryption scrambles sensitive information during storage and transmission
• Access controls limit who can view and handle payment data
• Vulnerability management identifies and fixes security weaknesses before criminals exploit them

Building and Maintaining Secure Network Infrastructure

Creating a fortress around your payment data starts with robust network architecture. The fundamentals haven’t changed, but the execution has become more sophisticated with PCI DSS 4.0 requirements.

Your firewall configuration forms the first line of defense. Every system handling cardholder data needs properly configured firewalls with default passwords eliminated immediately. I’ve seen too many breaches happen because someone left “admin123” as their password—it’s like leaving your front door wide open with a welcome mat for hackers.

Network segmentation has proven its worth time and again. The Co-op’s successful PCI compliance journey demonstrates this perfectly—they isolated their payment systems using strategic firewall placement, avoiding the nightmare of reconfiguring IP addresses for 210,000 devices. This approach saved them millions while dramatically reducing their attack surface.

Critical Network Security Components

• Traffic filtering to block unnecessary ports and services
• Zero-trust architecture limiting lateral movement during breaches
• Regular firewall rule reviews and updates
• Network monitoring for suspicious activity patterns
• Documented change management procedures

The shift to zero-trust principles represents a fundamental change in how we think about payment processing security best practices. Instead of trusting anything inside your network perimeter, every access request gets verified—no exceptions.

Protecting Cardholder Data Through Encryption and Access Controls

Data protection forms the heart of payment security. Without proper encryption and access controls, you’re essentially storing customer financial information in plain sight.

End-to-end encryption transforms readable card data into scrambled code that’s useless to thieves. This protection must extend across every touchpoint—from the moment a customer swipes their card until the transaction completes. AES-256 encryption remains the gold standard for data at rest, while TLS 1.2 or higher secures data in transit.

Implementing role-based access control (RBAC)

Access control determines who sees what within your payment systems. Role-based access control assigns permissions based on job functions rather than individual users, creating a scalable security model that grows with your business.

At Complete Controller, we’ve refined our RBAC implementation to include:

• Quarterly access reviews removing unnecessary permissions
• Automated de-provisioning when employees leave
• Detailed audit trails for every data access
• Segregation of duties preventing single-person fraud

Data minimization complements these controls by reducing what you store. If you don’t need the full card number after processing, don’t keep it. Every piece of data you retain becomes a potential liability.

Maintaining a Robust Vulnerability Management Program

Threats evolve faster than most businesses can adapt. A comprehensive vulnerability management program keeps you ahead of attackers by identifying and fixing weaknesses before they become entry points.

Patch management sits at the program’s core. Critical vulnerabilities need patches within 30 days—no excuses. The Target breach of 2013 serves as a permanent reminder of what happens when vulnerability management fails. Hackers infiltrated their network through a third-party vendor, ultimately compromising 40 million credit cards and costing the company $202 million.

Essential Vulnerability Management Practices

• Monthly vulnerability scans using approved scanning vendors
• Annual penetration testing simulating real attacks
• Real-time malware protection on all systems
• Third-party vendor security assessments
• Incident response planning and regular drills

Your approach to fraud prevention in the payment card industry must include proactive threat hunting. Waiting for alerts means you’re already behind—successful programs actively search for indicators of compromise.

Adapting to PCI DSS 4.0: The 2025 Compliance Landscape

PCI DSS 4.0 brings the most significant changes we’ve seen since the standard’s inception. The March 31, 2025 deadline for full implementation approaches quickly, and businesses need to act now.

Multi-factor authentication (MFA) requirements

MFA becomes mandatory for all administrative access to cardholder data environments. This requirement closes a critical gap—passwords alone simply aren’t sufficient anymore. Organizations implementing MFA early report 90% reductions in compromise attempts according to Thales research.

Implementation challenges include:

• Legacy system compatibility issues
• User training and adoption resistance
• Token management complexity
• Recovery procedures for lost authentication devices

The key lies in choosing MFA solutions that balance security with usability. Biometric options, push notifications, and hardware tokens each have their place depending on your environment.

Customized approach to compliance

PCI DSS 4.0 introduces flexibility through its customized approach option. Instead of following prescriptive requirements, businesses can implement compensating controls that achieve the same security objectives. This change acknowledges that one-size-fits-all security doesn’t work in today’s diverse technology landscape.

Securing Cloud-Based Payment Environments

Cloud adoption has transformed how businesses process payments, but it hasn’t eliminated security responsibilities. The shared responsibility model means you still own critical security functions even when using cloud providers.

Understanding your responsibilities starts with mapping data flows. Where does cardholder data travel? Who has access? How is it protected at each stage? These questions guide your cloud security strategy.

Cloud Security Best Practices

• Contractual agreements defining security responsibilities
• Data residency controls for regulatory compliance
• Encryption key management maintaining your control
• Regular security assessments of cloud configurations
• Incident response coordination with cloud providers

Modern information security for payment systems must account for distributed architectures. Your security perimeter now extends far beyond traditional boundaries, requiring new approaches to monitoring and control.

Implementing Security Policies and Employee Training

Technology alone won’t protect your payment data. Human factors cause most security breaches, making comprehensive policies and training essential components of your security program.

Security awareness training transforms employees from potential vulnerabilities into active defenders. Regular training sessions should cover:

• Phishing recognition and reporting procedures
• Password security and MFA usage
• Physical security for payment terminals
• Social engineering tactics and responses
• Incident reporting responsibilities

Policy development requires balancing security needs with operational efficiency. Overly restrictive policies get circumvented, while lax policies invite breaches. The sweet spot enables business while maintaining protection.

Creating a security-first culture

Building security awareness into your company culture pays dividends beyond compliance. When employees understand why security matters—not just what rules to follow—they become invested in protection efforts.

At Complete Controller, we’ve seen this transformation happen repeatedly. Companies that invest in security culture report fewer incidents, faster breach detection, and improved overall compliance scores.

