With A2X you can choose how you group your COGS entries. By default, they will be grouped together, however, you can also select to group your COGS by product type. If you are interested in using this feature, please reach out to our support team, to enable this function on your account.
This function also works with Xero or QuickBooks tracking/classes. You can elect to specify a tracking/class for each 'product type' grouping of your COGS entries.
Before you can group your COGS by product type, you first need to ensure you have product types set up.
Why do group by product type?
There are lots of different reasons, your financial adviser or tax adviser can help you choose when it is appropriate. One example where A2X users use this option is baby products in the UK. They are VAT exempt, so they get pulled out and accounted for differently on the invoices.
Some users also use this option to track broad categories of products in their P&L reporting for management.
The “Group by Product Type” option works well if we have consistent formatting in your SKUs or a SKU list that’s not changing too often.
What are product types?
Product types are a way of grouping together similar products by creating groups of SKUs.
Let’s assume we have 100’s of different sizes and colors, but we need to track them by brand, perhaps for tax reasons or for accounting reasons – for example, we split brand sales in our profit and loss reporting.
Before you go on, you need to ensure you have product types set up in A2X.
Please read THIS POST that explains how to set up product type grouping.
Once you have your product types set up, you will need to follow these steps:
1. Enable COGS
Firstly you need to enable COGS, to do this go to Settings > Cost of Goods Sold
NB: This function also works with the tracking/classes function in your Xero or QuickBooks. If you want to use tracking/classes, then log into the accounting system your A2X account is connected to and ensure it has one or more classes/tracking-codes set up. In A2X you should go to settings->connections and press REFRESH CACHE.
2. Enable ‘Group by Product Type’ invoice setting
You then need to go to Settings > Invoices:
Under ‘Sales Grouping,’ select ‘Sales by product type’. Then click ‘Update Invoice Settings’ to save.
NB: Again, if you want to use tracking/classes: you need to choose a tracking code default value (if Xero) or Classes value (if QBO). Then you will need to tick the checkbox under the 'Advanced Tracking Codes' heading (if Xero) or 'Advanced Classes' (if QBO).
Please note, that once we change the A2X invoice setting, we need to refresh each settlement we wish to post to reflect the new calculations:
Now that these settings have been enabled, you can view the updated settings under ‘Cost of Goods Sold’ page. On this page, you will be able to specify accounts for each product type.
NB: If you have set up for tracking/classes then you can also specify a tracking code for each.
Now, when you review a settlement or send a COGS invoice to Xero/QBO you will be able to see the new grouping behaviour.
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