anyone able to shed any light on how we can manage the depletion of inventory units in production, and sending the used item details (and therefore associated costs) over to Xero. Ideally so we can get a more complete picture on COGS in our accountancy software based on when the inventory is used, rather than just when it is purchased. currently Xero is being told when we are receiving items of stock into inventory, but has no record back to tell it those items are either now being consumed in the production of wort, or packaged into saleable units.
At the moment Breww doesn’t increase the quantity of stock of items when an inventory receipt is uploaded to Xero. We’d recommend linking this to an “Expense” account instead of an “Asset” account as then there is no need for depletion (for things to “balance” at least).
We’re happy to consider adding support for syncing inventory levels to Xero in the future, but it’s not going to a done in the short-medium term, I’m afraid. Keeping this sort of information in sync between two platforms is very complex and error-prone. We’d highly recommend getting COGS reporting from Breww where the data is always correct and cannot become out-of-sync.
If you can’t get the COGS data you need from Breww currently, could you give us some insight into why and we’ll happily look at making updates to the reporting available? Cheers.
I too would like to see this feature. Xero (our accounting package) should be considered the source of truth for everything related to assets/liabilities/expenses. Simply allocating ingredients to an expense is not the correct answer from an accounting perspective as those ingredients are considered an asset until consumed/transformed. By assigning all ingredients to an expense, the asset category in Xero’s balance sheet is no longer accurate of what the true assets of the brewery are.
Other brewery management platforms use a series of manual journal entries to move the cost of inventory through the process from Raw Materials to Work in Progress to Finished Goods.
This would be a a better way to process the purchase use and sale of anything in breww. instead of having to manually journal stock adjustments each time a stock count is performed.
Thanks for your comments. I can see that for a number of breweries, this seems to be relevant, so I am going to open this up as a community Feature request for you.
This post itself was converted to a feature request (from just a question in the help centre), which will preserve the comments etc. You can use the vote button at the top of this page to add your vote.
Thanks, everyone. It would be useful to hear why our current suggestion of using Breww’s monthly Stock Valuation reports to let Xero/others know the value of your current assets (stock of stock items and packaged beer) isn’t working for the people who have voted for this?
I agree, unless you track their value in Xero by keeping an asset account in sync with Breww’s stock valuations. Or am I missing something here?
In Breww’s valuation, if an ingredient is added to an in-progress batch of beer this doesn’t change the valuation. The ingredient hasn’t suddenly become worthless (even though it’s no longer in its original form) and it’s also not really worth more than it was before (you can make it so with a “WIP value”). Once the beer is packaged, it will almost certainly become more valuable than the sum of its components as it’s now a finished good.
For Breww to track every single movement of every item through to Xero/others, is massively error-prone (e.g. you use an ingredient on a batch and then realise you didn’t and undo it - there are so, so, so many scenarios to get right)… but to tell Xero once per day/week/month “this is the value of my current assets” by using Breww’s stock valuation feature would remove all the risk of keeping huge numbers of movements in sync between two platforms and still mean that Xero has an accurate understanding of your stock value.
I appreciate this is currently a manual process, so should the feature request instead be for Breww to automatically sync this asset value figure to Xero/others?
It’s possible that I’ve misunderstood something, and I’m not an accountant, but I must admit that I don’t feel that this suggestion as-is is the right solution to the problem. And I feel the solution is to simply use Breww’s Stock Valuations. If you disagree, please do let me know why as we’re looking to build the best possible platform and I’m happy to admit that I’m mistaken Thank you
Hi Luke, syncing the monthly closing stock number automatically would be a great start, however one thing that would not achieve is splitting out the cost side into different components. For example its pretty important to track wastage. We are also trying to track profitability by type of sale, so we know we make more profit on sales direct to customer, but being able to track that in Xero would be super helpful.
