Tracking COGS and Inventory

This guide provides step-by-step instructions for tracking Cost of Goods Sold (COGS) and Inventory by ensuring products are set up correctly in both Xero and Shopify and enabling SKU matching.

Step 1 - Set up Product SKU in Shopify

1. Log in to your Shopify Admin Panel.
2. Go to Products from the left-hand menu.

3. Click on the product you want to track.

4. Scroll down to the Inventory section.
5. Ensure that the SKU (Stock Keeping Unit) field is filled with a unique identifier of your choosing.

6. Make sure that the Track quantity box is checked. 

7. Click Save to confirm the changes.

Step 2 - Set up Product SKU in Xero

1. Log in to your Xero Account.
2. Navigate to Business from the top menu.
3. Select Products and services.

4. Click on the New Item button to add a new product.
5. In the Code field, enter the same SKU used in Shopify.

6. Make sure that the Track inventory item box is checked.

7. Set the Inventory Asset account to the account of your choosing.
8. Modify the Purchase and Sell section according to your preferences, ensuring that the relevant accounts and tax rates are set up correctly.

9. Click Save to confirm the changes.

Step 3 - Enable Match Product SKUs in the Post to Xero App

1. Open the Post to Xero app.
2. Navigate to the Setup - Xero section.

3. Locate the Match Product SKUs setting.
4. Enable this setting to ensure that product transactions in Shopify automatically match with the corresponding SKUs in Xero.

Once that's been enabled, any orders for that particular item will automatically be matched and posted to Xero according to the Sales, COGS, Inventory accounts, and Tax rate that have been set up in Xero for that item.

If you have a more complex setup for COGS and Inventory, feel free to reach out to us at help@hyvelabs.co to discuss your needs.