The FIFO option best matches how businesses commonly sell inventory. Your cost of goods sold uses the costs of the first items in inventory. With FIFO, your balance sheet shows your inventory valued at the cost of more recent purchases. LIFO impacts your inventory cost and the cost of goods sold on your income statements.įIFO assumes the first items added to inventory are the first sold. Your chosen valuation method determines which items you assume are sold first when an item is removed from inventory. When managing tracked inventory in Xero, you need to choose an inventory valuation method – either FIFO (first-in, first-out) or LIFO (last-in, first-out). Consider this option for when there is no need to closely monitor your stock, for items that are simpler. Although visibility into current stock levels is lost, the time required to track each unit is avoided. It minimizes the time spent managing inventory for high-volume, low-cost products. Untracked inventory records transactions but does not monitor item quantities or costs. This option is best suited for expensive, frequently sold items where the benefits of close management outweigh the costs. Tracked inventory provides maximum visibility and control, allowing businesses to minimize stockouts, efficiently reorder, and gain insights from detailed reports. You can use tracked inventory for items you sell through your e-commerce store. Tracked inventory items allow you to set up stock quantities, costs, and track items as they move in and out of stock. The option to choose the appropriate method for different categories helps ensure that the processes are not only simple but also adaptable to the growing and changing nature of e-commerce store ownership. You can start with an untracked solution and transition select items to tracked inventory over time as the business grows and maintains control and consistency over costs. Xero offers two options, tracked and untracked inventory, so businesses can choose the appropriate method to suit their needs. However, the level of detail needed to manage inventory effectively differs depending on the types of products sold. Inventory is one of the most important assets for a business to monitor and control. Related: 5 accounting and finance apps you need for your WooCommerce store Options for inventory management in Xero Having either of these options integrated with your e-commerce store will enhance your management of stock for the better. Cin7 Core also can integrate Xero with Square, Shopify, WooCommerce, among other e-commerce platforms. Unleashed is able to integrate Xero to various e-commerce platforms, such as eBay, WooCommerce, Amazon, and Shopify.Īnother option is Cin7 Core (formerly known as DEAR), software that tracks inventory levels and has features for product availability notification and multi-site stock management. Consider integrating your e-commerce store with an inventory management software to stay on top of your stock levels and to access in-depth reports.Īn app option for your e-commerce store is Unleashed which allows for your stock level updates, and supports barcode scanning options. With the addition of apps for inventory management, you’re able to streamline your processes, eliminate waste, and receive invaluable insights on your product flow. Using apps (or plugins) for inventory management Through using accounting software, such as Xero, e-commerce business owners can have a clear picture of inventory and accounts in real-time to guide smart decisions that drive profitability. Xero is an accessible accounting software that helps business owners to gain control and share insights across their business. As an e-commerce store owner, you’re aware of the impact proper e-commerce inventory management has on your finances, COGS, among other areas.
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