Advanced Threat Detection and Response

Modern payment environments face sophisticated attacks requiring equally sophisticated defenses. Traditional signature-based detection can’t keep pace with evolving threats.

Behavioral analytics represent the next frontier in threat detection. By establishing normal patterns for accounts, systems, and transactions, these tools identify anomalies that signal potential breaches. A user suddenly accessing systems at 3 AM or downloading unusual data volumes triggers investigation.

Building Effective Threat Detection

• Security Information and Event Management (SIEM) deployment
• User and Entity Behavior Analytics (UEBA) implementation
• Threat intelligence feed integration
• 24/7 monitoring capabilities
• Automated response playbooks

The average breach goes undetected for 207 days according to industry research. Reducing this dwell time requires continuous monitoring combined with rapid response capabilities.

Cost Considerations and ROI of PCI Compliance

Small businesses often struggle with compliance costs ranging from $1,000 to $10,000 annually according to Central Eyes research. These expenses cover vulnerability scans, penetration testing, security tools, and potential consultant fees.

The investment pays for itself by preventing breaches. With average breach costs approaching $5 million and 43% of cyberattacks targeting small businesses, compliance becomes cheap insurance. Beyond financial protection, compliance builds customer trust and opens doors to larger contracts requiring security verification.

Maximizing Compliance ROI

• Automate repetitive security tasks
• Leverage cloud-based security tools
• Combine compliance efforts across frameworks
• Document everything for faster audits
• Build security into processes rather than bolting on later

Future-Proofing Your Payment Security Strategy

Payment security continues evolving with emerging technologies and threats. Quantum computing threatens current encryption methods, while new payment methods like cryptocurrency introduce novel risks.

Staying ahead requires continuous adaptation. Monitor payment card security standards updates, participate in industry forums, and maintain relationships with security vendors who provide early threat warnings.

Building resilience into your security architecture means assuming breaches will occur and planning accordingly. Segmentation limits damage, encryption protects data even when stolen, and robust incident response minimizes impact.

Final Thoughts

Payment card industry information security has evolved from a compliance checkbox into a business imperative. The statistics paint a clear picture—with less than half of businesses achieving compliance and breach costs soaring, the time for action is now.

Success requires more than technology implementation. It demands cultural change, continuous improvement, and unwavering commitment to protecting customer data. The tools and standards exist; execution separates protected businesses from breach headlines.

Your next step starts with honest assessment. Where are your gaps? What systems need updating? Which processes require refinement? Answer these questions, then build your roadmap to comprehensive payment security.

Ready to strengthen your payment security and achieve PCI compliance? Visit Complete Controller to discover how our team helps businesses implement these best practices for payment security while maintaining operational efficiency. Our experts bring decades of experience protecting cardholder data protection across every industry sector.

FAQ

What is PCI DSS compliance and who needs it?

PCI DSS compliance involves following security standards set by major card brands to protect payment data. Every business that accepts, processes, stores, or transmits credit card information must comply, regardless of size or transaction volume. Non-compliance results in fines ranging from $5,000 to $100,000 monthly.

How do I implement multi-factor authentication for PCI DSS 4.0?

Deploy MFA solutions like Google Workspace, Azure AD, or specialized authentication platforms for all administrative access to cardholder data environments. Start with high-privilege accounts, test thoroughly with pilot groups, provide comprehensive user training, and establish backup authentication methods for system failures.

How often should I conduct penetration testing and vulnerability scans?

Conduct penetration testing annually at minimum, with additional tests after major infrastructure changes. Run external vulnerability scans quarterly through an Approved Scanning Vendor (ASV) and perform internal scans monthly or after significant system modifications.

What encryption methods meet PCI compliance requirements?

Use TLS 1.2 or higher for encrypting data in transit and AES-256 encryption for data at rest. Avoid outdated protocols like SSL and early TLS versions. Implement proper key management procedures including secure key storage, regular key rotation, and split knowledge/dual control for key access.

How much does PCI compliance cost for small businesses?

Small businesses typically spend $1,000 to $10,000 annually on PCI compliance including vulnerability scans ($300-$1,500/year), penetration testing ($2,000-$5,000), security tools and software ($500-$3,000), and potential consultant fees ($100-$300/hour). These costs prevent average breach expenses of $4.88 million.

Sources

• Ace Cloud Hosting. “PCI DSS Compliance in 2025.” April 2025.
• Alation. “PCI Data Compliance: Key Requirements in 2025.” July 2024.
• Basis Theory. “PCI 4.0 in 2025: What Best Practices Are Becoming Requirements.” November 2024.
• Central Eyes. “How Much Does PCI DSS Compliance Cost?” 2025.
• Cybersecurity & Infrastructure Security Agency. “Multi-Factor Authentication.” www.cisa.gov/multi-factor-authentication
• GR4VY. “PCI Compliance in 2025: Best Practices.” January 2025.
• IBM Security. “Cost of a Data Breach Report.” 2024.
• Kerv Connect. “The Co-op Achieves PCI Compliance with Network Segmentation.” 2025.
• MWE. “New PCI DSS 4.0 Requirements Effective April 2025.” April 2025.
• National Institute of Standards and Technology. “Cybersecurity.” www.nist.gov/topics/cybersecurity
• PCI Security Standards Council. “PCI DSS Quick Reference Guide.” November 2024. www.pcisecuritystandards.org
• SecureFrame. “PCI DSS History: How the Standard Came To Be.” 2024.
• Sprinto. “PCI Compliance for Small Businesses.” 2024.
• Thales. “Preparing for PCI DSS 4.0 Compliance in 2025.” March 2025.
• U.S. Senate Committee. “A ‘Kill Chain’ Analysis of the 2013 Target Data Breach.” 2014.
• Verizon. “Payment Security Report.” 2023.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Entrepreneurship refers to planning, pitching, and running a freshly built startup that complies to flourish into the business cloud. The entrepreneurs adopt various strategies to lead a successful business. For instance: an experienced management team, fully- equipped infrastructure, efficient accounting strategies, etc.

