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Coupa Success Portal

Inventory Accounting Impact

Overview

Inventory includes raw materials, work-in-process and finished goods that a company has on hand for its own production processes or for sale to customers.  Inventory is considered an asset so appropriate accounting must be done consistently to ensure accurate balance sheet reporting.  Coupa inventory handles the management part to track on-hand balances, provide visibility into what's available, assist with reordering, counting what is on hand, and receiving into warehouses.  Accounting requirements to create GL entries and adjustments to balance sheet resulting from inventory transactions are handled in ERP or customer's other 3rd party systems.  While Coupa does not directly handle accounting we do provide necessary information from transactions performed in Coupa to perform accounting activities downstream.  

Transaction history information is provided in 'InventoryTransactions' outbound file that can be configured by Coupa to export on a regular scheduled basis for import into GL.  The file contains key pieces of information such as transaction type, expense account, amount and warehouse balance sheet account.   For more technical specs please see here:  https://success.coupa.com/Integrate/...xport/Receipts

Below are three different scenario of common inventory movements in Coupa and how Inventory Transactions outbound file would display information to provide proper information to apply accounting.

InventoryTransactions Outbound File Export Sample:

Custom field is added to warehouse object to associate with warehouse account code that will be passed in outbound file as part of inventory transactions.  Column F represents mapped 'Balance Sheet/Warehouse Account' field in this example that is pulled from Warehouse object.

While warehouse is the most logical object to derive the account for the transaction, we can also derive and supplement this information by referencing account code values stored in custom fields on other business objects as well e.g. item, commodity etc. 

Financial transactions based on inventory movements in Coupa:

A.  Warehouse A is replenishing stock and ordering from External Supplier.  Purchase order is received into Warehouse A inventory.

Debit:  1000-01 (Warehouse Account in Column C)    Credit:  Accounts Payable

B.  Business Requester is requesting for item consumption from Warehouse A.  Warehouse receives internal order and fulfills by releasing item to business.  Business Requester completes receipt.

Debit:  3000-40 (Business Expense Account in Column C)    Credit:  1000-01 (Warehouse Balance Sheet Account in Column F)

C.  Warehouse B requests for item transfer from Warehouse A.   Item transferred to Warehouse B.

Debit:  1001-01 (Warehouse B Expense Account in Column C)   Credit:  1000-01 (Warehouse Balance Sheet Account in Column F)

 

 

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