Stock Issued But Not Billed - Recognizing cost of goods sold upon invoicing

[rtdany10]

Currently, ERPNext recognizes the expense(cost of goods sold) upon delivery, that is, either via Delivery Note or update-stock checked Sales Invoice.

Everything works fine if you update stock via the invoice, but if you do it via Delivery Note, there is a catch in a particular scenario.

Lets go through the scenario:

1. Create a Delivery Note, dated this month.
   

   
   
   
   

2. Create Invoice against the Delivery Note
   

   
   
   
   

If you check the ledgers, you can see that expense is booked in the first month and income in the second.

Profit & Loss:

As seen, March shows only income(from the invoice) and no expense at all, as Delivery Note was created in Feb. If this happens around the end/beginning of fiscal years, yearly P&L is also affected.

The proposed (optional) change we would like to bring to this flow is:

1. Upon submission of Delivery Note, if it isn’t invoiced yet, instead of the expense account, ledger will be passed into another account(Stock Issued But Not Billed - Balance Sheet account).
   

   

2. Upon invoicing, we will cancel out the change in Stock Issued But Not Billed and book the expense.
   

   

This way, income and expense are booked in the same time period, making the flow IFRS complaint and P&L would show the correct value.

Also this proposed change doesn’t cover the reverse flow, ie, Sales Invoice first and Delivery Note later.
Drop in your thoughts!

[rtdany10]

@Deepesh_Garg @Ruthra

[jcagbay]

On service items, this workflow is very much needed becuase there a scenarios where the delivery of the services are done but cannot yet proceed the billing or invoicing waiting for the docs i.e. inspection report of the services.

At the delivery note is the best doctype to execute this workflow.

In V14, we have this Account Payables Unbilled for Stock and Asset Items so somebody can dublicate this function in the other direction.

[rajeevs]

Thanks for bringing this issue up @rtdany10 . Has anyone been able to build and push this functionality yet?

I agree with @jcagbay, the Delivery Note seems like the most natural approach to recognising revenue, and the matched Cost of Sales or Cost of Goods Sold, in the period where the revenue and costs are accrued.

The Sales Invoice should then only move Accrued Revenue (Asset) to Accounts Receivable (Asset).

[santhida]

this is the professional job
accountant need to check and do adjustment entry

[aa_prashant]

Hi @rtdany10
Hope you are having a good time, is there any update on this?

Because many organisations work this way. they do not immediately invoice the client at the time of delivery, instead it is done periodically.

Thanks,

[Md_Zabed_Hossain]

Hi, Did you find any solution for this ?

[aa_prashant]

@rtdany10 Hi Dany! I know that this issue is long pending and nobody is able to answer this in the community. any thoughts on this? Looking forward to hearing from you on this.

Thank you!

[rtdany10]

Hi Prashant, we ended up overriding the standard functionality to achieve it as it as an immediate requirement for us. It was done in client specific style and not in a generic way and hence wasn’t open-sourced.

Although once I free up a bit, I plan on cleaning it up and pushing it to upstream!