This document explains how to check if a customer is profitable. After setting in place a few procedures, reports can be printed to see gross profit for one customer. Then decisions can be made to see if contract prices, discount tables or standard prices need to be increased or decreased.
If special non-stock items are being bought for specific customers on a regular basis, but not charged to the customer, these items should be added to Inventory. Item can be added to inventory (Module 5) using Add New Items (Task 1), Quick Item Setup (Task 5) or Shortened – Add New Items (Task 8). See documents on the website www.mvsoftware.com for instructions.
These items will be sold to the customer at a zero selling price, but they will pick up a cost.
- Make sure when the items are purchased, they go into an inventory G/L #. When sold the cost of the item will debit COGS and credit inventory when the invoices are posted through to the G/L.
If special non-stock items are being bought for specific customers, but they are not bought on a regular basis and not charged to the customer, you can keep these as non-stock items and not add them to the inventory module.
These items would need to be sold to the customer as non-stock items at a zero selling price.
- Make sure when the items are purchased, they go into an inventory G/L #. When sold the cost of the item will debit COGS and when the invoices are through to the G/L.
- Make sure when selling these non-stock items to the customer, to use the same non-stock item #, report class, product code & cost as when they were purchased.
If outside services are being done for specific customers, again you should sell a non-stock item to the customer at a zero selling price, but type in the cost of the service on the non-stock item.
- If this is done, be sure to pay attention to the G/L account number you use when vouchering the service and the G/L account number used when selling the non-stock item to the customer.
If selling items to the customer with no cost the Commission Maintenance can be used to set a cost on items. This is in Order Processing (Module 6), Commission Maintenance (Task 24). First check to see if the commission maintenance already has records for commission calculation purposes. If so, the cost on these records will need to be set first.
How the commission maintenance records are setup depends on how commission records are being used already. This cost doesn’t go to the A/R to G/L interface. The commission maintenance records can be setup for all customers relatively easy by item number, product code, or report class. Contact us for assistance.
Print item history report:
Once the above procedures are in place, an item history report from Order Processing (Module 6) may be printed for any customer. Many of the item history reports have a sale $ column, a cost $ column, a TOTAL PROFIT and a % PROFIT column, so you will be able to see the customer’s gross profit. An example of one report is:
Customer / item / date IHSCUS