How do you manage inventory value? How much should accountants take care of?

[Lampre92]

Hi all, I did originally write a big waffling post but it contained a lot of useless information, if you need more information please let me know!

We sell products online, we import 90% of our goods from abroad and as such in the past few years the cost have varied massively, currency changes, shipping and product costs!

Something about our LTD being setup a certain way meant our accounting period was extended so we did our first accounts after about 17 months, until then we had almost no communicatoin from our accountants as mostly everything is automated by software. Our accountants then requested a break down of what inventory we hold and the cost - big problem. We have never tracked it.

The "solution" was to estimate it because we had very limited time. We went 5-10% over to ensure we didn't get into trouble.

My questions:
1. How should we manage the value of our inventory?
Lets say we import SKU1 in January 2023 for £19.50 per unit as a full container but then import the same product in September 2023 in much smaller quantity and it cost us £24.50 because of shipping and quantity, what happens then?
If we have 100 of the January order left but have 400 of the product purchased in September in stock, if we use the value we paid in September then it means we would owe more tax as we would declare we have 500 units @ £24.50 instead of 400@ £24.50 and 100@ £19.50?
How do we convert currencies? We have not tracked the value of our stock properly until now so we are going to do it all now from the bottom up - full stock take and then input it into the software we use to manage our stock which will ask us how much we paid, if we conver the USD>GBP value today then it won't be accurate as the currency values have changed?

2. We feel very "alone" with the financial side, the accountant gives very generic advice if any questions are asked. They never seem to ask any questions or offer any tips on how we can be more efficient or anything like that. Is it a different type of company we need or am I not doing my job as a director and should be much more aware of the finances?
We use well over 20 suppliers in china, multiple deliveries per month coming in and approx 2000 orders per month leaving us.

Thanks!

 

[Sil_14]

Hi all, I did originally write a big waffling post but it contained a lot of useless information, if you need more information please let me know!

We sell products online, we import 90% of our goods from abroad and as such in the past few years the cost have varied massively, currency changes, shipping and product costs!

Something about our LTD being setup a certain way meant our accounting period was extended so we did our first accounts after about 17 months, until then we had almost no communicatoin from our accountants as mostly everything is automated by software. Our accountants then requested a break down of what inventory we hold and the cost - big problem. We have never tracked it.

The "solution" was to estimate it because we had very limited time. We went 5-10% over to ensure we didn't get into trouble.

My questions:
1. How should we manage the value of our inventory?
Lets say we import SKU1 in January 2023 for £19.50 per unit as a full container but then import the same product in September 2023 in much smaller quantity and it cost us £24.50 because of shipping and quantity, what happens then?
If we have 100 of the January order left but have 400 of the product purchased in September in stock, if we use the value we paid in September then it means we would owe more tax as we would declare we have 500 units @ £24.50 instead of 400@ £24.50 and 100@ £19.50?
How do we convert currencies? We have not tracked the value of our stock properly until now so we are going to do it all now from the bottom up - full stock take and then input it into the software we use to manage our stock which will ask us how much we paid, if we conver the USD>GBP value today then it won't be accurate as the currency values have changed?

2. We feel very "alone" with the financial side, the accountant gives very generic advice if any questions are asked. They never seem to ask any questions or offer any tips on how we can be more efficient or anything like that. Is it a different type of company we need or am I not doing my job as a director and should be much more aware of the finances?
We use well over 20 suppliers in china, multiple deliveries per month coming in and approx 2000 orders per month leaving us.

Thanks!

Hi, do you record your purchase invoices in an accounting software?

 

[Lampre92]

Hi, do you record your purchase invoices in an accounting software?

Hi, the only manual accounting work we do is uploading invoices from suppliers to "Dext". Everything else is done automatically with software, it syncs all of our data from the sales channels.

 

[apricot]

I am trying to understand your question, let me try to answer

Jan 23 - £19.50- You paid import VAT at the time of import £3.25 Vat - Currency exchange rate will be whatever the rate at the time of import

Sep 23 - £24.50 - You paid import VAT at the time of import £4.08 - rate again same as above
You collect and pay Vat from the sales Value so lets say £70 you sell items - regardless how much you paid for the item Vat would be £11.66
Vat will be deducted on your next VAT return so import VAT you paid in Jan 23 will be deducted in March VAT 23 return. It doesnt matter if you have any items left or not.

I hope this helps.

I use stock value whatever the rate was at the time I paid for the products. I dont change it product price based on the daily rate.. What I paid in GBP is my product value.

I am the same, I dont get any advice from my accountants, I learn as I go along.. I stop counting the stock as I have too many too much time consuming.