- June 11, 2011
- Posted by: Mary Brettmann
- Categories: Mary How Do I?, QuickBooks Point of Sale, Real World Best Practices
What you do if you want to add a service or value to inventory that you have already purchased? Recently I was at one of my clients trying to solve their custom T-shirt problem. They purchase regular T-shirts from an outside vendor and then send them out to a custom screen printer. They wanted to capture the full cost of the T-shirt in Point of Sale so that the profit margins would be accurate.
As always when looking at a problem, there is more than one solution. The main issue is the method in which the screen printing is captured. But the real question is how to code screen printing. The easiest (but less accurate) method would be to pay for the screen printing directly in QuickBooks financial (and code it to Cost of Goods Sold). This will create a correct overall Cost of Goods Sold number in QB financial, but it will not be correctly reflected on any point of sale reporting (as the cost is captured only in financial). It is also possible to create a non-inventory PO (and receiving voucher) for the screen printing. That will effectively do the same thing as paying for it in financial as the value is not stored anywhere in Point of Sale, it will simply move it over to Cost of Goods sold in one journal entry.
The best solution that we found would be to code the screen printing as an inventory item. Receive in the quantity and the price, and then use the assembly function to build up the cost in Point of Sale. The benefit of this approach would be that the entire cost of the T-shirt would be captured and it would give a more accurate reflection of profit margin in Point of Sale. The main caution that I would give to this approach would be that the assembly of the T-shirts must be done as soon as the screen printing is received in by point of sale. That way you can capture the correct value of screen printing into the correct bath (and thereby keeping screen printing at a 0 quantity). If this doesn’t happen, then you risk the averaging the cost of screen printing and blurring your profit margin on the custom T-shirts.