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Inventory Management

Know what your products actually cost you

Most businesses holding stock cannot tell you their real margin by product. The purchase price is in the books, but freight, duty, packaging and the units that never sold are somewhere else entirely, so the numbers say one thing and the bank balance says another.

We build inventory into your accounting properly, so cost of goods sold is right every month and you can see which products are worth making, buying or dropping.

Book a free 20-minute call805-225-4959

Every inventory client gets

However you hold or make your stock.

  • Cost of goods sold recorded when the item sells, not when it is bought
  • Freight, duty and packaging built into unit cost
  • The balance sheet reconciled to your actual count
  • Margin by product, reviewed with you every month

What's included

The monthly cycle, with stock in it

  • Inventory on the balance sheet: purchases held as an asset until the item sells, so profit follows sales rather than buying
  • Landed cost: freight, duty, customs brokerage and packaging built into unit cost rather than buried in overhead
  • Cost of goods sold: calculated monthly on a costing method chosen deliberately and applied consistently
  • Count reconciliation: your physical or cycle counts compared to the ledger, with the variance identified rather than absorbed
  • Shrinkage and write-offs: damage, theft, spoilage and obsolete stock recorded as their own line so you can see the trend
  • Work in progress: for light manufacturing, materials and labor tracked through production into finished goods
  • Margin by product: reporting that shows what each product line actually earns after its real cost

Who this is for

  • Light manufacturing
  • Wholesale and distribution
  • Retail with a stockroom
  • Restaurants and food service
  • Online sellers holding stock

Selling online as well? The eCommerce page covers payouts, channel fees and multi-state sales tax alongside this.

Typical fit

Businesses doing $250K to $25M a year holding physical stock, whether that is a hundred SKUs or a few thousand, in one location or several.

What a unit actually costs

Say a case lands at $40 from the supplier. Add ocean freight, customs duty, brokerage, the drayage to your warehouse, and the packaging you put around it before it ships to a customer, and the real cost per unit can be a third higher than the invoice.

If those costs sit in overhead instead of in the product, every margin figure you have is overstated by the same amount. Businesses discount their thinnest-margin products because the books make them look like the healthy ones.

We build landed cost into unit cost so the margin you see is the margin you get, and pricing decisions stop being guesses.

What we fold into unit cost

  • Supplier invoice price
  • Inbound freight and drayage
  • Customs duty and brokerage
  • Tariffs where they apply
  • Packaging and assembly
  • Direct labor, for manufacturing

Allocated by value, weight or units, whichever reflects how the cost is actually incurred.

Your first 30 days

1

Discovery call

Twenty minutes. What you hold, how it moves, and what you currently cannot answer about margin.

2

Quote in 24 hours

A flat monthly price, plus a separate one-time fee if the inventory has to be rebuilt first. In writing.

3

Set the costing

Costing method agreed with your CPA, landed cost rules set, and an opening count established.

4

First close

A P&L with real cost of goods sold, margin by product, and a call to walk through what it shows.

What we do not do

Said up front, so nobody finds out in month three.

  • We do not count your stock. We reconcile to the counts you or your warehouse provide, and we will tell you how often to count.
  • We do not run your warehouse or manage purchasing. We account for what you buy and hold, we do not decide it.
  • We do not choose your costing method alone. That is a tax decision, so we set it with your CPA and then apply it consistently.
  • We do not implement full ERP systems such as NetSuite. We work in QuickBooks and Xero with inventory apps around them.
  • We do not value inventory for a lender or an acquirer. That is a valuation engagement and it needs a different professional.

Inventory FAQ

How often do I need to count?

Most businesses do a full count once a year and cycle counts on the fastest-moving items monthly or quarterly. Cycle counting catches problems while you can still work out what happened, rather than finding a large unexplained variance in January.

We will tell you what your mix of stock actually needs, and reconcile whatever counts you give us.

Do I need inventory software?

Not always. QuickBooks Online and Xero both handle inventory adequately at modest volume, and if your SKU count is manageable that is often enough.

You need a dedicated app when you have assemblies or manufacturing, multiple warehouses, serial or lot tracking, or high SKU counts. We will tell you which situation you are in rather than selling you software you do not need.

What costing method should I use?

Most small businesses use average cost or FIFO. Average cost is simpler and smooths out price changes, FIFO tracks more closely to what actually moved. Both are acceptable, and consistency matters more than which one you pick.

It affects your taxable income, so it is a decision to make with your CPA. We will explain the practical difference, set it up, and apply it the same way every month.

My inventory has never been on the balance sheet. Is that a problem?

It is common, and it is fixable. If you have been expensing purchases as they are paid for, your profit has been swinging with your buying rather than your selling, and your balance sheet has been understating what the business owns.

We establish an opening value from a count and your purchase history, agree the approach with your CPA, and go forward properly from there. That rebuild is quoted as a one-time engagement.

Can you handle manufacturing?

Light manufacturing, yes. Raw materials into work in progress into finished goods, with direct labor and overhead applied, and job costing where you build to order.

If you are running multi-stage production with complex routing and capacity planning, you need a manufacturing system and a specialist to implement it, and we will say so.

What about stock that will never sell?

Obsolete stock sitting at full value on the balance sheet overstates what your business is worth and hides how much cash is tied up in things nobody wants.

We flag slow-moving and dead stock in the monthly review so you can decide to discount it, liquidate it or write it off, and we record the write-off properly when you do.

Find out what your stock is really costing you

Twenty minutes on the phone and you'll have a flat quote within a day.

Book a free 20-minute call 805-225-4959