One approach would be to push a daily “bill” into Xero which breaks down the cost of goods sold by sales order, also separating out any samples / wastage etc. Even better would be the ability to see the different stages, so purchases initially get added to raw materials which again pushes an adjustment into the accounting software, then when raw materials are consumed an adjustment is made to move the value into WIP, then when the product is packaged a further adjustment moves the value into finished goods (which should be valued at cost, i.e. the sum of all the components including packing), and finally when the product is sold that value is moved into COGS.
Possibly instead of pushing huge amounts of data around every day this could be achieved by generating monthly journals in Xero?
Really happy to have a call to discuss if that would help.
The issue seems to boil down to having a periodic inventory system or a perpetual inventory system. (Good explanation of the differences here: www.accountingcoach.com/inventory-and-cost-of-goods-sold/explanation.) Breww does not support maintaining a perpetual system that syncs with accounting software. Would be nice but as Luke points out, it’s a big ask. (I’ve used brewery management software that supported it: it generated many many journals in the accounting SW, was subject to bugs and almost impossible to back out mistakes.) So given that we are restricted to a periodic system, how to implement?
Make sure you have the following accounts in your accounting SW: Inventory, COGS and Purchases.
In Breww’s accounting SW integration settings, set the default expense account (used for inventory receipts) to Purchases.
Create a monthly repeating journal with the following 3 pieces of information:
A) New end-of-month inventory value (from automatically generated Stock Valuation report in Breww)
B) Current value of Purchases in your accounting SW
C) Previous end-of-month inventory value (the current value of Inventory in your accounting SW)
Utilising the fact that COGS = Beginning Inventory + Purchases - Ending Inventory, the monthly journal is:
COGS: Credit A
Inventory: Debit A
Purchases: Credit B
COGS: Debit B
Inventory: Credit C
COGS: Debit C
It would be nice if Breww could automate filling in the numbers for this journal somehow.
Hi Luke, this sounnds like a great start. I’d love it to be daily rather than monthly if possible so we can see the correct gross profit more than once a month. Cheers!
Hi Luke,
I’m in agreement with a couple of the users and would love to see a monthly, if not more regular automated journal into Xero from Breww for the movement in stock. Would really assist the management of margin on a real-time basis.
Cheers, Lara
We are just coming into Breww and I know this is going to be a big pain point with us (and with our accountant). We would really like to see our inventory balance sheet accounts keeps in sync with our general ledger. When, when ingredients or inventory is consumed or sold, the appropriate COGS, Expense, Income and Balance Sheet accounts are updated.
For all of my kvetching about Ekos, this is one of the things they did that was really solid - our P&L was kept accurate on an accrual basis and we didn’t have wild swings when we did bulk-buys, and our tax filings were able to show correct inventory valuations (which we will have to figure out manually from Breww reporting rather than our GL, which should be the source of truth for this stuff!)
Happy to describe in more detail with the appropriate Breww people when they are ready to look at this. Soon, hopefully!
You might want to speak with an accountant, but there are specific rules about how this is supposed to work that you really should be implementing if at all possible for US-based firms.
For example, buying a truckload of cans should not generate a big increase in your packaging balance sheet account.
Then, when you actually package a beer, you are moving the value of the cans (and other ingredients) from your packaging and ingredients balance sheet account to your finished goods balance sheet account.
When you sell that beer, you are then moving the value of the finished goods out of your finished goods balance sheet account and into COGS, as well as recognizing the income from the sale. Income - COGS = gross profit.
Similarly, if you have to dump a batch of beer, that would go from a balance sheet account to a COGS WIP-loss or expense account (as your accounting rules require).
If you don’t do this for all transactions, your P&L looks extremely lumpy and makes it hard to understand what your business is doing on a month-to-month basis (or do month-to-month comparisons). Plus, tax rules generally require that inventory get booked to the balance sheet and only recognized as an expense when it is consumed so we aren’t reporting expenses and income in violation of GAAP or other similar rules.
For items which span calendar years or are long-lived brews (like things in barrels) they really shouldn’t be impacting your P&L until they are consumed or dumped, and they should get reported on your tax filings as inventory and not already recognized as an expense.
