Numerous sellers are now opting for an inventory management solution to assist in managing the overall inventory processes within their business.
The inventory management system is traditionally used in two ways:
As a system that integrates fully with the accounting system, sending all sales, purchases, costs, and inventory values to the accounting system. In this case, the reconciliation of e-commerce payouts would be done manually in the accounting system.
As a standalone system that is not connected to the accounting system and is managed independently.
Many of the inventory management systems focus primarily on inventory movement by way of capturing sales data on a per order or per unit basis. This approach is ideal for managing inventory values in the accounting system, but what happens to all of the other accounting information that makes up the Amazon or Shopify deposits, such as fees, charges, shipping, tax amounts, etc.?
This is where A2X comes in with a solution that will take care of it all for you!
Using A2X with the inventory management system
We will use the Cin7 Inventory as an example to explain this integration.
Cin7 posts invoices/sales receipts over to Xero or QuickBooks Online covering only the sales/refunds value. They are sent as invoices and do not have a payment applied to them, payment must be manually reconciled.
These entries are missing the additional accounting details needed for reconciliation (fees, charges, shipping, etc.), and it is hard to reconcile multiple single entries with a single deposit in the accounting system.
The reconciliation process when using A2X is significantly easier and only a click away, as our entries contain all of the details and actually perfectly match the deposits in the bank account.
To use Cin7 in conjunction with A2X, we need to ensure both systems are set up so no transactions are being duplicated, resulting in reporting inaccuracies.
The recommended method as explained below will ensure your e-commerce sales and corresponding fees are sent to your accounting system from A2X and your COGS are sent from Cin7. Because Cin7 sends COGS to your accounting system via a monthly journal based on invoice date your month-end figures for the month will include all sales and fees as per A2X and the corresponding COGS as calculated by Cin7. Cin7 also calculates COGS based on Purchase Orders and Landed Costs entered into their system so it removes the need to manually enter costs.
A2X Settings
The only change that will need to be made in your A2X account is that you won't need to upload your costs through your A2X account. If you previously were using this feature you can disable this in your settings as below.
Cin7 Settings
To ensure Cin7 doesn't send your e-commerce sales to your accounting system but still calculates COGS you will need to update your settings within the relevant integration settings in Cin7. You can configure the integrations to download orders with the Accounting Status 'Do Not Import'. To do this;
Whilst logged in as an administrator, click on your username, top right.
Click on Settings.
From the integrations menu, click Shopify (or equivalent).
From the Accounts section, from the Default Accounting Status drop-down, choose 'Do Not Import'
In the same Accounts section, from the Invoice Options drop-down select 'Allow Individual Invoices'. This will ensure an invoice date is automatically applied to the sales order in Cin7.
These two settings are very important as Cin7 has three conditions that must be met for COGS to be calculated and this satisfies two of the conditions, the remaining condition is dispatch date so it is important to ensure entering this is part of your workflow. If you have any questions about this process it is best to reach out to Cin7 support.
Important Notes
This method is particularly beneficial for customers selling through channels other than e-commerce because any sales generated by POS, B2B, or manual entry within Cin7 would still be sent to your accounting system by Cin7.
Whilst Cin7 can map the COGS for channels separately, it doesn't have the ability to only send the COGS for selected channels to your accounting system so if you were to use the COGS calculations from A2X you would need to manually amend the Cin7 journal to exclude those channels.
If your preference would be to use Cin7 to track inventory only and use A2X for sending all transactions to your accounting system that will also work. In that case, it would be recommended to disconnect your accounting system from Cin7 to avoid staff members uploading transactions in error.
If you have questions or need any assistance to ensure your inventory management system and A2X are working together smoothly, please contact us via our chat support anytime or at contact@a2xaccounting.com.
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