Understanding Variances Between Xero and Your Stock Management System: Unleashed/Cin7Core/Cin7Omni

Failed Exports:

Occasionally, transactions may fail to export from your stock system to Xero due to issues such as incorrect account mapping, invalid data, or connection errors. These failed exports contribute to variances since the transaction will exist in your stock management system but not in Xero.

You can track and troubleshoot failed exports by checking the Connection Log within the integration. It’s important to resolve these issues promptly to maintain consistency.

Transaction Timing:

Sales Orders are processed in two parts: Invoices and Shipments. Invoices manage the pricing and revenue, and they integrate directly with your Sales account. Shipments, on the other hand, manage stock movements, affecting the stock value and Cost of Goods Sold (COGS) accounts.

This split can lead to timing discrepancies. For instance, if an order is invoiced in one month but shipped in the next, revenue will appear in Xero in the month the invoice is raised, while the COGS will appear when the stock is shipped. This results in a mismatch between revenue and costs in the Profit & Loss (P&L) report, which should be taken into account when reviewing your financials.

Exchange Rates:

In some stock management systems, like Unleashed, currency exchange rates are manually set and recorded within the system's settings. Unlike platforms that automatically update rates based on global changes, manually updated systems require regular review to ensure accuracy, or else outdated rates can result in variances in foreign currency transactions.

Although Xero manages exchange rates, these rates do not sync automatically with your stock system. Therefore, it’s important to understand how your system manages exchange rates, and keep an eye out for any large variances.

If a foreign currency sale or purchase is recorded in a stock system and the exchange rate differs from that in Xero, the variance will be recorded in the Unrealised Currency Gain/Loss account. Once the invoice is paid, this variance moves to the Realised Currency Gain/Loss account, potentially causing differences in financial reporting. However, if your stock system updates exchange rates automatically, these variances should be minimal.

Edits in Xero:

The integration design with Xero means that any changes made to transactions in Xero, such as altering prices or dates, do not sync back to update the transaction in your stock system. If dates are edited in Xero, transactions could be recorded in different periods in each system, leading to discrepancies in reports.

To avoid this, ensure that any required adjustments are made in your stock system before exporting to Xero. This will keep your records aligned and reduce the likelihood of variances.

Drafts in Xero:

If transactions are exported to Xero in ‘Draft’ status but are not approved, they will not be reflected in Xero’s financial reports. It's crucial to approve these drafts in Xero to ensure they are accounted for in your figures and to avoid discrepancies in reporting.

Manual Entries in Xero:

Any manual transactions entered directly into Xero do not flow through to your stock system, leading to mismatches between the two systems. For consistency, try to record as many transactions as possible through your stock system, which will automatically sync to Xero. If manual entries are unavoidable, be sure to adjust the corresponding figures in both systems where appropriate.

Duplicate Transactions:

Transactions completed in your stock system are automatically exported to Xero. If these same transactions are manually added into Xero, this will cause duplicate entries, inflating stock value, revenue or expenses in your financials. Always check that transactions have exported correctly before manually entering any data to avoid this issue.

Freight Costs:

Freight can be managed in different ways depending on your stock management system and unique business requirements. You may prefer freight to be included as part of your stock value, or this may be better managed as an individual expense.  It is important to ensure your freight is coded correctly to prevent over- or undervalue of stock, and accurate margins.

While it's not always an easy task, getting to the bottom of stock variances is essential to ensure your transactions are flowing to Xero correctly. Regular checks and reviewing the frequency and value of journals can help to highlight issues and maintain your data integrity. 

We’re here to help if you need assistance investigating the cause of these discrepancies or reviewing your stock processes. Reach out to us today.