While the “best” way to do this would be to add journal entries with every transaction which is not a bill or invoice, a monthly JE would certainly be a good first step.
I hope I’m lost in an old thread or I’m not understanding all of these comments or this functionality exists now, but…
Plain and simple…you can’t efficiently run a business like this (cash basis) and understand where/when you are making money or how to address areas that need support. Keep in mind that on the accounting side, many of us prefer an accrual basis and have a PnL broken into silos such as Overhead, Taproom, Restaurant, Production, Distribution, etc. This allows for better management of the company and the many different areas within the company. Also, if you have investors, it gets old explaining that “we don’t think we lost money this month, we just bought grain” or “no we didn’t start printing money at the brewery, we just didn’t have any big inventory purchases”. Additionally, you either file taxes in the US on a cash basis or an accrual basis; without the option to do an accrual basis, accrual basis companies can’t use your software.
As mentioned in previous comments, receiving 50,000lbs of grain or 155k cans is not an expense at the time of receipt. I should be able to look at my BS and see at a minimum assets such as Ingredients, packaging, WIP, and packaged beer. Our current software does this. Is it perfect…no…but we only experience small expense entries at the time of inventory checks instead of the large ones mentioned here.
In short, I’m on-boarding now and have to rethink my decision now…unfortunately for me, I’ve spent many hours of time to get the system setup to find in the last steps that this issue exists. Not sure it’s worth all of our input when your competition has these capabilities…and that’s probably enough said.
Hi John, if I’ve understood correctly, you should be able to set up the accountancy integration as you’ve described here!
Breww allows you to choose either an expense or asset account when selecting where you would like transactions, such as inventory receipts, to be posted. So, you can effectively choose whether to work on a cash or accrual basis. However, the section where you set these accounts in Breww is titled “Expense accounts”, which I suspect may have caused the confusion (and something we may need to rename)!
If you go to Integrations → Accountancy → Actions → Configuration → Then scroll down to the Expense accounts part of the Default accounts (nominal codes) & tracking categories section, you can set which account you’d like your purchase transactions to be posted to by default, as well as override this per Stock item type (e.g. if you want Hops to go to a specific Hop asset account, rather than a generic Ingredients asset account).
Although the title here is Expense accounts, a better name would be Purchase or Stock item accounts. You can set either asset or expense account types here, depending on how you’d like the integration to work (so asset accounts here in your case).
Then, each month, Breww’s Stock valuation report will run automatically to provide you with the total value of your stock items, WIP goods and packaged beer (finished goods). You can then post these figures as manual journal entries to the correct places in your accountancy software to give you a COGS figure in your accountancy integration for the month. This is the bit that we’re looking to automate in this feature request so that there’s no need to manually add these journal entries.
If you need to post these values more frequently than monthly, you can also manually run the Stock valuation report whenever required.
I hope that clarifies things - but just shout if I’ve misunderstood! Or, if you’d like us to look at the setup in your account, you can grant us access to your account via a support ticket in the Need help? section, and we can jump in and help!
We are just onboarding with Breww and REALLY hope this feature gets added. We have been used to (and would love to continue to see) monthly (at minimum) JE’s to adjust
raw materials inventory → WIP inventory (when we brew)
WIP Inventory → Finished Goods Inventory (when we package)
However, this would be effectively syncing a “grand total stock valuation”, rather than syncing across the more granular level of detail described by Tanya (and others):
For these who would like this level of detail synced across, would you mind explaining why this level of detail is needed/important to you, over simply a “grand total stock valuation”?
Splitting this valuation into “sub-components” adds a lot of additional complexity from a sync point of view, and we’re keen to understand why this complexity (and risk) is important compared to the simpler solution.
The simpler solution of just opening stock and closing stock would be preferable to us, so we wanted to ensure that this covers everyone’s requirements before we go any further.
Thank you, everyone, for your feedback and help on this.
Thank you 