Overview

This article provides a step-by-step guide to enabling and configuring Perpetual Inventory in iVendNext.

1. Enabling Perpetual Inventory in iVendNext

Before diving into the setup, you need to ensure that Perpetual Inventory is enabled in your company settings. Here’s how to do it:

1.1 Steps to Enable Perpetual Inventory

1. Navigate to Company Settings:

• Go to Home > Accounting > Company.

2. Enable Perpetual Inventory:

• In the Company master, locate the option to Enable Perpetual Inventory and toggle it on.

3. Save Changes:

• Save the settings to activate Perpetual Inventory for your company.

Note: Once enabled, iVendNext will automatically generate General Ledger (GL) entries for every stock transaction, ensuring real-time sync between stock and account balances.

2. Configuring Default Accounts for Perpetual Inventory

For Perpetual Inventory to function correctly, you need to set up specific default accounts. These accounts are used to track inventory values, temporary liabilities, and adjustments.

2.1 Default Accounts to Configure

• Default Inventory Account: Tracks the value of stock-in-hand (an asset account).

• Stock Received But Not Billed: A temporary liability account for goods received but not yet invoiced.

• Stock Adjustment Account: Used for adjusting stock values during discrepancies.

• Expenses Included in Valuation: Tracks additional costs (e.g., shipping, customs) that are included in inventory valuation.

• Cost Center: Used for allocating costs to specific departments or projects.

2.2 Steps to Set Up Default Accounts

1. Navigate to Chart of Accounts:

• Go to Accounts > Chart of Accounts.

2. Create or Verify Accounts:

• Ensure that the above accounts exist in your Chart of Accounts. If not, create them under the appropriate categories (e.g., Current Assets, Liabilities, Expenses).

3. Link Accounts in Company Settings:

• Go to Home > Accounting > Company and link the default accounts in the respective fields.

3. Linking Warehouses to Specific Accounts

To achieve granular tracking, you can link individual warehouses to specific accounts. This allows you to view inventory and financial data warehouse-wise.

3.1 Steps to Link Warehouses to Accounts

1. Create Warehouse-Specific Accounts:

• Go to Accounts > Chart of Accounts and create accounts for each warehouse (e.g., "Stores Account," "Finished Goods Account").

2. Link Accounts to Warehouses:

• Go to Stock > Warehouses and select the warehouse you want to configure.

• In the warehouse settings, link the corresponding account (e.g., link the "Stores" warehouse to the "Stores Account").

3. Save Changes:

• Save the settings to apply the account linkage.

Note: If an account is not set for a specific warehouse, the system will use the account from the parent warehouse or the default inventory account from the company master.

4. Handling Stock Transactions with Perpetual Inventory

Once Perpetual Inventory is set up, all stock transactions will automatically generate accounting entries. Here’s how some common transactions are handled:

4.1 Purchase Receipt

• When you receive goods, the system:

• Debits the Stock-in-Hand Account (asset).

• Credits the Stock Received But Not Billed Account (liability).

4.2 Purchase Invoice

• When you receive the supplier’s invoice, the system:

• Debits the Stock Received But Not Billed Account.

• Credits the Creditors Account.

4.3 Sales Invoice

• When you sell goods, the system:

• Credits the Stock-in-Hand Account.

• Debits the Cost of Goods Sold (COGS) account.

4.4 Stock Adjustments

• If there’s a discrepancy in stock counts, you can use the Stock Adjustment feature to reconcile physical stock with system records. The system will automatically adjust the corresponding financial accounts.

5. Troubleshooting Common Setup Issues

While setting up Perpetual Inventory, you may encounter some common issues. Here’s how to resolve them:

5.1 Mismatch Between Stock and Account Balances

• Cause: This usually happens due to previous entries made before enabling Perpetual Inventory.

• Solution: Create a Journal Entry to sync the stock balance and stock account balance. Use the "Create a Journal Entry" button in the validation message to resolve the mismatch.

5.2 Missing Default Accounts

• Cause: If default accounts are not set, the system won’t be able to generate automatic GL entries.

• Solution: Ensure that all default accounts (e.g., Default Inventory Account, Stock Received But Not Billed) are configured in the company settings.

5.3 Incorrect Warehouse-Account Linkage

• Cause: If accounts are not linked to warehouses, the system may use incorrect accounts for transactions.

• Solution: Verify and update the account linkages for each warehouse in the warehouse settings.

6. Best Practices for Setting Up Perpetual Inventory

To ensure smooth operation of Perpetual Inventory, follow these best practices:

1. Regular Reconciliation:

• Periodically reconcile stock balances with account balances to identify and resolve discrepancies.

2. Accurate Valuation Rates:

• Ensure that valuation rates (e.g., purchase rates, landed costs) are entered correctly during stock transactions.

3. Monitor Back-Dated Transactions:

• Be cautious when entering back-dated transactions, as they can impact future stock and account balances.