Tanya’s way is in accordance with best practices for GAAP accounting on an accrual basis. Which a significant amount of US based business are on accrual basis. This is because on accrual basis you are not recognizing the cost until the item is consumed. For example, I am not recognizing the full cost of a grain silo fill on my income statement when the full raw material is delivered. Your simple solution is fine for much smaller breweries that are doing a couple brews a week but someone like us that are doing several a day and packaging several a day we need to have it in more detail as it provides accurate financial data at any given time.
Thanks for getting back to me, Christian. Is the problem with the sync being too infrequent (e.g. monthly)? What if the opening and closing stock journals were synced daily (or even hourly) instead?
There are many pitfalls with the other approach that we’re trying to avoid, such as:
Unreliable and hard to correct mistakes/undo things (Erik mentions this above as problematic with his previous software).
How to account for stock items sold on invoices, rather than consumed into beer batches before sale.
How to account for stock items used in ingredient batches.
How to account for utility/other costs which impact the value/cost but never had a “stock item” in the first place.
Is there actually a need for the “steps” of moving the value from Inventory to WIP, to Finished goods before COGS? This moving of costs is our concern (reliability, backing out human mistakes, future-proofing of new functionality not yet in Breww, etc). Or is this just because it’s helpful to see them itemised on the balance sheet? We were hoping that this could be simplified by using opening and closing stock journals, even if they need syncing daily (or more often).
The sync being too infrequent is definitely an issue. Doing it daily is definitely workable but hourly would be ideal. There are many times we are making decisions based on how a month looks and real time numbers are key. The way you are proposing could work for smaller breweries but with breweries at larger scales we would need to have this information separated since there are so many moving parts.
Regarding the need for steps. It is mainly due to transparent and accurate financial reporting. When a company is small, a basic inventory account can suffice but as you get bigger you need to have the inventory move through these separate accounts and is considered best practices.
Breww already supports custom timings/internals for stock valuations, so we would expect this to be customisable to your requirements too (monthly will probably just be the default).
Sorry to be a pain, but would you mind explaining further why this is needed for accurate financial reporting?
Putting aside for now, the real-time part, why does the movement of costs between the stages need to be in your accounting software when it’s already in Breww?
As another vote for a more detailed cost of goods integration - we are trying to split cost of goods by sales channel to provide really solid useful management information, just doing opening vs closing stock is OK as a starting point, but doesn’t give us what we need to run the business effectively
I was not told that there were other options for frequency already in the software, that is definitely a good start.
Regarding the financial reporting. As the company’s accountant I am living more in the financial software and rely heavily on the data I am receiving from the production software to help make important business decisions. A massive lump sum number for all inventory is not helpful. For example if I can quickly look at my raw materials inventory balance and see that is it low vs historical numbers I should be expecting some large orders to come and need to allocate the appropriate cash. Or if we look at our packaged goods inventory and see that it is high then we need to start working harder at moving product. I also run financial ratios from various accounts to help us make business decisions. In short better financial reporting helps make business decisions and keeps the lights on.
I understand that the information could be retrievable in Breww but I was expecting more of a symbiotic relationship with the accounting software and Breww, especially since there is no internal accounting option offered and the software was designed based on integration. Our current option is jumping between different software options and its extremely cumbersome and a huge reason why we are switching. This never came up earlier in the process on our end because it is a feature that is expected to be part of a software that many of your competitors do have.
I have forgotten to mention but I should also be able to split costs of goods sold between kegged beer and bottled/canned beer once the item is sold. Kind of like Georgi mentioned in another comment.
I just wanted to reply and let you know that we’ve not missed your responses (they’re very helpful for our understanding of what is important to you). We’re still internally talking through the different options here and will get back to you again very soon.
This is a very recently released feature (see announcement), so it might not have been available before. Sorry for the confusion here.
Hello all! Thanks for your patience while we discussed everyone’s responses and requirements and for engaging so constructively with us on our questions. We believe we’ve scoped out the feature now so that it will provide the desired functionality while also planning out from a technical perspective how to keep it robust and able to reliably handle mistakes and corrections.
We first plan to allow specifying the following additional accounts within Breww:
A WIP account
A WIP losses account - to be used in the event nothing is packaged from a batch, and the whole cost is lost. Otherwise, all costs make their way to Finished goods.
A default COGS account with the option to override on a per-product basis
A default Finished goods account with the option to override on a per-product basis
A Stock adjustment account (COGS/Expense account)
A Utility/other costs account with the option to override on a per-cost type basis (these costs currently only increase the cost of the WIP batch in Breww; there is no stock item providing a value for it in your raw material value, so this account will be necessary to have in order to move the cost from an account in your accountancy platform to the WIP account)
If enabling this feature, any existing accounts associated with Stock items will need to be set to “Asset” accounts rather than “Expense” accounts
This will provide us with all of the accounts necessary to create journal entries for the following new main syncing areas:
Brewing:
Adding ingredients to a batch: Raw materials accounts → WIP account
Adding ingredients to an ingredient batch (e.g. a Yeast batch): No change
Adding an ingredient batch to a beer batch: Raw materials accounts → WIP account
Adding a Utility/other batch cost to a beer batch: Relevant utility cost account → WIP account
Product assembled into another product, e.g. 24-pack into single cans (Product A’s finished goods account → Product B’s finished goods account)
Any adjustments to the costs of already sold batches (Relevant COGS account ↔ Finished goods account ↔ WIP account ↔ Raw material/other cost account)
To ensure adjustments and mistakes are handled robustly, Breww will periodically check that after everything has been synced that the account values match with what Breww is expecting. If there is any discrepancy, the adjustment account can be used to adjust for the difference. This also solves the scenario where the account associated with a product in Breww is changed, as this check will move the value from one account to the other through the adjustment account.
