How to initially backdate your stock in Craftybase
If your business is brand new and you have just purchased your first batch of materials ready to begin making your products, wonderful news! You can begin using Craftybase by entering in your recent purchases and manufactures to account for your current stock levels and work forward from there - you won’t need to worry about backdating your stock.
Most businesses that discover they need a inventory solution have been trading for a while and thus will have months or years of historical purchases and sales to account for. As Craftybase is a perpetual inventory tracker, all stock needs to be accounted for in some manner so that calculations are correct and accurate.
Moving stock from a previous system
If you are moving to Craftybase from a different inventory tracking system that breaks down costs at the product and material level, the best option is to take the most recent end of year inventory values and move them across to Craftybase as your starting adjustments.
For products, you will need to know (or be able to calculate) the quantity for each item on hand and its raw material cost. If using this approach, any manufactures of product before this point should not be entered into the system as they have already been included as part of your initial adjustment value.
The same applies to materials: you will need to be able to calculate the average unit cost of materials that you are bringing forward in the system. All purchases before your start date are now included as part of your average unit cost so should not be entered into Craftybase.
For both products and materials, it’s really important to set an accurate unit cost if using a starting adjustment to backdate. As Craftybase uses rolling averages, your unit costs will be factored into all calculations going forward. If you don’t enter a cost for your adjustment (and it should have an accounted for value), your initial stock will appear with a ”diluted" cost and will not reflect the true value.
EXAMPLE: John is moving from Craftybase from his old excel spreadsheet so has chosen 1 Jan 2016 as his inventory tracking starting point. For his "Orange Soap" product, he knows he had 10 bars in stock on this date and their cost of materials was $2.20 so this would be set as the Starting Adjustment for this project.
Starting without a previous system
If you haven’t been using an inventory tracking system before this point and thus can’t bring any calculations forward, it becomes a little tricker. Firstly, you’ll need to find out how you have been claiming your material expenditure. If you have been using the direct expensing method (i.e. you’ve been claiming the full amount of all materials you have purchased in the year they were bought) then your materials up until the end of the last financial year have already been fully claimed.
In this case, you’ll be wanting to start your tracking on the first day of the financial year that you haven’t yet submitted a return for and work forward from here. All product that remained unsold on this date is considered “brought forward” and due to the fact that you have already claimed the materials they will not be able to have COGS value. This means you’ll be adding in a starting adjustment for each of the products you had on hand and assigning them a material cost of zero.
EXAMPLE: Kate is starting to track inventory for the first time. She claimed all her materials as expenses in her last tax return so has chosen the start of the current year (Jan 1) as her inventory tracking starting point. For her “Red Scarf" product, she knows she had 2 in stock on Jan 1. As the material cost has already been claimed, she would enter a quantity of 2 and a cost of $0.00 as the Starting Adjustment for this project.
For your materials, you’ll need to determine your stock that was purchased in the current financial year and enter these as material expenses with cost. Any material stock brought forward will have a zero cost as you will have already claimed the cost in past financial years via direct expensing.
From your chosen start date, you’ll now need to work forward to the current date to account for any stock changes made between the two dates. This means entering in manufactures for any stock made, orders for any stock sold and adjustments for any miscellaneous loss or breakage. Keep in mind that you can do this in any order and don’t technically need to do this all at once: Craftybase is flexible enough to be able to recalculate stock and costs added at any point in time.
Once you have your historical entries in place, the final step is to do a quick stocktake of your actual physical stock on hand to ensure that they match and you are done!