Managing your inventory is essential to any ecommerce business, not only from an operations perspective but also from an accounting perspective. Stock is likely one of your biggest investments, so it’s essential that you have the right management process for your business.
Many sellers opt to use inventory management software, such as Finale Inventory, to assist in managing the overall inventory processes within their business. Inventory management software can help with tracking, expensing, and even forecasting your inventory requirements.
Generally, inventory management systems track and capture inventory on a per-order, per-sales-channel basis. This approach is ideal for managing inventory quantities from an operations perspective and as part of the accounting process. While this does help with some financial aspects, you also need to account for transactions such as fees, charges, shipping, tax, returns, damages, and so on to complete accurate accounting for your e-commerce channel. In order to correctly reconcile the e-commerce payout you receive, you need to account for all of the different transactions.
This is where A2X comes in with a solution that will take care of it all for you! And the great news is A2X works really well with Finale Inventory.
A2X will ensure that you have an accurate breakdown of transactions and will correctly account for all of the transaction types, while Finale will allow you to track your inventory and COGS. Finale even provides you with the option to calculate your inventory costs using a system based on weighted, landed, and average costing.
Using A2X and Finale Inventory
Finale can automatically sync a sales invoice to QuickBooks Online directly. This invoice will specify the more direct transaction values: sales, revenue, discounts, and fees. Each individual order is posted as an individual invoice, and they do not have a payment applied to them–meaning the payment must be manually reconciled.
These entries are missing the additional accounting details needed for reconciliation (commissions, fees, marketplace fees, credit card processing fees, listing fees, advertising charges, shipping cost, etc.), and it can be very time-consuming 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 match the deposits in the bank account.
To use Finale Inventory in conjunction with A2X, we need to ensure both systems are set up to work together to ensure 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 Finale. Because Finale sends COGS to your QuickBooks via ledger entries based on the ship date, your month-end figures for the month will include all sales and fees as per A2X and the corresponding COGS as calculated by Finale. Finale also calculates COGS based on Purchase Orders and Landed Costs entered into their system, so it removes the need to manually enter costs.
Here is an example of the entry that A2X will send:
The same entry in QuickBooks:
Here is an example of the entry that Finale will send:
The same entry in QuickBooks:
Here is an example of the COGS ledger account in Finale:
The same COGS GL account in QuickBooks:
The primary setting to be aware of in A2X is ensuring that your COGS are not enabled. Your COGS will be imported through Finale, so there is no need to use the A2X COGS feature. To access this within your A2X account, navigate to the settings and then click on Cost of Goods Sold. If you were previously using this feature, you can disable it in your settings, as shown below.
To ensure Finale doesn't send your ecommerce sales to your accounting system but still calculates COGS, you will need to update your settings within the relevant integration settings in Finale. Finale Inventory can be configured to send manual, B2B, Wholesale, and Distributor type sales/invoices to QuickBooks and omit sending the ecommerce sales.
Here is a general overview of the settings, but the Finale team can help configure them for your specific setup. You will need to configure Finale not to send ecommerce 'Source' values and not map the sales clearing, Income, and AR accounts .
To do this, start by creating the various sources you sell from. Examples are Manual, B2B, Wholesale, Retail etc. This can be found under Application Settings > Selling > Sources.
Depending on the type of transaction you want to classify the sale as, the sources you create will appear on your Sales Orders. You can then choose to send them to QuickBooks if desired.
Now, in the 'Sale Source Filter' (Application Settings > Accounting > QuickBooks Online Tab), select the source or sources that should be sent to QuickBooks.
This field is connected to the 'Source' field on your Sales Order. Make sure the Sales Order 'Source' field is populated correctly, and the invoices will be sent (or not sent) to QuickBooks based on these settings.
If you would still like to send B2B invoices, the settings are under ‘Application settings’. Select 'Integrations' under the ‘Accounting’ tab. Under ‘Sales source filter’ select ‘B2B’.
If you have any questions about this process, it is best to contact Finale support.
This method is particularly beneficial for customers selling through channels other than ecommerce because any sales generated by POS, B2B, or manual entry within Finale would still be sent to your accounting system by Finale.
Finale does not support FIFO inventory tracking.
Finale tracks COGS by products or SKUs, and each product or SKUs may have different COGS accounts. Finale doesn't have the ability to only send the COGS for selected channels to your accounting system. Whilst it can report on the sales for channels separately (see the report screenshot below) Finale doesn’t track COGS by channel.
If you have any questions, please reach out to our Customer Success team via the blue chat icon in the bottom right of your screen, or via firstname.lastname@example.org.
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