Introduction

Free of Charge (FOC) stock can be dealt with in 2 distinct ways, dependant on the business processes of the customer.
 

1. Fixed Pricing – No Ability to Edit Prices

If a customer does not have access to editing cost prices, and the users typically utilise invoice adjustments to amend any invoice discrepancies, they will also follow this same process when receipting FOC stock.
 

Fig 1 – Original Delivery Note

• Quantity of goods received is amended to include the FOC stock received. In the above example 12 bottles were ordered, but an additional 6 bottles were received FOC. The cost for the goods remains £90.00.
• The cost price of the delivery has increased to £135.00 due to the additional 6 bottles received; this needs to be decreased to £90.00 by using the invoice adjustment product.

Fig 2 – Updated Delivery with An Invoice Adjustment Item

• By adjusting the cost of the delivery this will provide the benefit in cost and therefore GP % during the current period as the bottles of wine, in this example, will still be valued at £7.50 when counting the closing stock.

2. Ability to Edit Cost prices

If customers have access to editing cost prices on a line by line basis they can continue this process for FOC stock.
By editing the cost price of the delivery the weighted average cost of the product will fluctuate and rather than a large GP benefit in a single period there will be a small GP benefit over a number of periods due to the change in weighted average value of the product.
 

Fig 3 – Delivery With The Cost Price Updated

• Quantity of goods received is amended to include the FOC stock received. In the above example 12 bottles were ordered, but an additional 6 bottles were received FOC. The cost for the goods remains £90.00.
• The cost is simply amended in the ‘actual net cost’ column’.

Also See

• P2P&I - FnB Live: Handling Products with Catch Weights
• P2P&I - FnB Live: Creating Invoice Adjustments