All departments contribute to the success of a business, but this article has entirely focused on the accounting strategies adopted to run successful entrepreneurship. The following are specific strategies that can be adopted to achieve successful entrepreneurship by an entrepreneur:

• Keep an eye on your company’s financial health

The financial health of a business corporation refers to the financial state of a business that illustrates its operations’ well-being. Financial health itself is an indicator of substantial importance in an establishment that determines a company’s profit margins.

A company’s profit margins depict the phenomenon where profits exceed the cost in revenue generated by a business. However, the financial health of a business is necessary for the smooth and successful running of a business, which ensures its well-fare both in terms of the market status and higher returns at minimum costs.

Various techniques are available to talk about a business’s financial health, such as quick ratio, current ratio, days scale outstanding, days inventory outstanding, debt/equity ratio, etc. A sound financial state is an indicator of how successful an entrepreneur is in running a business.

• Budget your regular finances

Budgeting refers to allocating entire resources and funds available in an office to all departments available to create harmony among them for the effective running of all operations of an office. Therefore, traditional financing of an office helps create a friendly environment in financial stability, ensuring the well-being of a business association’s operations.

Bookkeeping software is available in the market to promote healthy, error-free budgeting to generate accurate results to identify the limitations, weaknesses, and strengths. Budgeting has to be a priority in business. Still, more importantly, the budget needs to be based on accurate calculations and data, making it essential that you invest in bookkeeping software.

• Conserve cash at any cost

Political, social, as well as environmental conditions of a country tend to drive business markets. In any of these instabilities, stocks are adversely affected, resulting in dark periods for businesses where they ultimately require higher amounts to overcome the shortages.

Therefore, to avoid haphazard during these times and to ignore lengthy debts, one must keep a particular amount of cash in reserve to overcome crises or crucial conditions if caused. Moreover, in higher manufacturing orders, a company might require financial assistance in terms of a loan. Instead of looking for loans from other companies or individuals, one must keep its finances in reserve for emergencies.

This would help out in overcoming statuses that tend to hinder the smooth working of a business. However, business efficiency is promoted through effective techniques such as budgeting, which also determines a company’s profit margins determining a particular and feasible amount for future crises.

Conclusion

A company’s financial health is the indicator for its marginal profits, which ensures a company’s economic and financial well-being so that it can easily go for future investments and repay debts. Therefore, it plays a significant role in promoting a business in favorable terms by giving it sustenance through hard times.

Finance is the backbone of any business organization. Irrespective of your business profile, you must try to bring the strategies mentioned above into practice to avoid discrepancies later. Accounting for small businesses is not very complex, so if you follow the correct steps right from the beginning, things will be much easier for you later. Remember, the right business finance and accounting strategy can help you withstand unforeseen circumstances later in the business.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

 

As you know, it is essential to save money to prepare for unexpected bills and circumstances. It will help if you organize your savings and expenditures. According to the CFPB, also known as the Consumer Financial Protection Bureau, people who save money maintain savings buckets as an effective saving method. You can have as many buckets as you’d like. Typically, the four most common savings buckets are:

1. Regular Expenses – Recurring expenses such as quarterly, monthly, or annually bills
2. Unexpected Expenses – Expenses that do not occur often but you will inevitably have to pay, such as a car or house maintenance
3. Emergency Fund – For unforeseen circumstances such as a medical emergency or loss of a job
4. Financial Goals – For achievement of life goals and dreams such as retiring early or going back to school

According to the CFPB, if you are not covering these four buckets, you are not saving enough for any unpleasant or unexpected events.

Regular Expenses

It is much easier to cover your recurring monthly expenses when you have a good source of income, such as paying your utility bills, transportation expenses, or groceries. However, it is understandable that you cannot have any collective savings even after earning your paychecks.
This scenario can be frustrating when you cannot take out extra cash for a holiday trip, birthday celebration, or a little additional shopping. This is a clear sign that you are not saving enough every month. The budget that you create should always account for monthly expenses.
If you earn a good paycheck and can still pay for your regular expenses, something is wrong. Either your monthly expenses exceed your income, or you are spending too much on the extra stuff. Therefore, it is always best to account for your recurring expenses and save every month before spending on anything else.

Unexpected Expenses

There are so many unexpected bills that can occur at any time. Therefore, you need to have separate savings account for all of the unexpected expenses. Out of the blue, your car can decide to break down at the end of the month. Perhaps it needs a new clutch or belt.
A car is necessary for your daily traveling needs, and you need to fix this issue immediately. One should have a separate savings bucket for these unforeseen events. It would help if you considered opening an “irregular expense fund” within your savings buckets that you can contribute to every month to recover such repair costs and other maintenance costs such as these.

Emergency Fund

The most important of all savings is an emergency fund or emergency savings bucket. Losing a job or facing an unexpected medical expense can be a daunting experience as your list of monthly expenses is right in front of you. Now, you wonder if your savings is enough to support your current lifestyle unless you find any better opportunity.
However, if you have already set an emergency savings fund, you will have income set aside to support your loss for the time being. According to financial industry experts, a person’s savings should cover at least three months of their basic expenses.
Hence, consider creating an emergency savings bucket that will benefit you in an uncertain situation. You can even open a separate savings account with your bank in which you can make monthly payments to consider the account as your monthly liability.

Financial Goals

We all strive to achieve our life goals and dreams. All of these achievements not only require time, but they also need money. It would help if you created your financial goals for every age in your mind, such as your mid-30 goals and retirement years. The consumer financial protection bureau states that a person should separate their earnings to pursue their life goals, even that dream vacation you’ve always hoped for.

Conclusion

By creating these savings buckets for bookkeeping purposes, you will not only have enough income, but you will even be able to track and monitor your spending criteria. The savings buckets will give you peace of mind in monetary pressures, as you know you have money saved in your accounts for all of your planned and unplanned needs. About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

 

No matter how much one may argue about who is solely responsible for cloud data protection, experts from all across the globe are unanimous on the resolution that the ultimate responsibility of data compliance lies with the organization that owns the sensitive information, not the service provider.

