PayTraq Blog

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Costing and Inventory Valuation

Sooner or later all new entrepreneurs ask themselves: Why is costing necessary?

Cost analysis is vital for businesses because entrepreneurs cannot optimize expenses unless they clearly understand what they consist of and which business performance indicators will be impacted by the changes and which will not.

Costing is needed to valuate inventory objectively, determine the wholesale and retail prices, calculate and control the return on sales (ROS) of each specific item.
Knowing the unit cost, you can easily determine the required/minimum acceptable markup for the selling price to reach the projected profits.

One of the key factors contributing to accurate financial reporting is the correct inventory valuation. Inventory is considered to be short-term assets, and as working capital it should be valuated based on its acquisition cost.

Why is the cost generally not equal to the latest purchase price?

Current stock may include goods purchased at different times at

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Posted in inventory, warehousing, accounting, business, PayTraq U

Supply Сhain Management. Arranging Your Sales & Procurements

Depending on the requirements and specifics of your business, PayTraq offers a variety of options for your sales and procurements arrangement and planning. You can choose an option according to your specific business process or take advantage of its modified versions.

Below are some of the most commonly used sales and purchases workflows.

1) Sales if the product is in stock

(Sales Order) -> Invoice to Customer -> Outgoing Shipment

It is used to sell products which are available in stock.
The easiest and the most common way for selling a product is when the sales order is created, based on which then an invoice is issued.

An outgoing shipment from the warehouse is generated in the program automatically when the invoice is posted.

A simplified alternative of this workflow is when the invoice is issued right away, without the sales order being created.

For advance payment sales, a proforma

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Posted in automation, business, warehousing, PayTraq U

Periodic vs. Perpetual Inventory

Before getting ready to sell goods, every entrepreneur should decide for himself what system of inventory his business will be using. Companies may use either the perpetual system or the periodic system to account for inventory.
The choice of the system should be fixed in the company’s accounting policy. Workflow organization, content and frequency of various internal reports, selection of accounting and inventory management software - it all depends on this significant choice.

Periodic inventory system keeps the inventory balance at the same value that it was at the beginning of the accounting period. At the end of period, the inventory balance is adjusted to a physical count.

Under the periodic system, merchandise purchases are recorded in the purchases account, and the inventory account balance is updated only at the end of each accounting period. Thus cost of goods sold account does not exist during the accounting period. The

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Posted in business, accounting, warehousing, inventory