This does mean that Breww will need to take control of these accounts, as Breww will override any changes made manually in your accountancy software.
This feature will need to be enabled, and it will involve an additional setup flow that creates these new accounts for you to use by Breww/takes control of existing accounts if desired. This additional information won’t be synced for anyone who doesn’t want it to be.
Could anyone interested please confirm whether this will or won’t cover everything you need?
I’m afraid this looks like it will sit outside of the initial scope of this task, as it requires more complicated logic than simply “This product uses this COGS account”. It instead needs “This product uses this COGS account if sold to this person”, at which point we would need to look at adding “Rules” that allow you to customise this - which would very much be a second step.
The only thing missing from my point of view would be journals to a beer duty account in whichever accounts package is chosen. One of the main benefits in this feature for me would be tracking profitability through the month rather than waiting for month end stock journals to be made. Unless I’m mistaken the above doesn’t mention any journals for beer duty when beer is sold. It would just need a journal to be made at the point of sale into a ‘COGS’ type account in the P&L (our ledger is simply called ‘Beer Duty’).
Thanks for the feedback, Jack - and really happy to hear you’re excited about this feature
Yes, that all makes sense! We decided for the first release of this feature to leave duty costs out of the journal syncing, mainly because it has some additional complications that would require further investigation and would delay the rest of the core functionality significantly. These are mainly surrounding paying duty in advance of selling the beer (such as through site transfers to a non-bonded location), accounting for the fact the accrued amount will ultimately be different from the amount payable due to the actual amount paid being rounded differently when submitting your totals, handling reclaims and manual adjustments.
These can, of course, all be solved, but it will likely amount to a significant build in and of itself, and the rest of the functionality will be hugely useful even missing this. But we do think it would be an excellent addition to look at after we have the rest of the feature complete
In the meantime, depending on how much those complications affect you, a manual journal entry as regularly as is convenient for the difference between your current return’s total and the last amount you posted for that return may help provide the last piece to live profitability throughout the month - but I appreciate it doesn’t cover a more complicated situation where you’re selling duty-paid stock over many months and you’re looking to spread that cost on your P/L over those months.
This all seems to be in line with our initial expectations, although I’m going to go back and read through it again.
WIP loss is only used for batches that are dumped, not for volume lost along the way (those are rolled up into COGS?). Otherwise Packaging would go to WIP + WIP Loss.
Regarding duty, can you try to delineate the UK-based feature discussion from the US-based? Since the whole TTB-based Excise tax approach is different that crosstalk can be confusing. While it would be nice to accrue TTB-based (and state-based) excise, that is a “nice to have” and pretty low on the request list compared to everything else we have out there.
We would have some interest in rules-based allocations of COGS based on sale, as we do try to look at profitability of retail vs. wholesale which would require some sort of more advanced ruleset for both container types and customer types. For example, profitability of cans sold to wholesale vs. retail, which I don’t think we can easily get now.
As an interim step, setting COGS and Income based on container type rather than having to drill all the way to the product would be nice.
Good news everyone, we have a late Christmas present for you all This is now live for Xero and Quickbooks
We have a guide here on setup and exactly how it will work here: Balance sheet syncing - Breww docs, but if anything isn’t clear, please don’t hesitate to ask!
Please read the guide in full before enabling this feature!
As part of ensuring no transaction is missed, Breww will take control of the Stock item, WIP, and Finished goods accounts you choose to use so that it is possible to regularly check the live balances of those accounts against what Breww expects them to be. Any discrepancies are then adjusted into your chosen Stock adjustment account. This means manual changes to those accounts after you have enabled this feature will be overridden by Breww.
We’re delighted to have this feature out for you all. Please let us know how you get on!
Hi David, thanks for taking a look at this and confirming!
Yes, that’s right, WIP Loss will only be used for batches that are dumped. If a single product is packaged, then all the WIP costs will be moved to the relevant finished goods account.
This thread also has two other great suggestions you’ve mentioned on how it can be improved further. However, as the votes are all rolled into the main feature, even if they may not be a priority for you, we’ve split these into new feature requests so that people can add their votes to the ones that are important to them.
OK - I have set it up and enabled it, and it seems to have done everything expected. The timing is good as I can get everything adjusted out for 12/31 so we are clean and automatically synced as of 1/1 for the new year.
I will open a ticket if anything unexpected happens!
This is now live for Xero and Quickbooks 