We often invoice the customer on one date, and ship out their product on another. It seems like DEAR wants to post the COGS journal entry on the date the product ships. For our business and many others, this creates very inaccurate reporting (for example, if I make a sale in August, and want to review a P&L, I want to see all costs associated with that month's sales. If I ship orders from August out in September, my P&L will be skewed for both August and September).
Talking to various accountants, it appears the standard in the USA is to always account for COGS when an order is sold, not when it physically leaves the warehouse.
It seems like many inventory solutions give you a setting for this: post COGS on ship date, or post COGS on invoice date. Adding a setting like this would accommodate different accounting standards.
When purchasing goods, there is an option to set
Goods Received Not Invoiced Account, (we haven't recieved an invoice but the goods have arrived) we call this shipment clearing account
Goods Invoiced Not Received Account (we have recieved the invoice but the goods haven't arrived yet) we call this inventory stock in transit..
I don't see why this sort of system coulndn't be implemented for our goods going out, so that between the shipment being sent and the invoice being sent, there is a suspense account of some sort being used to hold the balance until the order is completed
For example, picked not invoiced (the commonly known system), or shipped not invoiced, and on the other side invoiced not shipped or picked. Surely there is a way of doing this with a suspense account so that the sale and the cost of goods relatate once the order is completed.
We use Drop Shipments, so it complicates it a little more. We also end up with COGS captured, but the invoice isn't generated yet.
Correct, the COGS will only post when you mark the order as 'Shipped'. There is no workaround for that. But you can control whether it dates the COGS when the order is shipped, or when the invoice was generated. So if you invoice in August, but ship the order in October, the setting allows you to chose whether the shipping COGS are dated in October or August. But in all cases the COGS won't show up until you actual mark them as shipped in October.
I am confused as you say they fixed it, but then say that COGS only posts on shipment?
From a sales reporting perspective is where I am having a bit of an issue. The invoice may be generated, but the COGS is not associated with it, so we see 100% GP.
Jonathan, they actually fixed this. If you go into Settings, there is one called 'Default Shipment Date'. Set it for 'Date of Invoice' if you prefer that. Unfortunately there is no way to have COGS post if an order is invoiced but not shipped yet (i.e., product is still waiting to ship in your warehouse), but according to our CPA this is correct. You technically should only post the COGS once the product ships out.
YES, YES. This is causing havoc in my business right now. The ability to select would be awesome