Intro to Cost Accuracy

• Cost accuracy affects margins, inventory valuation on the balance sheet, and decision-making across the business.
• Common causes of cost errors: receiving before vendor invoice, freight treatment, partial shipments, split invoices, and compound errors over time.
• System 5 supports FIFO (and average costing) and has workflows and settings to enforce PO-to-bill matching and prompt cost updates on receiving.
• Four core workflows to manage: ideal PO → receive → bill workflow; receiving with known price increase; receiving with immediate cost update; price change discovered after receipt (requires additional steps/configuration).
• Recommended next step: attend the deeper virtual workshop for step-by-step procedures, configurations, and handling complex scenarios like freight and partial shipments.

00:00 Kyle (Host): All right.

00:01 Kyle (Host): Welcome, everybody.

00:03 Kyle (Host): As people join, we have a lot of attendees today.

00:07 Kyle (Host): We'll quickly explain this webinar.

00:10 Kyle (Host): Today we're talking about cost accuracy.

00:13 Kyle (Host): This is an introduction to why cost accuracy is critical and where errors come from and how they affect margin, inventory value, and reporting.

00:25 Kyle (Host): This session sets the foundation for a deeper workshop in two weeks.

00:30 Kyle (Host): In the workshop we'll walk through exact workflows in System 5.

00:34 Kyle (Host): Charlene will demonstrate today.

00:38 Kyle (Host): Let's get started.

00:40 Charlene (Presenter): All right, thank you, Kyle.

00:41 Charlene (Presenter): Welcome, everyone.

00:43 Charlene (Presenter): This is the second topic in our 2026 webinar and workshop series.

00:44 Charlene (Presenter): I'm Charlene; I manage and work with System 5 experts on the implementation team.

00:50 Charlene (Presenter): We have about 30 minutes, so I'll get right into it.

01:00 Charlene (Presenter): Why are we running webinars and workshops this year?

01:07 Charlene (Presenter): Live events had barriers like travel and time away from the business.

01:11 Charlene (Presenter): Over the last few years some topics rose to the top as most valuable to customers.

01:16 Charlene (Presenter): We decided to offer virtual sessions with less commitment and cost while keeping value.

01:29 Charlene (Presenter): The approach is 30 minutes to introduce the topic; today's topic is cost accuracy.

01:37 Charlene (Presenter): In a couple of weeks we'll do a longer deep dive for configurations and end-to-end workflows.

01:49 Charlene (Presenter): You can find the full series at windwardsoftware.com/training; each session builds on the next.

01:57 Charlene (Presenter): Today is the intro to cost accuracy; next we'll cover reconciling.

02:11 Charlene (Presenter): If cost accuracy is in place, reconciling becomes much easier for year-end.

02:21 Charlene (Presenter): Later we'll pivot into barcoding and inventory counting efficiencies using Sidekick.

02:27 Charlene (Presenter): That picture is from a live event where we included video segments.

02:29 Charlene (Presenter): I'll minimize my video so we have screen real estate for the demo.

02:37 Charlene (Presenter): Bear with my screen setup briefly.

02:39 Charlene (Presenter): Okay, here we go.

02:44 Charlene (Presenter): What do we mean by cost accuracy?

02:57 Charlene (Presenter): It's not just accounting—operational risk and decision-making depend on accurate item-level costs.

03:00 Charlene (Presenter): Margins depend on correct costs tied to inventory records.

03:07 Charlene (Presenter): If a product is brought into System 5 with an incorrect cost, that inaccuracy follows through invoicing and inventory depletion.

03:15 Charlene (Presenter): Inventory valuation on the balance sheet must reflect the true value for owners and lenders.

03:22 Charlene (Presenter): Understated inventory makes the business look weaker; overstated makes it look stronger.

03:33 Charlene (Presenter): Accurate cost data affects margins, inventory value, and cost of goods sold—impacting pricing and vendor decisions.

03:36 Charlene (Presenter): That's why we're discussing it today.

03:41 Charlene (Presenter): Now, why can cost accuracy break down in System 5?

03:56 Charlene (Presenter): One common area is receiving stock before the vendor invoice arrives—invoice value may differ from expected cost.

04:02 Charlene (Presenter): We'll review a few workflows to address this.

04:04 Charlene (Presenter): Freight charges often aren't considered at receiving, which can affect landed cost; businesses may choose to include freight in landed cost or track it separately.

04:14 Charlene (Presenter): Parcel shipments and split invoices from partial shipments can complicate matching and costing.

04:21 Charlene (Presenter): Cost errors compound over time if not corrected, making reconciliation harder later.

04:37 Charlene (Presenter): Many people share System 5 access, so ideal workflows can be hard to enforce in practice.

04:43 Charlene (Presenter): I'll show workflows that in reality may span days but I'll demonstrate them quickly.

04:50 Charlene (Presenter): Financial impact: unreliable margin calculations and incorrect inventory values lead to poor decisions.