What Is Cloud Data Protection?

Looking at the big picture, cloud data protection (CDP) is all about infrastructure security, storage management, and data integrity. Since it provides optimal data storage, protection, and network security, businesses around the globe are trusting it to be more safe, secure, and stable than ever. It protects the cloud and prevents the leakage or theft of sensitive information from the cloud.

Since the ultimate objective of CDP is to protect static and moving data in the cloud and ensure various services and processes, it is critically important for you and your cloud provider to ensure its optimal functioning at all levels.

Data integrity: Data remains the same as stored as strong encryption layers protect the sensitive data from illegal editing or corruption. This indicates that your sensitive data is secured against all threats or illegal access.

Storage Management: The cloud infrastructure needs to ensure the safety and security of data and provide a continuously available interface as desired or required. Primarily, it depends on the capacity of your cloud service provider in how agile or responsive they are in managing the account. However, you also need to make sure that the data is maintained correctly.

Infrastructure security: These are collective efforts, processes, measures, and policies that ensure cloud infrastructure and network security. However, most small-scale businesses do not pay much heed to cloud data protection protocols, and that’s where most problems related to the safety and security of sensitive data commence arising.

Why Are Most Businesses Misguided?

It’s a human tendency to shift responsibilities or critical tasks entirely onto someone else’s shoulders. Most of us do not want to take complete ownership of complicated things with intense and severe repercussions (if not executed properly).

Then, there are those people who are misguided about their responsibilities and entirely rely on others. No matter how much money you can afford to spend on acquiring the services of any pro cloud provider, you have to make efforts to secure your data yourself and not solely rely on your service provider.

Although people have different perspectives about data safety and security and whether or not to trust the cloud entirely, cloud data protection is inevitably the most critical aspect of the cloud. Without this, you can never expect to secure your sensitive data at all.

According to a study, 80% of businesses wrongly believe that data protection and management are solely the cloud service provider’s responsibility. This indicates that cloud service providers are responsible for providing specific layers of security protocols or encryption. However, the information protection or safety and security of sensitive information lies in the hands of businesses.

The study further revealed that businesses prefer to transfer their responsibilities of data protection, data privacy, or data compliance to third-party cloud vendors or service providers. This allows them to focus more on the core side of business and less on its security, storage, or management affairs.

Moreover, the total spending on cloud technologies is predicted to increase by a massive 20% from 2018 to 2020, which bears testimony that most businesses intend to transfer their cloud data protection-related responsibilities to cloud service providers.

Core Reasons Why Most Businesses Choice to Hire Pro-Level Cloud Services

Businesses prefer to embrace an easy approach to protect their sensitive data because they lack in-house skills, knowledge, experience, and expertise in optimally handling cloud data protection. However, you need to ensure that the cloud service provider you are acquiring for utilization has relevant skills and provides 24/7 assistance in managing cloud-related discrepancies effectively.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Being in debt is one of the most stressful situations that anyone can face at any point in their life. Once someone takes a loan, it is mandatory and obligatory for them to repay the loan, sometimes with interest, despite any life-changing situation you could face during the loan repayment time. Repaying the loan is a must, even if you lose your job, get into a terrible accident, or experience a significant increase in your expenses due to being a new parent.

Reasons for Being in Debt

When you are in debt, there could be several reasons for it. It could be that you spent more than you intended on a birthday party or a wedding. Another reason could be purchasing an expensive car, and you had to take a loan to cover the payments. Some people spend a lot more than they are intended on a lavish holiday.

Getting out of debt is not impossible. All you need to do is plan out your income, expenditure, and debt payments. Many people can get out of debt by curbing their spending and looking for ways to have extra income every week. With careful planning, it’s possible to get out of debt quickly. Here are five simple steps to help you get out of debt.

1. Don’t Borrow More Money

The best way to get out of debt is to stop borrowing money repeatedly. After some time, it may become habitual to borrow money to make ends meet in the short term. Over time, the amount of debt keeps increasing and, before you know it, you could be under a mountain of debt.

To reduce debt and make your way out of it, it’s essential to refrain from financing extra expenses, stop signing up for credit cards, and spend any extra money on things you do not need. Avoiding these activities will help you to keep the focus on the debt that you want to repay.

2. Have an Emergency Fund

Another way to get out of debt is to have an emergency fund ready at all times. Having an emergency fund is to keep some money in the bank for serious, unavoidable emergencies. Avoid using a credit card for emergencies if you can. They will add to the massive pile of debt you already owe to creditors. Having an emergency fund can act as the primary buffer between your ever-creasing debt and your expenses.

3. Make a Budget and Stick to It

To reduce debt and manage your expenses, it is good to have a budget that includes all inevitable expenses. Having a budget will allow you to prioritize your expenses and avoid taking on more debt. Another benefit of having a budget is to save up your money and collect enough to repay your loans.

4. Trim Your Expenses

Another way to help in loan repayment is to reduce your expenses. Do not buy any more luxury items if you don’t have the money left for them. It’s easy to use a credit card to buy yourself that shirt you’ve been eyeing, but you are only adding up more debt by doing so.

Another money-saving tip is to unsubscribe from your Netflix subscription (or other similar types of subscriptions) until you have your finances straightened out. Avoid eating out at fancy restaurants more frequently if you are in debt. It’s essential to stay committed to the goal of trimming your expenses to save up for that long-due loan repayment.

The more committed you are to reducing your expenses, the better your chances of getting out of debt quickly. It’s helpful to get rid of the extra amenities you use in your life to get out of debt.

5. Proper Organization of your Debts

Properly organizing your debt repayment is an essential step in repaying loans. It’s possible to organize your debt by two different methods. In the first method, make a list of all of the debt that you owe. Start from the smallest debt first and include each debt that needs to be paid according to its respective amount. With this method, people successfully loan repayment of almost $60,000 in a short amount of time.

