I have just done a profit and loss report for the last five years as well as the inventory profit margin report for the last five yeas as I wanted to see what my profit margins on inventory sales was.
In every single year, the inventory sales and inventory cost on the profit and loss report is different from the inventory profit margin report. Usually lower on the profit margin report with the exception of one year where the inventory sales is higher.
I understand that inventory kits have been excluded from inventory profit margin reports but that would not explain why the inventory profit margin report is £600 more on the inventory sales than the profit and loss statement for the exact same time period!
Why are the inventory sales and costs different between these reports. I have changed from cash to accrual and I have checked each item shown on the inventory profit margin report to make sure the invoice is in the correct year. But I still cant find the cause.
I went into inventory and selected each item on the inventory profit margin that I printed out and checked the invoices allocated in the relevant year which matched up with the inventory profit margin report.
However, its not possible to do this for the profit and loss report as nothing is clickable after clicking on the inventory-sales and I can’t align the amount with the inventory items on inventory profit margin report. The only way I can see of doing it is to open up every single invoice listed on those days which will take hours.
So it would be helpful to understand what would cause this discrepancy as every single year the figures do not match between the two reports which is a bit worrying.
I don’t understand this remark. When you click on an account balance on the P&L, you see all the transactions contributing to it. Have you verified those against the Inventory Profit Margin report? Manager gives you all the tools necessary to see what makes up any number on a report. It might take some digging, but you should be able to track down the source of any differences.
Understand, it’s impossible to troubleshoot a report at long distance.
One thing to consider is timing of any freight-in allocations from third-party vendors. Such costs might not yet be reflected in allocations to Inventory - cost when a sales invoice is raised, because they are not yet in the average cost of the item. Even if it’s the same item, Manager won’t retroactively adjust the transfer from Inventory on hand to Inventory - cost when the freight-in is applied. That freight cost is going to affect subsequent sales, which might not occur in the same period.
Also, if you are using goods receipts and delivery orders, have you considered their effects on timing and costs?
This is what I see when I click on inventory sales in profit and loss report. I cannot click on sales invoice or anything in this view to see what that £11.50 is.
I am wondering if its not the delivery orders that may be causing the issue as I did more than once do a bulk clear of delivery orders. However I cannot see why the delivery date should have any effect on the transaction as the invoice dates are what are relevant.
This almost certainly explains things. Once the Delivery Orders tab is enabled, Manager does not consider inventory items to have left inventory until one is generated. The figures on the P&L are based on sales and purchase invoices (assuming you’re not selling or buying with cash payments and receipts). The transfer of costs is based on average cost at the moment of transfer. If you later delete delivery notes, you are tampering with the calculation of average cost after the fact. And the sale is not complete until the corresponding delivery note is created.
This is why there are caution notes in the Guides about deciding to use goods receipts and delivery notes. Inventory management and accounting is an order of magnitude more complex once you do. Roll in a few inventory kit sales and things would get really impenetrable.
I will investigate the delivery notes to see if this could be the cause of the issue. If so, I won’t bother about aligning the last four years, but rather focus on future alignment. What you say does explain what is probably happening.