Finale Inventory is a great solution to help you track all of your inventory and be able to know what you paid for it and what all of your on-hand inventory stock level is worth, in other words, your total inventory valuation. Onboarding and implementing Finale Inventory may be done in five easy steps.
Step 1. Import/Create your Product Ids(SKUs)
Step 3. Import/Enter your beginning stock levels for each of your Product Ids(SKUs)
Step 4. Map your Product Ids(SKUs) with your Marketplace/Website Listing SKUs and barcodes
Step 5. Reconcile your current open Sales orders and Purchase orders with your stock level in Finale Inventory and go live
IMPORTANT: Cost is a value you import using a specific accounting transaction called an Average Cost Change transaction. You must establish a valid average cost in Finale Inventory for each and every Product Id(SKU) you create in Finale Inventory before any transaction is entered, created, or imported, otherwise you will not have accurate COGS, Stock valuation, Margin, Profit, or General Ledger/Accounting calculations on your reports, screens, views, analytics dashboard, or exports. Cost is not a value you import when you first create your products/SKUs in the Product catalog table in Finale Inventory. Cost is not stored in a field on the product detail page, it is a calculation by Finale Inventory.
GIVE IT TO ME STRAIGHT! You must use an Average Cost Change transaction to establish the correct COGS and stock valuation for all of your products BEFORE you import or create any sales orders, sales shipments, sales history, stock levels, stock takes, or stock transfers into Finale Inventory. This Average Cost Change transaction is a separate imported or manual transaction that you must create. It is a complete and separate step from importing and creating your Product Ids(SKUs) and it is also a separate import/transaction from a transaction you use to import your beginning stock levels.
DON'T PANIC: If you did not import your costs before you proceeded with the implementation of your Finale Inventory account, and you need to correct issues with your costs, not a problem, you may use the Average cost change transaction feature and backdate the transaction to the day you first started with an Effective date.
Key data fields, terms, and terminology:
Average cost - The system calculated average cost per unit(including landed costs if used) that is the basis for Finale Inventory's Cost of Goods Sold(COGS). This field is transactional and historically maintained. The formula for calculating the weighted average cost is:
Cost of goods available for sale ÷ Total units from beginning inventory and purchases = Average cost
For further explanation on this formula, see here: https://www.accountingtools.com/articles/2017/5/14/average-cost-method
Finale Inventory does not currently support FIFO, LIFO, or Specific Inventory Item(Serial number) costing methods.
Landed cost - The true cost of each product you purchase by determining the total cost for you to acquire that product from the factory floor to your warehouse.
Std. Accounting cost - This is a static field that you have to update and maintain a value for. It is not historically maintained, meaning if you change the value of the field today, it affects all records and transactions for any time period when reporting. This is field is NOT what Finale Inventory uses for Cost of Goods Sold(COGS). It is a utility field for manual cost reports for situational valuation needs.
Std. Buy price - the default field used for new purchase orders to get a price for an item that does not have a specified supplier price listed or matched on the purchase order. Std. Buy Price is used to "Default" the Purchase Order unit price when a product id is added to a Purchase Order. It is NOT the cost field and it is NOT used in the calculation of COGS.
Item price - Not associated with the cost of your items. This is the default selling price field used by Finale Inventory when creating new Sales Order manually in Finale inventory. It is what you would sell it for.
COGS - Cost of Good Sold, is recorded when you ship a shipment for an item against a Sales Order. COGS is not established or recorded to Finale Inventory General Ledger when you Invoice a sale. It is recorded in the General Ledger when you ship an item against the sales order.