The second method for debt repayment is called laddering. This method is the most effective method for saving money for repaying your debts. The method works by allowing you to make a list of all debts and begin with the highest interest rate. Now that you have a list add the money you save to the debt with the most effective interest rate. Once paid off, move ahead and similarly pay each debt until all the pending debts are cleared away, and you are debt-free.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Businesses are increasingly shifting towards the virtual trend, as most business operations are now conducted online. Bookkeeping and budgeting are also often performed through popular online apps and tools. The low setup costs and environmental concerns have driven businesses to adopt the paperless office trend.

One of the major obstacles that a business owner faces when running a virtual company is the effective engagement of employees to boost productivity levels. According to Michael Watkins, author of The First 90 Days, “Communication on virtual teams is often less frequent and always is less rich than face-to-face interaction, which provides more contextual cues and information about emotional states — such as engagement or lack thereof. The only way to avoid the pitfalls is to be extremely clear and disciplined about how the team will communicate.”

Fortunately, technological advancements have eliminated various communication barriers that halt a company’s growth. We have compiled the best communication tools and messaging programs available online to help businesses establish strong Communication with their employees. Effective messaging programs allow you to keep all your communication with the team in one place.

1. Slack

Slack is one of the most popular team chat apps online. It was launched in 2013 by the same team that created Flikr. Since its launch, it has become one of the most popular group chat apps.

Slack offers exceptional chatting facilities and a unique tool known as Slackbot, which acts as a reminder. You can set any reminder on Slackbot. It provides users with customizability and flexibility so they can select their personalized themes. It hosts powerful emoticons that will add a lively feel to your conversations.

The Slackbot tool has led to bots popularity over the past few years. It allows users to start projects, approve invoices, and crunch numbers. Slack has recently introduced an option to turn an ordinary message into a mini-channel relating to one topic.

You can form multiple teams to separate office, reading, and other groups.

Furthermore, it allows you to invent your chatbots through its integrations. It works on iOS, Android, Windows, Linux, and Mac and costs around $8 per month.

2. HipChat

HipChat is a popular messaging program that offers incredible features to its users. It allows easy and fast access to your group chats, enabling you to remain in touch with your teams wherever you go. You can form separate chat rooms on HipChat, which can be public or private. If you want to invite a contact into a particular chat room, you can send them a link.

If you are looking for an app that offers fast messaging, HipChat is an ideal option. HipChat offers Trello and JIRA integrations, enabling you to turn your message into a Trello card or share updates regarding JIRA projects in your conversations.

It offers a simple user interface, making it easier for users to adapt to the application. The team that invented HipChat also launched Stride, which allows you to conduct video and audio calls and screen sharing to manage remote teams easily.

3. Twist

If you are looking for an app that offers threaded conversations, Twist is an ideal option. It is often effortless to miss messages that pop up in a general chat session, and that is precisely why Twist turns the conversations into a thread, allowing you to track each message. This ensures that you do not miss out on any vital information.

If you want to say something, you must post your comment on an existing thread or make a new one. It also offers a traditional chat experience through the ‘Messages’ tab. This allows you to send direct messages to your contacts. It comes at a price of around $6 per month. Plus, you can utilize the integrations to create your chatbots.

These are the top 3 messaging programs for managing remote teams effectively. Other famous team chat apps include Microsoft Teams, Flock, Discord, Cisco Spark, Mattermost, ChatWork, Ryver, Zoho Chat, and Google Hangouts Chat.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Companies that use cloud hosting are facing a multitude of issues. Most of these issues are related to security threats and data breaches within the cloud network. The threat of a data breach is so high that 53% of companies believe that cloud hosting poses many general security risks. The risks are the essential barriers to cloud hosting.

Because of these risks and potential barriers, it is essential to understand them and determine if you are at risk with security threats if you use cloud services. Once these risks are determined, companies need to follow the best practices in cloud hosting to avoid the risks as highlighted below.

Services Accessible by Cloud Hosting

Before selecting a cloud hosting service, make sure that the company and IT officers are aware of the services they are getting. An important point in selecting a suitable cloud hosting service for business is software (SaaS). Most cloud hosting companies provide access through the web. Cloud hosting provides different services such as:

• Infrastructure as a service (IaaS)
• SaaS (Software as a Service)
• Platform-based services or Platform as a Service (PaaS)

SaaS is a well-known service and consists of making software applications accessible through web sources. Infrastructure-as-a-service refers to remote access to servers or storage capabilities. At the same time, Platform-as-a-service is a software-based computing platform that enables developers to design and deploy web applications on a hosted infrastructure.

Applications Included in Cloud Hosting

Cloud hosting allows companies to put an application onto the cloud. Each application can be charged differently depending on the sources it uses. Businesses should put the applications on the cloud that they frequently need.  More importantly, regulatory and compliance issues prevent companies from putting specific applications into the cloud, especially those that involve sensitive user data. IDC surveys show that the primary uses of Clouds are:

• IT management
• Collaboration
• Personal or enterprise applications
• Application development
• Server and storage capabilities

Transferability of Applications

An essential aspect of a cloud hosting service is allowing easy access and transfer of different applications. Application transfer services from one cloud platform to another, and in-house cloud data centers must be easy and quick.

Cloud hosting services will have to adapt standard technologies to ensure true interoperability. The recent “Open Cloud Manifesto” supports the interoperability of data and applications. The Open Cloud Consortium advocates for frameworks that allow different companies that provide cloud-hosting services to work seamlessly between them. The goal is to move an application from one cloud to another without having to rewrite it.

Security Offered by Cloud Hosting Providers

The cloud-hosting provider must offer adequate security measures to protect the sensitive data of the client. In the past, there have been several data breaches. These breaches resulted in the loss of sensitive data and loss of millions of dollars. While keeping data on a cloud has its risks, many hosting companies offer proper security measures to keep your data safe.

