Most accounting software systems provide a lot of information. Management and employees depend on financial reports from the software to make key business decisions. But do you know exactly how those numbers on the reports and screens are calculated? Don’t think it is common sense.
Here is an example:
A distributor (who has a calendar year) was looking at a February ranking report produced by his software. This ranking report was a list of inventory items in descending order based on cost of goods sold. He had sold $4,000 worth of the widgets (at cost) this year, but his report showed a value of $24,000 for the product in the COGs column.
The first two months of the year he had sold $4,000 worth of product. The system annualized sales over the first two months and projected that he would sell $24,000 for the entire year. This was a seasonal item that was sold only in January and February. It was not logical to project sales over an entire year based on two months of usage. Many inventory products don’t have consistent usage throughout the year. If this distributor had not carefully looked at his report, he would have treated the item as though it had greater than actual sales.
There is a good chance that you are unaware how the “canned” reports are calculated from your software system. Take the time to learn and understand the reports from your accounting software. On-Hand Qty, COGS and Demand/Usage are very popular on inventory reports yet are calculated differently based on the accounting software. Don’t assume you understand the meaning of a reporting field or you could be misled.
To learn more about Business Intelligence tools and ERP accounting systems such as Microsoft Dynamics SL, Microsoft Dynamics GP or Microsoft Dynamics NAV contact Admiral Consulting Group at firstname.lastname@example.org