Configuring COGS Settings for PayTraqer Summary Sync

Andrew Francis Etto

Modified on: Thu, 2 May, 2024 at 12:32 AM

Overview:

Understanding and Managing Cost of Goods Sold (COGS) in PayTraQer

Cost of Goods Sold (COGS) is a critical financial metric used by businesses to calculate the direct costs associated with producing goods or services sold to customers. This article aims to provide an overview of COGS, its significance, and how to manage COGS mapping effectively in PayTraQer.

1. What is the Cost of Goods Sold (COGS)?

Definition: COGS refers to the direct costs incurred in producing goods or services sold by a company during a specific period.
Components: COGS typically includes expenses such as raw materials, labor, and overhead costs directly associated with production.
Importance: Understanding COGS is essential for accurately determining a company's profitability and assessing the efficiency of its operations.

2. Why Cost of Goods Sold (COGS)?

Financial Analysis: COGS provides valuable insights into a company's financial performance and helps in evaluating its gross margin.
Pricing Strategy: Knowledge of COGS enables businesses to establish competitive pricing strategies while ensuring profitability.
Decision Making: COGS data informs strategic decisions related to inventory management, production processes, and resource allocation.

Here's a simple example:

Let's say you run a bakery. The flour, sugar, butter, and other ingredients used to make your cakes are part of your COGS. Additionally, the wages of your bakery staff and the cost of electricity used in baking would also be included in COGS.

Understanding COGS is essential for businesses because it helps determine the profitability of each product or service sold. By subtracting COGS from total revenue, a company can calculate its gross profit margin, which indicates how efficiently it's using its resources to generate profit.

You can create/add COGS manually.

If you would like to calculate COGS, Enable the option “Do you want to calculate Costs of Goods Sold” and set the Expense Account and Inventory Assert Account.

Do you want to calculate the Costs of Goods Sold? Calculate the total costs of the products sold in your payment or e-commerce platform.

Expense Account: Select an Expense account to track the Cost of goods sold.

Inventory Asset Account: Select an Asset account for tracking inventory reduction from sales.

Manage Product Costs: Cost data to calculate the cost of goods sold.

Note: Cost modifications will not update the cost of goods sold (COGS) for previous transactions. To reflect the changes, you need to regenerate the COGS.

Please furnish the following details:

SKU: Product SKUs in your Payment System/e-commerce platform inventory.
Product Name: Name of the product listed in your Payment System/e-commerce platform inventory.
Product Cost: Cost of the items sold from your inventory.
Currency: Currency used for the items sold from your inventory.

1. Import COGS: If you have Cost of Goods Sold (COGS) data saved in a file, you can utilize the "Import COGS" function to add/save this information into PayTraQer.

2. Product Category: You can add/create a product category manually in PayTraQer.