Before choosing a cloud hosting service, be careful when reviewing the SLA. It is essential to understand all the concepts discussed before making a final decision. The terms and conditions must be easy to understand. Reading through all publicly available data is essential. Amazon, for example, maintains a dashboard that shows the state of operation of the various services and history.

There will always be latencies on the network with a cloud service, making applications slower than running on your own data center. Many third-party vendors, such as RightScale, are developing additional services to the cloud to ensure that applications evolve and work well.

Companies that need cloud hosting services must make sure that the company is ready to adopt the principles of cloud computing. The service must have open data centers. 

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

In the US, farming was once considered a significant occupation. Statistics show that, in 2012, not more than 1% of the American population were professional farmers. Farmers of today face many challenges that the general public is oblivious to.

Most of the general public have an obsolete view when one thinks of a farm. They consider it a small parcel of land owned and run by family members, where cattle are raised and crops are harvested. In reality, present-day farms must overhaul their operations to cater to the demands and stay competitively priced while adjusting to new technology. 

The Top 3 Challenges Faced by the Farming Industry 

1. Technology

Rural farming communities of today are expected to consider integrating modern technology into their farming industry.

As easy as it may sound, it is not. To make such a shift in rural areas is quite a challenge. The communications systems are not as up-to-date compared to urban areas. Combined, these factors make it difficult for the farming industry to make the switch and become accustomed to ever-changing technological trends. 

Technology is also an opportunity in the farming industry. Research shows that the farmers who made the shift and involved modern technology in their business noticed increased production. It also had a substantial effect on the labor supply.

2. Decline in Farming as a Profession

Very few Americans claim the farming industry as their primary occupation. In our country, most farmers are now above 55 years of age. Most young adults don’t consider the farming industry as one of their aspired professions. 

3. Environmental Apprehensions

Many farmers are held responsible for how the farming business affects the environment. These days, the emphasis is placed on conservation and sustainability. It has resulted in public protests against some farmer’s certain practices. These practices refer to water pollution, raising livestock, use of chemical pesticides, fertilizers, etc. 

On the other hand, many farmers have changed their methods and practices to be more self-sustainable and environmentally friendly in the process.

This is not the only environmental issue that farmers face in their industry. Climate and weather changes are also ecological issues that farmers must deal with. Severe droughts and intense storms have made the farming industry even more demanding and complex.

Opportunities in the Farming Industry

Despite all of the challenges, there are still opportunities in the farming industry. The NSAC (National Sustainable Agriculture Coalition) works hard to provide farming opportunities to all of the independent family farmers of America. New federal programs and policies are coming out to support the young adults in the farming industry.

Every few years or so, Congress reauthorizes the state farm bill in which legislative decisions about funding and policies provide opportunities for women, beginning, veteran, and minority farmers.

The government also considers the funding and monetary aspect of supporting the young adults entering the farming business. They will also support and fund any farmers involved in the yearly appropriations process and deliver guide program applications.

Conclusion

The one constant in the farming industry is changing. Skillfully navigating the changes, many of which represent profit margin compression in producing several commodities will continue to succeed in farming operations. To survive changes in the economy, the farming industry has to embrace change.

A farmer’s business decisions are complicated by global economic factors, like fluctuating commodity prices and trade issues. A harvest can be affected by weather, insects, or disease.

There’s also the question: who is going to farm in the future? As millions of people from rural areas migrate to cities each year, farmers need to inspire enough of them to remain and build a career in agriculture.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Credit scores and credit reports are a reflection of how well or poorly you have managed your finances. If your credit report shows negative information, it becomes critical for you to get rid of any unpaid debt. Otherwise, you may be charged with an exuberant amount of interest.

If your credit report shows terrible reviews of your financial behavior, it will be difficult for you to obtain credit from other creditors. You may still get some credit, if and only if you collateralize it with a property or an asset. But, if you don’t own any valuable assets to use as collateral, you will not be eligible to get any form of credit, leading to a worse financial situation.

To get rid of bad credit scores, you are left with the only option to start rebuilding your credit. Improving your credit score will help you get approved for loans or credit cards, and, as a result, you will be rewarded with better interest rates. A bad credit score is equal to or below 619 per the FICO score. Follow the mentioned steps below to get your credit score back on track.

Review your Credit Report

Make sure to review your credit file so that you know your financial position. By doing so, you will get a better idea of what points need improvement. Do you have late or missing payments? Is your credit file showing that you have a higher rate of debt utilization? Reviewing such information will help you formulate a plan on where to start to improve your credit score.

You also need to check your scores to know whether there are any errors or inaccurate payment details present without your knowledge. If yes, then dispute the problem and get those debts removed, automatically improving your score. In case of any dispute, FTC offers some great rewards which will help you rebuild your credit score.

Catch your Payments

Your payment history has a significant effect on your credit report. If you fail to meet your payment deadlines, it will not improve your credit score. You will only be making it much worse.

If you find it challenging to make your payments on time, you should contact your creditors to get a more suitable payment plan. Make sure to be up-front when contacting your creditors and explain your whole scenario. Let them know that you still want to pay for your responsibilities. You can also ask for services from a credit counseling agency to make a proper payment plan.

Pay your Bills on Time

You can slowly rebuild your credit by paying your bills on time. This also includes paying non-credit card bills such as utility, phone, internet, etc. Late rent and missed utility payments are reported directly to credit bureaus. Payment history helps you to establish a reliable pattern to improve your score. Make sure that you are not falling into the bad habit of making late payments. If you can make automatic payments from your bank account, utilize this not to miss any more future payments.

Avoid Closing Credit Card Accounts

Try to avoid closing your credit card accounts, whether you use them or not. The longer the history of your credit, the better it is for your score. However, if you are far behind on your payment deadlines, the only option you are left with is to get a payment plan. A payment plan is required to cancel your credit card account. But, make sure to track the history of your credit score to rebuild it.

