Table of contents
- Why does a late invoice change the cost of goods already sold?
- How do the figures change before and after recalculation?
- Which other late documents change cost?
- How does an exchange rate error in a receipt change the cost of goods sold?
- How do you recalculate cost in Bimp?
- How do you avoid breaking reports during recalculation?
- Who does what when a late document arrives?
- What Bimp does and does not do
- FAQ
- A late freight invoice raises the value of a batch, and with it the cost of everything already sold from that batch. Last month's gross profit goes down, although the sale was closed long ago.
- In the example, a batch of 1,000 hardware sets cost €12,000 and 600 sets were sold for €12,000. After a €1,500 freight invoice, the cost of goods sold rose from €7,200 to €8,100, and gross profit fell from €4,800 to €3,900.
- In Bimp, cost in sales is updated by reposting documents. A full repost runs automatically after midnight, and the result is visible at once after reposting the sale.
- Before recalculating, save the report for the past period so you can compare the figures before and after and explain the difference to the owner.
Cost recalculation is a repeat posting of documents after which the system recalculates the value of write-offs using new data. If a freight invoice arrives after a sale, the value of the batch goes up, the cost of goods sold goes up too, and the gross profit of the past period goes down. In Bimp this is done by reposting: automatically after midnight or manually by posting the sale again.
The situation is typical. In October the report was closed: gross margin 40%, the owner is pleased. In November the logistics company sends a statement for delivering that same batch, dated October. The amount on the statement is small, but the October figures no longer match reality.
Why does a late invoice change the cost of goods already sold?
Freight, customs duty and other purchase costs raise the value of the batch they belong to. When part of the batch has already been sold, these costs are divided across all units in the batch, and the sold units get their share too. That is why the cost of goods sold goes up retroactively.
The allocation follows the method the user selects in the document: by amount, quantity, weight or volume. In the example below, the invoice amount is divided across the whole batch, and even the sold goods receive their euros.
If the invoice is not entered at all, the money still goes to the carrier, and the cost in the reports stays understated. The owner sees a margin higher than the real one, and the price list stays at prices that no longer cover delivery. It is better to post the late document and accept the change in the report than to keep comfortable numbers.
How do the figures change before and after recalculation?
A furniture manufacturer also sells hardware sets to dealers. The company is hypothetical.
| Indicator | Value |
|---|---|
| Receipt in October | 1,000 sets at €12 = €12,000 |
| Sold in October | 600 sets at €20 = €12,000 |
| Freight invoice (arrived in November) | €1,500 |
We allocate freight by quantity: 1,500 / 1,000 = €1.5 per set. The new value of a set is 12 + 1.5 = €13.5.
| Indicator | Before the invoice, EUR | After the invoice, EUR |
|---|---|---|
| October revenue | 12,000 | 12,000 |
| Cost of the 600 sets sold | 600 × 12 = 7,200 | 600 × 13.5 = 8,100 |
| Gross profit | 4,800 | 3,900 |
| Gross profit margin | 40.0% | 32.5% |
| Balance of 400 sets in the warehouse | 400 × 12 = 4,800 | 400 × 13.5 = 5,400 |
Check: 4,800 / 12,000 = 40.0% and 3,900 / 12,000 = 32.5%. The profit difference 4,800 - 3,900 = €900 equals 600 × 1.5 = €900. The rest of the invoice, 400 × 1.5 = €600, went to the balance. Together 900 + 600 = €1,500, so the whole invoice amount was split between what was sold and what sits in the warehouse. The warehouse after recalculation is worth €5,400, and goods sold plus warehouse together, 8,100 + 5,400 = €13,500, equal 12,000 + 1,500.
The 7.5 percentage point loss of margin came from an invoice worth 12.5% of the batch value. If it had not been posted, the October report would have shown a profit the shop did not earn.
Which other late documents change cost?
A freight invoice is the most frequent case, but not the only one. These events change cost retroactively:
- A customs broker statement or a duty payment. They raise the value of an imported batch in the same way as freight.
- An error in the goods receipt. A wrong price, currency, exchange rate or date passes on to all later sales, write-offs, transfers and production.
- A change in the VAT setting for cost. The “Goods cost price includes VAT” switch requires reposting documents.
The second cause is dangerous because it goes unnoticed for a long time. Here it is in numbers.
How does an exchange rate error in a receipt change the cost of goods sold?
