ERPAG 5.1
QuickBooks Online and Invoice before packing
1. Introduction
One of our clients asked us: “What happens with QuickBooks Online integration with Sales Orders which are invoiced before packing?”.
Our answer was: “You have to keep an eye on Cost of Goods Sold (COGS)”.
For someone who is not an accountant, this looks confusing. In this blog, we will represent a detailed case scenario.
2. Invoice before packing
Packing items in ERPAG is a moment when the items are “taken” from the stock. In case you don’t have sufficient quantity in stock, you won’t be able to pack the items.
The usual chronological order of documents is:
FOR PURCHASING:
- Purchase order
- Goods Received Note
- Supplier Invoice
- Payment to supplier
FOR MANUFACTURING:
- Work order
- Load Materials
- Work operations
- Deliver Finished Goods
FOR SALES:
- Sales order
- Packing list
- Shipment
- Invoice
- Payment from customer
Of course, nothing is ideal in practice, so we always have some deviations. One example is an Advance payment.
For practical reasons, ERPAG allows us to generate an Invoice before packing the items.
In our case, we generated an Invoice on October 22nd.
The reasons are different – from closing the advance payment to the customer’s wish to have an invoice before the items are delivered to him.
In our example, we did an Invoice before we even got the goods for the customer from our supplier.
3. Procurement
The next day, through the fulfillment option, we generated a Purchase order for the missing quantity.
And we received items to our stock:
After that, we “got” a supplier invoice:
4. Packing previously invoiced Sales Order
After we received the items, we have sufficient quantity in our stock, in order to pack the Sales Order:
And this is how the synchronization list looks like:
5. QuickBooks Online results
On the COGS account, we have an adequate value:
This is the recommended workflow.
6. What would happen if we synchronize the Sales Order, that is not packed?
We can achieve a similar effect if we sync only the “Sales Order”.
The COGS in QuickBooks Online will be 0.
That’s because we don’t have adequate data in QuickBooks Online to calculate this value.
After we sync the PO to QuickBooks Online
The result will be corrected:
We got the same result like we followed the recommended workflow and packed the sales order first.
NOTE:
In some cases when doing Invoice before pack (eg when we don’t have enough stock), Cost of Goods Sold (COGS) may be incorrect.
It is advised that you pay more attention to such documents and consult your accountant.
2019. ERPAG Inc
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