Fix sales with zero COGS

A sales order shows a COGS of 0, so its margin looks like 100%. The cost of goods sold was never recorded for that sale, and if you use Xero or QuickBooks, it may never have reached your books either.

This article explains why it happens, how to find the product and the stock movement that caused it, how to stop it happening again, and how to repair the sales that already shipped. It covers products valued at moving average cost, which is where this usually happens.

Why a sale has no COGS

Qoblex records the cost of goods sold at the moment a shipment is dispatched. For a product valued at moving average cost, the COGS is the quantity shipped multiplied by the product’s moving average cost (MAC) at that moment. If the MAC was 0, the COGS is 0.

The MAC is the value of the stock you hold divided by its quantity. It drops to 0, or close to it, when stock comes in without a cost, for example:

• a stock adjustment that added quantity with a Cost of 0
• a stock-take import with a cost of 0, or with no cost for a product that never had one
• a purchase order received with a unit price of 0
• a product created with opening stock and an Initial Cost of 0

Once the MAC is 0, every shipment of that product records a COGS of 0 until the MAC is corrected.

Find the cause

Check the product’s MAC

1. Open the sales order and note which lines show a COGS of 0.
2. Open the product from Products.
3. For a product with variants, look at the MAC column in the Variants table. For a product without variants, look at the Moving Average Cost field in the Inventory section.

A MAC of 0, or one far below what you pay for the product, confirms the cause.

Find the movement that set it to 0

1. Select View History. For a product with variants, it is in the gear menu on the variant’s row in the Variants table. For a product without variants, it is in the header of the Inventory section. This opens the Stock Transactions Report for that product.
2. The report opens on the last 30 days. Click Filters, widen Select a date range to before the problem started, then click Apply Filters.
3. Read the Cost (MAC) column and find the row where it dropped to 0. The Reason column tells you which adjustment or import it was.

For the value of each movement, use the Inventory Ledger Report under Analytics > Inventory Ledger. It also opens on the last 30 days. Narrow it to the product with the search box, and read the Value, Closing Value, MAC and COGS columns.

Stop it happening again

Correct the MAC on the product, so the next shipments are costed properly:

1. Open the product.
2. Enter the correct cost in the variant’s MAC column, or in the Moving Average Cost field for a product without variants.
3. Click Save.

You need access to Adjustments to change the MAC. A bundle has no MAC of its own to edit.

If you still hold stock of the product, correcting the MAC also revalues that stock. Tell your accountant, so the repair below doesn’t count the same value twice.

If you use Xero or QuickBooks, Qoblex posts the revaluation between your Stock On Hand Account and your Inventory Adjustments account. If an override rule applies to adjustments, it goes to the account that rule picks.

Then fix the habit that caused it. Give every stock adjustment that adds quantity a real Cost, include a cost when you import a stock take, and receive purchased stock on a purchase order at its real price.

Repair the sales that already shipped

List every sale with zero COGS

1. Open Reporting > Sales and select the Shipments tab.
2. Click Filters, then Add Filter. Choose COGS, choose Equal, enter 0, and click Apply.
3. Click Export. In the export dialog, set the shipment date range you need to repair. One export covers one year at most, so export one file per year if you need more.

Each row is one shipment line, with the Product, Order Number, Shipment Number, Location, Shipment Date and Quantity. Returns appear too, with a Return Number and a negative quantity. Keep them in the list so they net off. See Sales reports and Exporting reports.

Work out the missed COGS

For each row, multiply the Quantity by the correct unit cost of the product at the time of the sale. Add the rows up per month, or per accounting period, so you can post one correction per period.

Correct your accounting system

Correcting the MAC does not change the COGS Qoblex already recorded, and Qoblex does not send anything new for those sales. Record the missed COGS yourself with a manual journal in your accounting system.

The other side of the journal depends on where the real cost of those goods sits in your books, for example a purchase posted straight to an expense account, or opening stock that was never valued. Agree it with your accountant.

Neither Xero nor QuickBooks received any cost of goods sold for these shipments. Post a manual journal that debits your Cost Of Goods Sold account for each period.

Frequently asked questions