The shop bought 500 units at USD 4, USD 2,000 in total. The receipt was entered at a rate of 0.92 EUR per USD, while the correct rate is 0.95. By the end of the month 300 units were sold. The company is hypothetical.
| Indicator | With the wrong rate, EUR | With the correct rate, EUR |
|---|---|---|
| Batch value | 2,000 × 0.92 = 1,840 | 2,000 × 0.95 = 1,900 |
| Value of one unit | 1,840 / 500 = 3.68 | 1,900 / 500 = 3.80 |
| Cost of the 300 sold | 300 × 3.68 = 1,104 | 300 × 3.80 = 1,140 |
| Balance of 200 units | 200 × 3.68 = 736 | 200 × 3.80 = 760 |
The difference in batch value, 1,900 - 1,840 = €60, split like this: 1,140 - 1,104 = €36 in the cost of goods sold and 760 - 736 = €24 in the balance. Together 36 + 24 = €60. The gross profit on the sale of these 300 units was overstated by €36, and it was found only during reconciliation with the supplier.
How do you recalculate cost in Bimp?
The method depends on the cause. If a new invoice for additional costs has been received, it is enough to create an “Additional costs” document based on the goods receipt and post it. After that there are two paths.
- Wait for the night. A full repost of documents runs automatically after 00:00. Cost in previously created sales will update the next night.
- Update manually. Open “Sales → Sales”, find the document the goods were sold with and post it again. Cost and margin are recalculated at once.
A mass recalculation over a large volume of data is better left for the night so as not to load the system during the day. The result is checked in the Gross profit report.
If the cause is an error in the incoming document (price, currency, exchange rate or date), the order differs:
- Create a new correct goods receipt with the same date or an earlier one.
- Archive or cancel the wrong document.
- Run a repost from the correction date to today.
Batch accounting needs extra attention. Simply replacing a receipt does not change the batch in sales that are already posted, and in outgoing documents you may have to re-link the goods by hand. Otherwise negative balances may appear in the warehouse.
How do you avoid breaking reports during recalculation?
Recalculation changes the figures of a past period, and people who have already used the October report will see different numbers. So do three things before recalculating.
- Save the report. Generate Gross profit for the period before the recalculation and save it. After the night, compare it with the new one, and the difference explains what changed.
- Tell the owner and the accountant. October profit fell by €900, and this change should have a supporting document: the freight invoice.
- Enter costs on time. The shorter the gap between the sale and the invoice, the smaller the shift in the reports. Carrier statements are best posted on the day they are received.
After the recalculation, check the result against your calculation. In the freight example, October gross profit should fall by exactly €900, and the value of the balance should rise by €600. If the numbers differ, check whether all documents are posted and whether the allocation method is set correctly.
Input data for the report is also worth checking in advance. Before the final posting of a receipt, check the currency and the rate, and for a preliminary reconciliation use the “Draft” status.
Who does what when a late document arrives?
So that recalculation does not depend on mood, assign roles in advance.
| Who | What they do |
|---|---|
| Buyer | Passes the carrier or broker statement to the accountant on the day it is received and states which receipt the cost belongs to |
| Accountant | Creates the “Additional costs” document, selects the allocation method and checks the amount against the statement |
| Economist | Saves Gross profit before the recalculation, compares it with the new one and writes the explanation |
| Owner | Decides whether to show the corrected margin for last month in the report and in the price list |
In a small company the roles can be combined, but the steps stay the same. Then the answer to the question “why did the October margin change” sits in the additional costs document itself.
What Bimp does and does not do
Bimp is a Ukrainian cloud ERP for manufacturers, and it recalculates cost in sales after documents are reposted: automatically after midnight or by posting the sale again manually. Additional costs (freight, customs duty, logistics) are allocated to the batch, and even when the goods are already sold, the nightly repost updates the financial result of the sale. How such costs work on a receipt is described in the article Additional costs on a goods receipt, and the full recalculation procedure in the article Cost price recalculation. How customs duty and freight get into the value of goods is covered in the article on landed cost of imported components.
The limits are these. Changing a figure in a posted receipt is not enough, because the period has to be reposted. Comparing the figures before and after the recalculation is up to you, which is why the report is saved in advance. The decision whether to pass corrected data to the owner or the accountant for last month is made by the company.
How to build a product’s cost from materials to the finished product is described on the Bimp site.
FAQ
What is cost recalculation?
It is a repeat posting of documents for a period, in which the system recalculates the cost of write-offs using new or corrected input data: the price in a receipt, the exchange rate, freight, customs duty.
When does Bimp recalculate cost on its own?
A full repost of documents runs automatically after 00:00. Additional costs entered during the day reach previously created sales the following night.
How do you see the new cost in a sale right away?
Open "Sales → Sales", find the document the goods were sold with and post it again. Cost and margin update at once, and the result is visible in the Gross profit report.
Will a late invoice affect a report already generated for last month?
Yes. Additional costs are allocated to the batch, so the cost of the sold part changes, and the gross profit of the past period will be different after the repost. Save the report before the recalculation so you have figures to compare.
In a Bimp ERP demo, a specialist shows how the Additional costs document changes the cost of a sold batch and where the Gross profit report shows the difference before and after.
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