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RE: Real time (perpetual) inventory valuation - matching between theinventory and accounting valuations

Re: Real time (perpetual) inventory valuation - matching between the inventory and accounting valuations

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Re: Real time (perpetual) inventory valuation - matching between the inventory and accounting valuations

by
ForgeFlow, S.L., Jordi Ballester Alomar
- 15/12/2016 22:53:07

On Thu, Dec 15, 2016 at 8:38 PM, <kevin.mcmenamin@solnet.co.nz> wrote:

I agree with your points - the ability to reconcile GL to inventory valuation is an important element for a trading company.

The issue is when using average cost (which most of our customers do) you cannot do historical reports without there being potential differences arising from changes in average cost.

Our approach has been to do a report they run as part of the month end process. It values the stock moves and values the GL moves and compares by product. The only material difference should be cost price adjustments. This does require that all moves have a cost price and consistent treatment of dates across moves and GL transactions.

Good luck with your work.

Kevin McMenamin
ERP Capability Manager

Mobile  +64 22 651 3753
Phone  +64 9 977 5805
Email   kevin.mcmenamin@solnet.co.nz

Solnet Solutions Limited
Level 19, Crombie Lockwood
191 Queen Street, Auckland 1010
PO Box 6619, Auckland 1141

www.solnet.co.nz  




From:        Jordi Ballester Alomar <jordi.ballester@eficent.com>
To:        "Accounting" <accounting@odoo-community.org>
Date:        15-12-16 11:52 PM
Subject:        Re: Real time (perpetual) inventory valuation - matching between the inventory and accounting valuations




Thanks for your feedback Kevin,

IMHO the top priorities are:
1. The stock valuation account must be protected against manual journal entries.
2. All processes posting to the stock valuation account must include the product, and reference to the id of the process that generated this accounting entry (like stock.move, stock.landed.cost stock.inventory.revaluation or the one we're proposing in this PR, stock.valuation.account.manual.adjustment)
3. There should be a report 'Inventory Audit Report' that should allow the user to list the past history of transactions for a product, and display the corresponding accounting journal and running balance, so that it is possible for a user to trace the differences between the transaction and the subsequent accounting entries. And by transaction I mean every transaction (moves, landed costs, revaluations,..) that has an impact on accounting. 

Once the user realizes the differences in valuation, he should be able to make adjustments to the unit cost (using stock.inventory.revaluation) or, in case that the unit cost and stock on hand are right, just align the inventory value with accounting balance using stock.valuation.account.manual.adjustment

I think that an additional need (perhaps not as important for some companies) would be to be able to perform corrections to the inventory in the past (either quantity or unit cost), and make the system perform the necessary adjustments in the subsequent transaction history for that product (e.g.  adjusting subsequent COGS, recomputing average cost,..)

Regards,
Jordi.

On Wed, Dec 14, 2016 at 8:07 PM, <kevin.mcmenamin@solnet.co.nz> wrote:
Jordi

This is very useful - we have done something similar to reconcile the movement in the GL to the movement in perpetual inventory after finding the GL was not reconciling to inventory valuation reports. From our work the key things that needed fixing were:

1. making sure that every posting to te GL included the product code (for example price adjustments)
2. allowing the user to specify the period for inventory and price adjustments and making sure the journal picked that up (would be accounting date in V9) and that the move done done is correct

You will always get some differences but being able to identify and correct for is very important for a trading company.

Regards

Kevin McMenamin
ERP Capability Manager

Mobile  +64 22 651 3753
Phone  +64 9 977 5805
Email   kevin.mcmenamin@solnet.co.nz

Solnet Solutions Limited
Level 19, Crombie Lockwood
191 Queen Street, Auckland 1010
PO Box 6619, Auckland 1141

www.solnet.co.nz  




From:        Jordi Ballester Alomar <jordi.ballester@eficent.com>
To:        "Accounting" <accounting@odoo-community.org>
Date:        15-12-16 06:18 AM
Subject:        Real time (perpetual) inventory valuation - matching between the inventory and accounting valuations





Dear accounting experts,

FYI, we're working on the topic of real time (perpetual) inventory valuation, and have just built a module "product_inventory_account_reconcile" (https://github.com/OCA/stock-logistics-warehouse/pull/228) that allows a user to review the discrepancies between the inventory valuation from stock and accounting perspectives, and to reconcile the two worlds.

For example, according to my stock levels and unit cost, I have worth 10.000€ of iMacs, but when I look at my inventory account and look at the accounting balance for product "iMac" I get 12.000€ (for one reason or another - there are various). In that case I can list in the product list view that there's a discrepancy of 2.000€ and create a journal entry that reconciles the discrepancies.

This allows to better build the concept of "Material Ledger". This concept means that your inventory account is properly tracked on a product level. 

The module "stock_inventory_revaluation" also helps to better manage stock accounting under the real time inventory valuation.

If this topic is of your interest, please do not hesitate to review the PR.

Not sure if the name "product_inventory_account_reconcile" is clear enough. What do you think?

Best regards,
--
Jordi Ballester Alomar
CEO & Founder | Eficent
(+34) 629530707 | jordi.ballester@eficent.com | http://www.eficent.com
Twitter: https://twitter.com/jbeficent_erp | Linkedin: https://www.linkedin.com/in/jordiballesteralomar

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--
Jordi Ballester Alomar
CEO & Founder | Eficent
(+34) 629530707 | jordi.ballester@eficent.com | http://www.eficent.com
Twitter: https://twitter.com/jbeficent_erp | Linkedin: https://www.linkedin.com/in/jordiballesteralomar

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--
Jordi Ballester Alomar
CEO & Founder | Eficent

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