Inventory · 1 of 2 · 2 min read
Purchases and suppliers
Receive stock at a real cost, so margin means something.
On this page
Recording what you paid is what makes every margin figure afterwards mean something.
Add a supplier
Name, contact details, and payment terms if you buy on account. Terms matter if you want the system to tell you what is due and when.
Record a purchase
When stock arrives, record it against the supplier: which products, how many, and what each cost.
Enter the cost you actually paid, per unit, after any discount. That figure becomes the cost of those units for the rest of their life.
Why cost layers matter
Stock is not held at an average cost. Each batch you receive keeps the price you paid for it, and sales consume the oldest first.
The difference shows up the moment a price changes. Buy a hundred at two, then a hundred at three. Sell fifty. Averaging says those fifty cost two-fifty each. Cost layers say they cost two, because that is the stock you actually had on the shelf.
Every sale knows which layer it consumed, so profit per sale is a fact rather than a calculation applied afterwards. It also means a purchase entered at the wrong cost does not average itself away — it stays wrong until corrected, which is a feature the first time you go looking for a discrepancy.
Extra costs
Freight, duty, and handling can be allocated across a purchase so they land in the cost of the goods rather than sitting as a separate expense. Worth doing when the freight is a real proportion of the value — a container's shipping cost is part of what those goods cost you.
Paying a supplier
Record the payment against the purchase. What is outstanding, and what is overdue, follows from that.
If you pay several invoices at once, allocate the payment across them rather than recording one lump sum. Allocation is what makes a supplier statement reconcile.
Buying on credit
Purchases on account post to payables and appear on your balance sheet as money you owe. The report of what is due, and when, comes from the terms you set on the supplier — so setting terms is worth the thirty seconds.
Something here wrong or missing? Tell us — we would rather fix it than have you work around it.