Unleashed and Xero
We’re delighted to see a new breed of inventory systems coming online which can connect with Xero.
Unleashed Software, our latest Network Partner provides online inventory management for small to medium sized businesses. Unleashed tightly integrates with Xero so you can manage your inventory levels, purchasing and sales inside Unleashed and then it automatically creates the accompanying accounting entries in Xero. This means you don’t have to re-enter supplier and customer invoices in Xero or work through the accompanying inventory and cost of goods sold changes. Pilot customers have reported significant savings of time using both Unleashed and Xero together.
Take a look at this video from the Unleashed team about the integration:
21 Jan 2013 – video updated as previous one was out of date
To get set up from the Xero side you may need to add a few new account codes and make a small change to your reporting layout of your Profit and Loss. We recommend you talk to your financial advisor about this and make sure your opening stock and Cost of Goods figures are correct in Xero. Utilising Xero’s reporting layout customisation will enable you to easily adjust your Profit and Loss report to show your Cost of Goods sold in your Gross Profit calculation. Your balance sheet will show the most up to date value of your stock on hand as well.
To take a bit of a closer look behind the scene let’s step through the accounting entries created in Xero.
- A draft accounts payable invoice gets created inside Xero when the good you’ve ordered from a supplier have been received. Once this invoice is approved your stock on hand value will increase and there is an increase in your accounts payable liability.
DR CR Accounts Payable 1,125 Stock on Hand 1,000 GST 125
- When you make a sale a draft accounts receivable invoice is created in Xero. Once this invoice is approved your revenue increases and there is an increase in your accounts receivable account.
DR CR Accounts Receivable 2,250 Sales 2,000 GST 250
- There is then another invoice which comes into Xero (as a result of the sale) to lower your stock on hand value and increase your cost of goods sold. The invoice has a zero total and has the same effect as posting a manual journal with a matching debit and credit once it is approved. Our API will have support for manual journals very soon, when that happens this adjustment will be posted as a journal instead of an invoice.
DR CR Cost of Goods Sold 1,000 Stock on Hand 1,000
For a more detailed explanation of how as a developer you can integrate an inventory system with Xero, head over to our developer centre and read this guide.