04:58 Charlene (Presenter): We want correct margins, an accurate balance sheet, and informed decision-making.

05:04 Charlene (Presenter): Where does cost accuracy live in System 5? It starts at receiving, where cost is captured.

05:15 Charlene (Presenter): If the vendor bill differs, that causes inaccuracy; AP needs to match vendor invoices to POs to finalize costing.

05:21 Charlene (Presenter): Four workflows to discuss: the perfect PO→receive→bill workflow, receiving with price change known at receipt, adjustments for vendor pricing changes, and reporting.

05:25 Charlene (Presenter): If receiving, AP matching, and adjustments are handled correctly, reporting should be accurate.

05:28 Charlene (Presenter): At the 10-minute mark I'll show a live demonstration in System 5.

05:41 Charlene (Presenter): The four things we'll cover: key inventory cost fields, PO→receiving→AP best practices, handling price increases known at receipt, and price changes discovered after receipt.

05:51 Charlene (Presenter): Starting with key fields on an inventory record.

05:55 Charlene (Presenter): I'll use a demo item — a loveseat in the demo environment.

05:58 Charlene (Presenter): I recognize audience experience varies with System 5; I'll call out core fields.

06:02 Charlene (Presenter): First key field: Standard Cost (highlighted) — what you expect to pay the vendor.

06:12 Charlene (Presenter): Standard cost can change if you get a price increase; it also helps define selling price.

06:15 Charlene (Presenter): Second key field: Retail pricing section — how you price to customers.

06:24 Charlene (Presenter): Pricing can be markup-from-landed or fixed; if markup-from-landed is used, cost changes will update selling price automatically.

06:28 Charlene (Presenter): Example: landed cost $350 with 57.14% markup sets the selling price; a supplier cost change will affect that price if markup is used.

06:30 Charlene (Presenter): Fixed pricing is another approach to control when customer price changes happen.

06:33 Charlene (Presenter): Third key field: Cost and Stock Levels — lists stock lines with their landed costs; each stock entry can carry a different landed cost.

06:40 Charlene (Presenter): Now I'll walk through the ideal workflow in Purchasing.

06:45 Charlene (Presenter): Create a new PO for the loveseat from supplier Alpine at $350.

06:48 Charlene (Presenter): Send the purchase order.

07:04 Charlene (Presenter): Later, edit the PO to receive the item when it arrives.

07:07 Charlene (Presenter): After receiving, accounting will enter the vendor bill referencing the PO and dollar amounts.

07:10 Charlene (Presenter): I'll enter a bill for Alpine, add a bill number, $350, and tax, then save.

07:15 Charlene (Presenter): Tip: you can enforce PO-to-bill matching per supplier via configuration to support this workflow.

07:30 Charlene (Presenter): The system indicates if the bill doesn't match; best practice is to match the bill to the PO from the PO screen.

07:38 Charlene (Presenter): Select the received PO line to match it to the bill, improving reconciliation and reporting.

07:40 Charlene (Presenter): Add POs to the bill, add tax, and save — that's the ideal workflow with no changes.

07:44 Charlene (Presenter): I'll show the inventory item again to confirm nothing changed in the key fields after this ideal flow.

07:51 Charlene (Presenter): The stock line shows one received; key fields remain unchanged as expected.

08:01 Charlene (Presenter): Next scenario: price increase known at the time of receiving.

08:02 Charlene (Presenter): Create another PO and send it as before.

08:04 Charlene (Presenter): At receiving we see the packing slip shows the new price of $399.

08:08 Charlene (Presenter): Ideally vendors provide pricing information ahead of time, but sometimes you learn at receipt.

08:10 Charlene (Presenter): I'll receive the item at the new price.

08:13 Charlene (Presenter): System 5 can prompt the user to update the standard cost when it detects a change during receiving.

08:19 Charlene (Presenter): The prompt asks whether to update the standard cost permanently or treat the change as one-time (ship expediting, etc.).

08:23 Charlene (Presenter): I choose yes to update the standard cost; this will update the item and can impact customer pricing if markup-from-cost is used.

08:32 Charlene (Presenter): A report is generated when updating standard costs; you can save or print it for audit/control purposes.

08:35 Charlene (Presenter): This helps control updates and triggers price review for customers if needed.

08:37 Charlene (Presenter): After accepting the update, the inventory shows two in stock with different cost lines (350 and 399) under Cost and Stock Levels.

08:42 Charlene (Presenter): System 5 will cost the next sale using FIFO: the oldest item (350) will be used first.

08:49 Charlene (Presenter): Now add the bill for Alpine for $399 and match to the PO as before; workflow stays consistent.

08:58 Charlene (Presenter): Next workflow: price changes discovered after the item has been received.

09:08 Charlene (Presenter): This is more complex and depends on timing and conditions.

09:12 Charlene (Presenter): Create a PO expecting the current standard cost (now $399), send it, and receive it as usual.

