Introduction to Adjustments

Objectives

Once you've completed this tutorial, you'll be able to:

Understand how adjustments cost and calculate stock

Understand when adjustments are recorded

Review and investigate stock and costing issues

This tutorial should take approximately 17 mins to complete.

What are Adjustments?

Craftybase is perpetual inventory software. Perpetual means that we calculate your stock on hand and inventory value constantly and in real time (this is unlike spreadsheets or accounting programs that calculate only periodically when you manually stocktake).

All stock changes in perpetual inventory systems are recorded as adjustments. An increase in stock is a positive adjustment and a decrease is a negative adjustment.

You won't need to add these directly most of the time - adjustments will be added automatically for you based the actions you take.

For materials, adjustments will be created when an expense is created or a manuacture that uses the material is entered. For products, inventory adjustments will be created when the product is manufactured or an order is added.

For situations where stock is removed from the system without being directly related to a manufacture or an order, manual adjustments can be added directly when necessary. The most common scenario for adding your own adjustments is when a product or material is damaged or unsellable (this is otherwise known as wastage or inventory loss).

Rolling / Moving Averages

Craftybase uses a calculation method called Weighted Average Cost for all costings. This inventory costing strategy is also known as the moving average or rolling average method. This is an accepted GAAP and IRS method of accounting for inventory and is the one most commonly used in manufacturing situations as it effectively allows for "pooling" of materials. The Weighted Average Cost method involves recalculating all unit costs for materials and project material cost each time any change is made to inventory levels based on the amount available in stock at each point in time.

Your costing and stock calculations are thus based exclusively on your adjustment history - this is why it is really important to ensure that this is correct and represents every change since you began tracking in Craftybase.

How to find your adjustments history

One of the most useful areas of Craftybase is your Adjustments history: for each material and product, you can see each and every stock change made and when. This is really handy when trying to solve any stock discrepancies between your physical and Craftybase stock levels as you can see out of stock situations and costing problems all on the one page.

To find your Adjustment history, just navigate to your Material, Product or Variation page and then click the tab called Adjustments.

The clipboard icon represents the stock status on the date the adjustment was made. Green means that there was enough stock on hand to cover the manufacture or order whereas a red clipboard indicates that there was not enough stock on hand. You'll be wanting to review your stock adjustments on a regular basis for each material and product to ensure that you have no red clipboards and your unit costings are all in place correctly. If you do spot an issue, you'll want to review all stock changes before the problem and see if you can find the reason why. Most problems are due to missing adjustments (i.e. a manufacture was not added on a day you made products so orders after this time are not able to be fulfilled). You may find however that some costing issues are due to incorrectly entered costs for expenses.

More troubleshooting guides for adjustment issues can be found here:

Why is my order material cost zero?

Why is my manufacture costed at zero?

Have some questions?

If you have any additional questions, please get in touch and we'll be happy to give you a hand. Alternatively, feel free to join and post your question in our official Craftybase Facebook group.