Inventory Costing with discounts

Question

Hello guys, 
 
 I have a scenario below that needs some assistance: 
 
 1. I purchase an item from a supplier at 1,000, luckily the supplier issues me a discount of 20% (basically the value of the item in my books will be 800). 
 2. When I sell the same item to my customers, I want to quote the same price gross cost I bought it from my supplier at (In this case 1,000 and not the system cost of 800), but issue my customers a discount of 10% on the same item (So in retrospect, sell the item at 900 - I make a profit of 100 ). 
 3. On Sage 200, can Inventory valuation be set to pick the gross cost from the supplier (In this case 1,000) and not the net cost (1,000 less 20% = 800). 
 4. I don't want to make journals to recognize the supplier discount

Bennie Pienaar · Answer

Hi Kevin 
 The short answer is no when using the Average Unite Cost method on the Inventory Item. 
 When a discount has been applied on the Supplier Invoice/GRV, transaction line, the net price (after the discount is deducted) will be used to calculate the new Average Unit Cost of the item. 
 In your scenario, the item is purchased at R1000 (VAT Excl) MINUS 20% Discount = R800. 
 Starting from ZERO, R800 is now the new Average Unit Cost of the item, and this amount is used on the Inventory Valuation report, and posted to the Inventory Control Account. 
 But please confirm the following: What is the Costing method of the relevant Inventory Item? 
 Kind Regards 
 Bennie

Alex Wayfer · Answer

In your scenario, the key is managing inventory valuation accurately in Sage 200 to reflect gross costs. While Sage 200 is quite flexible, directly setting inventory valuation based on gross cost without manual adjustments might require a workaround. Typically, inventory is valued at net cost after discounts. However, you might explore setting up the initial product cost as the gross amount (1,000) and handling discounts separately, perhaps as a direct cost or via supplier rebate management, to maintain accurate reporting without needing journals for every supplier discount. Consulting the software's documentation or a Sage expert would provide the most tailored solution. Leveraging tools like Priceva's competitor price tracking and monitoring software https://priceva.com/blog/price-matching marks a revolution in this domain. With automated tracking, instant price change notifications, and a unified interface for all metrics, businesses can effortlessly stay ahead of the competition. The comprehensive analytics offered dive deep into market trends, uncovering opportunities that might otherwise be missed.

Shazi · Answer

Hey Kevin-Consult 
 You had quite a scenario, however, I see that both Alex Wayfer and Bennie Pienaar have shared their insights. 
 Please let us know which answer helped you: by clicking on Verify answer on the suggested answers that have been shared with you. 
 Sharon

Shazi · Answer

Hey Alex Wayfer thank you so much for sharing your knowledge in the community. 
 We love it when members give a helping hand to others. 
 Sharon

Sage 200 Evolution

Inventory Costing with discounts

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