I am struggling to find a solution for a inventory management issue that affects stock control but also margins and hence taxes. I hope someone can help.
Our inventory is based on three components: product cost, transport, import duties. As Manager does not work with FIFO and as we want to separate the value of stock on hand vs. bonded vs. to receive, we have tried to use this postings:
We register a product Purchase Invoice using the total value with quantity zero under the account “Inventory to receive”, and zero value with the total quantity purchased as inventory on hand":
The same is done also for the total value of the transport cost where the quantity is obviously always zero. This way we can have the total value of the stock to be received under the account “Inventory to receive” and we also have the actual quantity of products on the way.
When the goods arrive and enter the bonded warehouse we pass a Journal Entry and transfer the value from the account “Inventory to receive” to “Inventory bonded”:
The same is done for the value of the transport cost. This way we know the value of the stock that is now bonded and by entering a Goods receipt using the bonded inventory location we know how many pieces we have now bonded.
When we clear the stock, we normally clear a part of it and this is where it gets tricky. We pay import taxes on the quantity that is cleared and we want to capture the exact value of the cleared stock but it seems impossible with Manager. In fact at this stage we pass another Journal Entry like this:
Here we have calculated the portion of the product value that has been cleared (60 out of 660) and we can even transfer to stock from the bonded warehouse to the location where the stock is now cleared from customs. The same applies to the transport component. And by registering the new Purchase Invoice with the taxes paid on the 60 pieces we get all the three cost components registered. Also, the stock appears correctly with 600 pieces bonded on hand and 60 pieces in the cleared stock on hand.
However, when I check the average Inventory cost, Manager takes in consideration the 660 pieces initially registered with zero value, non only the 60 that have been cleared, and therefore the average cost is very low because it takes in consideration the total number of items purchased:
I was hoping to find a way out of the perpetual inventory valuation while being able to have an overview of the stock value to receive vs. bonded vs. cleared, and at the same time having the possibility to track the quantities of items at the different stages.
Has anyone a similar problem and found a way around it?
I would personally track the bonded status using a custom field and the entire quantity would not be received until the goods are cleared and at your possession.
I would track the entire purchase using a Purchase Order or Purchase Invoice, Track quantity to receive for Inventory Items and use a Custom field to track the entire purchase order status. The custom field could be a simple drop-down or a free text if you need to capture more information.
The bonded state is captured using the Custom Field.
Only when the stock leaves the bonded store, a Goods Receipt is issued.
@Tut Sorry but I do not get what you mean. Can you elaborate?
When I create an Inventory location I can only name it, there are no other options. Plus it seems that once you have a Purchase Invoice, Manager uses the quantities and values in the Purchase Invoice to determine the average cost, no matter what you do to go around it.
That’s how the average cost accounting system used by Manager is defined
You can include extra costs such as freight, customs duties, etc - see the guide to explain how
But each inventory item will have the same cost as all stock of an inventory item are considered identical to one another. There is no way to treat bonded and nonbonded items separately
I think you would be better served using a stock control system specifically designed to manage bonded goods
Manager is focussed on Accounting and is not an ERP. It is not a big limitation for accounting purposes but for some businesses supply chain operations. In essence the only benefit from bonded warehouse management is the delayed customs taxation. Features such as bonded warehouse management are specialist and belong to Supply Chain applications or ERP systems with advanced warehouse management. There are accounting applications that through API “integrate” with specialist warehouse management modules but these are known to be costly and not integral to the accounting application.
@eko I understand your point, but here the issue for me is not related to stock management, but to the correct imputation of inventory costs for accounting purposes. If the average cost of my items is not correct, I end up having higher or lower margins, hence my accounting is not correct.
For example, the bonded warehouse is one location, in transit is another, regular storage is a third. You could create multiple inventory items for the various locations and use inventory transfers and production orders to move items through your system.
Frankly, that seems like a lot of effort for little benefit. Eventually, all costs will be allocated to final sales anyway. Only timing will change.
