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We are seeing a need for a thing called an "Internal Cost Correction" or "ICC's". This deals with corrections to cost of goods sold and inventory values. This is a new concept that was found by Kelly Whyman and Steve Berkenkotter as they were helping people get their inventory values and numbers correct. The inventory values are figured on adding up the quantities in/out and then taking the costs in/out to get the value (we call that a stepped actual costing method). If either side is off (quantities and/or costs) the numbers are not exactly correct. This disconnect means "some of the parts get to ride" meaning that their value was either over or under stated as they were pulled out of inventory. Many accounting system use an average cost to accomplish this disconnect. That becomes a never-ending changing variable and doesn't allow us to pull a balance sheet with any level of accuracy (literally a shot in the dark because of the variables that could change at any given time). The goal would be to have tools that help update either side. The logical place to do that is either on a PO (update po for quantities) or on an invoice that only holds cost of good sold. Steve & Kelly want to use an invoice depending on whether the cost needs to go up or down... The invoice would use a -1 (negative one) or a +1 (positive one) on the quantity field. Each entry would have two lines. You would then adjust the cost accordingly (up or down). Pretty creative. The price on both lines would be $0.00 making the price of the invoice be $0.00. Doing it this way only effects COGS and does not effect inventory because a -1 plus a +1 = 0 on the quantity side. Basically it becomes an internal cost correction invoice that only carries the cost of goods sold (no revenue, no taxes, no receivables, no payments). The quantity is unaltered and we are able to virtually push the cost up or down according. Pretty cool! It is kinda like selling the quantity of 0 at a actual cost that shows up. That would be impossible except for the -1 + 1 = 0 logic. Read on for more ideas and notes about the subject. Here are some random notes on the subject. No particular order... some of these notes were written down before we decided that an IIC invoice would be the way to go. - We need a clean-up feature to help with updating cost of goods sold... Basically matching up PO's and costs to invoices and costs. The goal is to catch the pieces that "get to ride" on the cost changes. - This is location specific, date sensitive, and according to individual part numbers. What we need is a one-to-many relationship from parts to the corrections. We virtually track what came in (po's), what was sold (invoices) and calculate the differences or cost differences between the two. This correction could really help with perfect cost of good sold (GOGS). - On the accounting side, the cost differences would need to play into the P&L or income statement as part of the GOGS. It would also be cool if they, the differences or manual corrections, would show up under the part usage sections. - We talked about a thing called watchers and feeders for the balance sheet. This could be things like taxes, collected fees, etc. Why not cost of good sold corrections or differences. It automatically sits in the background and runs logic on items sold vs. items sitting in inventory. This would be cool and would take out the manual portion of this task. If it was virtual, it could be very dynamic but may take more processing power... if it was manual, it would take up more storage space but would be quicker to get to... - What about correcting per location? Locations play a part of inventory values. - We've had requests to be able to clean-up old inventory items. This is two fold... 1. COGS and 2. Quantities on hand. Basically, we need a "sweep the floor" function to get everything in order and then really hide the items on the look-back reports (subs of the balance sheet). Even if they are inactive... they still show up if there is a problem with GOGS and quantities on hand. - On the part number look-back reports (subs of the balance sheet)... maybe add a part number status filter and/or help them clean things up so that is works correctly. - We has a request to have a report and the ability to delete items (part numbers) in bulk. This would need to set COGS to the correct values and get rid of any remaining pieces (whole or parts) and mark the items as inactive. Do all of this all at once... |