The month-end close for manufacturing businesses is an essential part of the accounting process. At Plumb, we specialize in month-end close in QuickBooks for manufacturing businesses and provide outsourced accounting services for the manufacturing and distribution industry. In this video, Justin Atneyel walks your through the top 3 tasks that you should review each month.
At the end of each month, you should be comparing the month-end inventory figures with your Warehouse Manager to see if they are matching what is on the Balance Sheet. If there are variances, you must adjust your books with Costs of Goods Sold to match the true inventory levels. If there are large variances, find out why, so you can address the issue. Be aware of large amounts of shrinkage which could be a loss or theft. Also, if you are using QuickBooks for manufacturing, you could be experiencing “zero costs” and will need to fix it.
Take a look at your item list within your accounting software. Make sure you don’t have any items with a zero quantity. If you are using QuickBooks, it could reflect “zero costs” which wouldn’t properly reflect your COGS and ending inventory numbers.
Are you using QuickBooks for your manufacturing business? If you have noticed that the Manufacturing & Wholesale Edition of QuickBooks isn’t able to handle all of your accounting needs, take a look at your inventory costing system. QuickBooks only works for manufacturers who use the Average Cost System. FIFO works for QuickBooks Enterprise Platinum with the Advanced Inventory Module. QuickBooks does not handle Landed or Specific inventory cost systems.
It’s important to utilize sales orders that way it doesn’t reflect on your Profit & Loss and you can still create invoices. When you create sales orders, sometimes they don’t actually ship within 1 – 3 – 6 months. Make sure you check your sales orders backlog, because you can still create an invoice when ships and it doesn’t reflect on P & L. Many times manufacturers will create invoices before an item ships and this causes a large A/R, an overstated revenue and it doesn’t give owners a clear picture on what they need to see to make business decisions.