Use the Inventory menu to configure the basic requirements for forecasting with inventory purchases and movements. Inventory settings are part of the overall Cashflow Settings. You should review all the cashflow settings to take the heavy lifting out of preparing a Cashflow & 3-Way Forecast.
If you manage inventory in your organisation and plan to do a Cashflow or Balance Sheet Forecast you will need to consider and budget for your inventory. This help note identifies the basic settings required, but you may also need to look at the Budget for Inventory (Perpetual Method) or Budget for Inventory (Periodic Method) help articles.
Browse to Budgets & Cashflow -> Cashflow Settings -> Inventory.
Do you account for Inventory?
If you don't have inventory, or don't need to budget for inventory you can mark this as No and no further settings are required.
With a periodic or perpetual system?
There are two generally accepted principals used in accounting for inventory and they are Perpetual and Periodic. If you answered Yes to "Do you account for Inventory?" above you'll now need to indicate which accounting method you use for handling inventory.
Select Perpetual or Periodic to indicate what accounting method you use for Inventory.
Note: 💬 Perpetual Inventory
Inventory and Cost of Goods Sold are updated continuously. Stock purchases are recorded against the inventory account in the Balance Sheet. Then, when a sale is made, this records a transaction to the Cost of Goods Sold account.
Tip:💡If your accounting system or some add-on manages inventory or provides a record of stock on hand, then you're likely handling inventory with the Perpetual system.
Note: 💬 Periodic Inventory
Purchases are recorded in a Cost of Goods Sold account in the Profit and Loss. Periodically a journal is done to adjust the Balance Sheet to determine the correct Inventory amount. You'll most likely have Opening and Closing Balance accounts for this journal.
Tip:💡If you have accounts named Closing and Opening Stock or similar in the Cost of Sales section of your Profit and Loss, then you're likely handling inventory with the Periodic system.
Perpetual Inventory Settings
Which Asset accounts do you use for inventory purchases and movement?
Nominate your balance sheet stock accounts here. For the purpose of forecasting Calxa will now apply Creditor Day timing to these accounts as per the default timing on Cost of Sales accounts.
Please now review the Budget for Inventory (Perpetual Method) help article as you'll need to consider your inventory budgets for the purpose of a Cashflow or Balance Sheet Forecast.
Periodic Inventory Settings
Which Asset accounts do you use for inventory movements or balances?
Select all Asset (Stock on Hand, Inventory) accounts that are used as used to carry stock on your balance sheet.
Which Cost of Sales accounts are used for inventory movement or balances?
Select all Cost of Sales accounts that are used in your periodic inventory journals to adjust stock and cost of Sales.
Please now review the Budget for Inventory (Periodic Method) help article as you'll need to consider your inventory budgets for the purpose of a Cashflow or Balance Sheet Forecast.
Want to learn more about Cashflow Settings? Check out the other help notes in this series: