There are a range of acceptable reasons why your Unleashed and Xero stock on hand might not balance. We cover these in great depth in the Unleashed Tune Up course including how to identify and fix them. Below I’ve compiled some of the most common faults that I see from people using the Unleashed and Xero integration. No matter what industry you’re in, it is important that you understand and avoid each of the below.
- Removing zero-value stock transactions from Xero
This is a big one and one of the more difficult problems to fix. Because of the way the Unleashed integration works people can expect to see a series of $0.00 Accounts Payable transactions arrive as drafts in their Xero with each sale. Although the net effect of these is $0.00 to accounts payable the line-entries in these transactions have the effect of recognising the cost of good sold and adjusting down the inventory balance. Do not remove or adjust these under any circumstance. Just approve them as they arrive.
- Re-coding freight costs to a freight expense account
Double-entry accounting has existed for over 500 years and its key principle is that a transaction must balance and therefore cannot exist in two places at once. Because of the way Unleashed measures your true product costs through capitalising the freight and assembly costs this means that can’t also record the same purchase order freight as an overhead because it has been built into the cost of the product. A common fault is to find this ‘error’ and re-code your freight expenses to a freight account, changing it from the stock on hand account. Don’t do this as you will undervalue your stock on hand and cost of goods sold. A symptom of this is a constantly growing COGS account in Xero, a shrinking Stock on Hand account in Xero and suddenly decreasing margins.
- Inventory related transactions occurring outside Unleashed
Unleashed is the primary source of all inventory related information in your business. This includes balances, quantities and values. If a transaction at all affects inventory it needs to be recorded in Unleashed. Sometimes accountants or people will make a manual adjustment through a journal to their accounting system for events like stock-takes, losses, wastage, accruals or customer and supplier credits. All of these transactions without exception need to be reflected in Unleashed first.
- Sales Tax
In jurisdictions where sales tax is product-based ie. determined by the type of product, Unleashed will use the product-based tax rate. In jurisdictions where GST is customer/supplier based, Unleashed will use the customer or supplier setting. Its very important you understand which of these you fall into for your various operations and when. A common fault is to have product-based tax settings set in a jurisdiction where sales tax is determined by to whom you sell and from whom you buy, not by the product. The result of this is incorrect customer and supplier invoicing and incorrect sales tax returns in your accounting system. A bad habit to get into is to fix these up at tax time in your accounting system without updating the cause of the problem which is found in your Unleashed product or customer/supplier records.
If you can avoid the most common faults that occur by people using the Unleashed and Xero integration then you will have much more reliable financial results. If you suspect your Unleashed and Xero integration isn’t working like it should the Unleashed Tune Up course is designed for you. We cover How to setup your Unleashed and Xero integration as well as Reconciling your Stock on Hand between Unleashed and Xero.
If you’d like to discuss your Unleashed and Xero settings I’d recommend booking a quick session with us using this link.