09:14 Charlene (Presenter): Finance receives a bill for a different amount (example $415) which does not match the PO.

09:19 Charlene (Presenter): Options include allowing edits to completed POs via a configuration setting so you can edit and re-receive to match the supplier bill.

09:24 Charlene (Presenter): Editing completed POs has caveats: it doesn't work if there are outstanding backorders and other conditions apply.

09:32 Charlene (Presenter): If you edit the PO to 415, the system reminds you to change the bill as well so records match.

09:34 Charlene (Presenter): If the item has already been sold after the original receipt, fixing the cost post-sale is a larger discussion because postings have already occurred.

09:37 Charlene (Presenter): Toggle back into the bill/PO screens and complete the updated bill entry after changes are made.

09:42 Charlene (Presenter): There are multiple approaches and each business will have unique needs; we'll cover flavors of this in the workshop.

09:51 Charlene (Presenter): We're running a bit over time, but final points and tips now.

09:54 Charlene (Presenter): The webinar's aim was to provide an educational foundation on why cost accuracy matters and where it can fail in System 5.

09:57 Charlene (Presenter): Understanding where issues occur lets you build workflows to address them.

10:03 Charlene (Presenter): The workshop in two weeks will give step-by-step procedures, deeper scenarios, configurations, and topics we didn't cover like freight, partial shipments, and adjustments.

10:05 Charlene (Presenter): Usage tips: any change in the setup wizard should be tested in training first to understand business impact.

10:15 Charlene (Presenter): Under Suppliers & Payables there are supplier options where you can enforce PO-to-bill matching for specific suppliers.

10:20 Charlene (Presenter): Create a supplier lookup and test workflows before enforcing them broadly.

10:22 Charlene (Presenter): There are settings to prompt or automatically update standard cost during receiving with different flavors and conditions.

10:25 Charlene (Presenter): Resources and links are provided; you'll receive the recording after the session.

10:32 Charlene (Presenter): Self-help resources include the Windward Knowledge Base and the Learning Academy; Inventory Reconciliation is a helpful article.

10:35 Charlene (Presenter): If you don't have a Learning Academy account, contact your account manager; it's included with maintenance.

10:43 Charlene (Presenter): I'll turn it back to Kyle to talk about the workshop.

11:46 Kyle (Host): If today's session raised questions about doing this in your system, the virtual workshop is the next step.

11:39 Kyle (Host): Today's session covered what's possible; the workshop shows how to make it real in System 5.

11:41 Kyle (Host): The virtual workshop is on April 2 at 9 a.m. Pacific and provides an end-to-end walkthrough of PO-bill matching and cost adjustments.

11:43 Kyle (Host): Individual workshop purchases include the full recording; the 2026 bundle buyers will get a landing page with all recordings and handouts.

11:47 Kyle (Host): Register at windwardsoftware.com/workshop; the full list of workshops/webinars is at windwardsoftware.com/training.

11:52 Kyle (Host): You can also ask your account manager to invoice you instead of self-serve registration.

11:55 Kyle (Host): If cost accuracy matters to your margins, this workshop helps turn insight into action.

11:59 Kyle (Host): Now we'll move to Q&A; use the question icon to submit questions.

12:09 Kyle (Host): First question from Karen: Does System 5 use LIFO, FIFO, or another method, and does FIFO apply to balance sheet and inventory valuation?

12:18 Charlene (Presenter): System 5 uses FIFO by default; average costing is also an option.

12:19 Charlene (Presenter): FIFO applies to both the balance sheet and inventory valuation.

12:22 Charlene (Presenter): FIFO means the oldest item in the cost list is used first when selling.

12:25 Charlene (Presenter): Serialized items are an exception because costs can be assigned per serialized unit rather than by date.

12:27 Kyle (Host): More questions — keep them coming in the question widget.

12:36 Kyle (Host): Karen says thanks and appreciated the explanation.

12:38 Kyle (Host): We'll wait briefly for any additional questions.

12:40 Charlene (Presenter): The workshop is better for deep conversations about specific experiences, but I appreciate your attention today.

12:45 Charlene (Presenter): We're slightly over time, so we'll wrap up shortly.

12:50 Kyle (Host): If you have further questions, email webinar@windwardsoftware.com and we'll route them.

12:55 Kyle (Host): One more question popped in about foreign product being received.

12:57 Charlene (Presenter): Foreign product handling wasn't on the agenda, but it's a good topic; Scott, if you join, we'll include it in the workshop.

13:01 Kyle (Host): Thanks; we'll leave it there for now.

13:04 Kyle (Host): We'll follow up with any unanswered questions and get you to the right person.

13:16 Kyle (Host): The recording will be available within about three days at windwardsoftware.com/webinars.

13:25 Kyle (Host): We have all previously recorded webinars listed there.

13:28 Kyle (Host): Thanks for joining us, everyone.

13:38 Charlene (Presenter): All right, see you all.