Pay Down Debt

Credit utilization is another factor to consider to improve your credit score. Credit utilization is a way to measure how much debt you have, and it is expressed as a fraction of the available credit that you use. For instance, you have an available credit of $10,000, and you only use $7,500; the amount of your credit utilization is 75%. You need to make a plan to pay off your debt more rapidly by using credit utilization. Reducing your debt will help you to improve your credit score.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Understanding Inventory Costs and COGS for Better Management

Inventory cost of goods sold represents the direct expenses associated with producing and delivering the products your business sells, including raw materials, labor, and manufacturing costs that directly impact your bottom-line profitability. Understanding and optimizing your inventory COGS is essential for maintaining healthy profit margins, making informed pricing decisions, and achieving sustainable business growth through strategic inventory management.

After helping hundreds of small and medium-sized businesses optimize their financial operations over the past two decades at Complete Controller, I’ve witnessed firsthand how mastering the inventory cost of goods sold can transform a struggling company into a profitable enterprise. The businesses that truly understand their COGS don’t just track numbers—they use this knowledge to make strategic decisions that drive competitive advantages and sustainable growth. This article will show you exactly how to calculate, analyze, and optimize your COGS while implementing inventory management strategies that reduce costs and maximize efficiency.

What is the inventory cost of goods sold?

• Inventory cost of goods sold measures the direct costs of producing and delivering products, including materials, labor, and manufacturing expenses
• COGS directly impacts gross profit margins by representing the largest expense category for most product-based businesses
• Accurate COGS calculation enables informed pricing strategies, inventory optimization, and financial forecasting
• Different inventory valuation methods like FIFO, LIFO, and weighted average significantly alter your COGS and financial statements
• Strategic COGS management helps identify cost reduction opportunities, improve cash flow, and increase profitability

Core Components of Inventory Cost of Goods Sold

Understanding the inventory cost of goods sold begins with recognizing its essential components and how they interact within your business operations. The fundamental COGS formula—Beginning Inventory plus Purchases minus Ending Inventory—provides the basic framework for calculation. Raw materials represent the most obvious component, encompassing everything from basic supplies to specialized components that become part of your finished products.

Direct labor costs prove equally significant, including wages paid to employees directly involved in production, manufacturing, or assembly processes. Manufacturing overhead costs add another layer of complexity to the inventory cost of goods sold calculations. These expenses include factory utilities, equipment depreciation, and facility costs that support production activities. While indirect costs like administrative salaries or marketing expenses don’t belong in COGS, the line between direct and indirect costs sometimes blurs, requiring careful analysis for accurate financial reporting.

Inventory valuation methods’ impact on COGS

The First-In-First-Out (FIFO) method assumes older inventory sells first, typically resulting in lower COGS during inflationary periods and higher reported profits. This approach works particularly well for businesses selling perishable goods or products with limited shelf life, as it aligns with natural inventory flow patterns and reduces obsolescence risks.

Last-In-First-Out (LIFO) takes the opposite approach, assuming newer inventory sells first, which often increases COGS during inflationary periods and reduces taxable income. The weighted average cost method provides a middle ground by calculating average costs across all inventory purchases, smoothing out price fluctuations, and providing more stable COGS figures over time.

How COGS Analysis Drives Business Profitability

The relationship between inventory cost of goods sold and business profitability extends far beyond simple arithmetic calculations. COGS directly determines gross profit margins, which serve as the foundation for all other business operations and strategic initiatives. According to NYU Stern’s 2025 industry analysis, COGS percentages vary dramatically across sectors—food processing companies average 74.09% COGS, while technology companies maintain much lower COGS at 54.65%.

Companies with optimized COGS structures enjoy significant competitive advantages, including pricing flexibility, higher profit margins, and greater financial stability during economic downturns. Analyzing COGS trends reveals crucial insights about operational efficiency and market positioning. Rising COGS percentages may indicate supplier cost increases, production inefficiencies, or inventory management problems requiring immediate attention.

Cash flow and inventory turnover optimization

The cost of goods sold significantly impacts cash flow patterns through the timing of expense recognition and inventory turnover cycles. The e-commerce industry average inventory turnover ratio reached 10.19 in Q4 2024, with top-performing businesses maintaining ratios of 8 or higher. For optimal performance, most e-commerce businesses should target turnover ratios between 4 and 6 times per year.

High inventory levels tie up working capital that could otherwise support business growth or provide financial cushions during challenging periods. Inventory turnover ratios provide essential metrics for evaluating the efficiency of inventory cost of goods sold management. Higher turnover rates generally indicate efficient inventory management and faster cash conversion cycles.

Strategic Inventory Management for COGS Reduction

Strategic inventory management directly impacts the inventory cost of goods sold by minimizing waste, reducing holding costs, and optimizing purchase timing and quantities. Just-in-time inventory practices can dramatically reduce storage costs and minimize obsolescence risks, though they require sophisticated forecasting and reliable supplier relationships.

Implementing ABC analysis techniques allows businesses to focus management attention on high-value items that have the greatest impact on COGS performance. Category A items typically represent 80% of inventory value but only 20% of total items, making them prime targets for intensive management and cost optimization efforts.

Supplier partnership strategies

Building strategic partnerships with suppliers creates opportunities for significant inventory cost-of-goods-sold reductions through volume discounts, extended payment terms, and collaborative cost reduction initiatives. A multi-country European DIY retailer facing increased competition implemented a three-year program to reduce COGS by 8-10% by focusing on their top 50 suppliers and creating tailored negotiation strategies for each vendor.

Walmart revolutionized inventory management by implementing vendor-managed inventory systems in the 1980s. The company worked directly with manufacturers, offering guaranteed business in exchange for wholesale prices. Suppliers electronically monitor inventory levels at Walmart stores and automatically send replacements when stock runs low, dramatically reducing inventory management costs.

