1. Inventory Control Workflow
Inventory management is a vital part of any business that sells physical products. Having an efficient system to accurately track your inventory's ins and outs is crucial. Cashflow offers two inventory control methods: the simple process and the complex process. Here's how to set up each of them and in which scenarios they are most suitable.
a) Simple Tracking
The simple process automatically updates your inventory when a sale is made (decreasing stock) or when a purchase is recorded (increasing stock). This method is ideal for small businesses or startups that may not have the necessary personnel to manage a more complex inventory system. This simplified method allows business owners to maintain basic inventory control with minimal effort and time invested.
To set up the simple process:
- Go to the main menu and select Settings > Inventory > General Settings.
- In the Inventory Processes section, disable the Dispatch and Goods Receipt options.
- Click Save to confirm your choice.
Once the simple tracking process is configured, every time you record a sale or purchase, Cashflow will automatically update the inventory levels.
b) Advanced Tracking
The advanced workflow, on the other hand, offers more detailed control of your inventory. This process updates incoming and outgoing inventory items only when they are received or dispatched from your warehouse. This allows for greater control over inventory and is ideal for larger businesses with an inventory management team that needs to closely track product movements.
To configure the Advanced workflow:
- Go to the main menu and select Configuration > Inventory > General Settings.
- In the Inventory Processes section, activate the Dispatch and Goods Receipt options.
- Click Save to confirm your choice.
Once you have configured the complex process, you will need to manually record when products enter or exit your warehouse. For example, if you make a sale, the stock will not be reduced until you record the dispatch of the product from your warehouse.
Both methods have their advantages, and you should choose the one that best suits the needs and capabilities of your business. Remember that proper inventory management can improve your business efficiency, minimize the chances of product loss or running out of stock, and enable more accurate sales planning.
2. Invoicing Without Inventory
In the complex process, which enables the dispatch option, you have the option to allow billing of products even when they are not in inventory. This is possible because the inventory process is separated from billing.
To activate the option to bill without inventory, follow these steps:
- Go to the main menu and select Configuration > Inventory > General Settings.
- In the Inventory Processes section, activate the Dispatch option and click the (+) button next to the switch.
- In the "Invoice Without Inventory" submenu, enable the option by toggling the switch.
- Click Save to confirm your choice.
With this option enabled, you can invoice products even if their inventory quantity is zero. This can be useful in situations where you want to allow sales of out-of-stock items or backorders.
3. Inventory Valuation
In inventory management, it's crucial to know how inventory is valued. Inventory valuation involves determining the cost of the products stored in your inventory at the end of an accounting period. This is vital for calculating the cost of goods sold (COGS), which in turn affects your company's profitability and balance sheet.
There are several common methods of inventory valuation that you can use in Cashflow. Each method has its own advantages and may be more suitable for different types of businesses. Here is a description of the most common methods:
- Average Cost (Weighted Average)
The average cost method calculates the average cost of all similar products in inventory, regardless of when they were purchased or at what price. Each time you purchase more stock, you calculate a new average cost.
- FIFO (First In, First Out)
The FIFO method assumes that the first products that entered the inventory are the first ones to be sold. In other words, the costs of the oldest products are recorded first.
- LIFO (Last In, First Out)
The LIFO method assumes that the last products that entered the inventory are the first ones to be sold. In other words, the costs of the most recent products are recorded first.
Each of these methods has its own implications for financial reporting and tax calculations. It's essential to choose the method that aligns with your business's operations and financial goals, and to consistently apply that method to maintain accurate financial records.
Set Valuation Method
To Define the Inventory Valuation Method in Cashflow:
- Go to the main menu and select Masters > Product Groups.
- You can also access this through Settings > Inventory > Product Groups.
- In the list, locate the product group for which you want to define the valuation method, and click on the Actions Menu (three dots).
- Click on Edit.
- In the Inventory tab, in the Valuation field, choose the desired method (FIFO, LIFO, Average).
- Click Save to confirm your choice.
Each of these valuation methods has different implications for your financial statements and tax obligations. Therefore, it's essential to choose the method that best suits the needs and circumstances of your business. We recommend consulting with an accounting advisor before making your choice.
4. Reorder Point
The reorder point, also known as the reorder level, is a crucial concept in inventory management. It represents the minimum level of inventory that a business should have before it needs to place a new stock order with its suppliers. In Cashflow, you can define the reorder point for each product in each warehouse or store that holds inventory.
a) Define Reorder Point
To define the reorder point for a product:
- In the main menu, go to Masters, and then click on Products and Services.
- In the list of items, locate the specific inventory item you want to set the reorder point for.
- Click on the Actions Menu (three horizontal dots).
- Click on Edit.
- Scroll down to the Inventory section, and set the reorder point for each warehouse.
- Click Save to save the changes.
b) Reorder Point Alert
You can also activate the reorder point alert, which will notify you when a product reaches its reorder point at the time of billing.
To activate the Reorder Point Alert:
- In the main menu, go to Settings > Inventory > General Settings.
- Look for the Reorder Point Alert option and turn on the switch on the left.
- Click Save to save the changes.
Now, if an inventory item reaches its reorder point, you will receive an alert at the time of billing.
5. Product Variants
Product variants are versions of the same product that have different characteristics or attributes, such as size, color, flavor, capacity, and more. For example, a t-shirt can have variants in different sizes (small, medium, large) and colors (white, blue, red).
a) Activate product variants
To activate the product variants option:
- In the main menu, go to Settings > Inventory > General Settings.
- Look for the Products with Variants option and turn on the switch on the left.
- Click Save to save the changes.
b) Create product variants
When you activate the product variants option, you can define these variants when creating your products. To create a product with variants, follow these steps:
- In the main menu, go to Masters, and then click on Products and Services.
- In the list of Products and Services, click on the (+) button.
- From the contextual menu, choose Add Inventory Item.
- Complete all the other product information as per the steps defined for creating products.
- In the Inventory Item section, in the Item Type field, choose Item with Variants. In the Product Variants window, define the variants (Color, Size, or Type).
- In the Type field, select the attribute (Color, Size, Type), and in the Variant field, define its variants (Color: Blue, Red, White).
- If you need to add multiple Types and their variants, click on the (+) button to add another row.
- If you want to generate all the variants for this product, check the Generate Combination Matrix option. Click Save to save the variants and return to the product screen.
- For each variant, set the SKU, prices, costs, and the quantity of units in stock.
- Click Save to save the changes.
When you save the product with its variants, Cashflow will create a product for each variation, allowing you to manage the stock of each variant in any warehouse.
Other Options
Within General Settings, you can also configure the following options:
- Barcode
Enable the use of barcodes on inventory items, locations, and packaging.
- Serial Numbers
Enable the use of serial numbers on inventory items.
- View Image
Display product images on sales documents.
- Reorder Point Alert
Enables an alert when a product reaches its reorder point.
- Require Lots and Serials
Requires the registration of batch numbers and/or serial numbers when purchasing items.
- Products with Variants
Enable the creation of different versions of a product.
- Attributes
Enables the option to add attributes to items and locations.
With all these options and settings, you can customize how your company manages its inventory. This way, you can ensure that your inventory management system adapts to the specific needs and operations of your business.
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