Technology Solutions for Modern COGS Management

The evolution of inventory management technology has transformed how businesses track, analyze, and optimize their inventory cost of goods sold. Cloud-based inventory management systems provide real-time visibility into cost structures while automating routine calculations and reporting tasks. However, a 2024 study revealed that 58% of retail brands have inventory accuracy below 80%, highlighting the critical need for better technology solutions.

Automated three-way matching systems compare purchase orders, receiving documents, and vendor invoices to ensure cost accuracy while streamlining accounts payable processes. This automation reduces processing time while improving cost tracking accuracy, particularly important for businesses with high transaction volumes or complex supplier relationships.

AI-powered forecasting and real-time monitoring

Artificial intelligence technologies increasingly support sophisticated demand forecasting, which directly impacts the cost of goods sold through improved inventory planning. These systems analyze historical sales data, seasonal patterns, market trends, and external factors to predict future demand with greater accuracy than traditional forecasting methods.

Modern inventory management systems provide real-time monitoring of inventory cost of goods sold performance with automated alerts when costs exceed predetermined thresholds or unusual patterns emerge. Mobile applications extend COGS monitoring capabilities to field personnel and remote managers, enabling real-time decision-making based on current cost information.

Building Your Comprehensive COGS Management Framework

Creating sustainable improvement in the inventory cost of goods sold requires a comprehensive management framework that integrates operational processes, financial controls, and strategic planning initiatives. This framework should establish clear responsibilities for cost management, define performance metrics and targets, and create accountability mechanisms that ensure continuous improvement.

Implementing continuous improvement methodologies like Six Sigma or Lean Manufacturing principles can systematically reduce waste and inefficiency in the inventory cost of goods sold. Regular process audits help maintain improvement momentum while preventing regression to previous performance levels. Cross-functional teams can identify cost reduction opportunities that span multiple departments or business functions.

Successful inventory cost of goods sold management requires alignment with broader business strategy and long-term planning objectives. Cost management initiatives should support strategic goals like market expansion, new product development, or competitive positioning rather than operating in isolation from other business priorities.

Final Thoughts

Mastering the inventory cost of goods sold represents one of the most impactful steps any product-based business can take toward sustainable profitability and competitive advantage. Throughout my years helping businesses optimize their financial operations, I’ve consistently observed that companies with sophisticated COGS management consistently outperform their competitors in profitability, cash flow, and strategic flexibility.

The businesses that thrive understand that the inventory cost of goods sold extends far beyond simple calculation—it’s a strategic tool that informs pricing decisions, guides inventory investment, and reveals operational improvement opportunities. Success requires commitment to continuous improvement, investment in appropriate technology systems, and integration with broader business strategy. Ready to transform your inventory cost management and unlock your business’s profit potential? Contact the expert team at Complete Controller today to learn how we can guide your journey toward financial excellence.

Frequently Asked Questions About Inventory Cost of Goods Sold

What is the difference between inventory cost and cost of goods sold?

Inventory cost represents the total value of products held in stock, while the cost of goods sold specifically measures the expense of inventory that was actually sold during a specific period. COGS appears on the income statement as an expense, while inventory appears on the balance sheet as an asset.

How do different inventory valuation methods affect COGS calculations?

FIFO (First-In-First-Out) typically results in lower COGS during inflation, LIFO (Last-In-First-Out) usually increases COGS during rising prices, and weighted average provides stability by smoothing cost fluctuations. Each method can significantly impact reported profitability and tax obligations.

Can service businesses have cost of goods sold?

Yes, service businesses can have COGS if they sell products alongside services or if their services involve significant direct materials or subcontractor costs. However, pure service businesses typically classify direct costs as operating expenses rather than COGS.

How often should businesses calculate and review their COGS?

Most businesses should calculate COGS monthly for internal management purposes and quarterly for external reporting. However, businesses with high inventory turnover or volatile costs may benefit from weekly or even daily COGS monitoring using automated systems.

What’s the ideal COGS percentage for profitability?

COGS percentages vary significantly by industry—food processing averages 74%, while technology companies maintain around 55%. Your ideal COGS percentage depends on your industry, business model, and competitive positioning. Focus on continuous improvement rather than arbitrary targets.

Sources

• NYU Stern School of Business. (2025). “Operating and Net Margins by Sector.” NYU Stern. https://pages.stern.nyu.edu/~adamodar/NewHomePage/datafile/margin.html
• Unleashed Software. (2024). “19 Inventory Management Statistics & Industry Benchmarks for 2024.” https://www.unleashedsoftware.com/blog/inventory-management-statistics/
• Opensend. (2025). “7 Inventory Turnover Statistics For eCommerce Stores.” https://www.opensend.com/post/inventory-turnover-ecommerce
• Extensiv. (2025). “Why the Walmart Supply Chain is so Successful.” https://www.extensiv.com/blog/supply-chain-management/walmart
• Oliver Wyman. (2014). “Cutting COGS – Going Beyond Supplier Negotiations.” https://www.oliverwyman.de/content/dam/oliver-wyman/global/en/2014/jul/201408OWCutting%20COGS_ENG.PDF
• Investopedia. “Inventory Turnover Ratio.” https://www.investopedia.com/terms/i/inventoryturnover.asp
• Accounting Coach. “What is COGS?” https://www.accountingcoach.com/what-is-cogs/explanation
• Wikipedia. “Cost of Goods Sold.” https://en.wikipedia.org/wiki/Costofgoods_sold
• Complete Controller. “Managing Business Accounting.” https://www.completecontroller.com/managing-business-accounting/
• Complete Controller. “Cut Custom Assembly Costs: 5 Ways.” https://www.completecontroller.com/cut-custom-assembly-costs-5-ways/

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Reviewed By: Brittany McMillen

Brittany McMillen

Brittany McMillen is a seasoned Marketing Manager with a sharp eye for strategy and storytelling. With a background in digital marketing, brand development, and customer engagement, she brings a results-driven mindset to every project. Brittany specializes in crafting compelling content and optimizing user experiences that convert. When she’s not reviewing content, she’s exploring the latest marketing trends or championing small business success.

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