Ecommerce Inventory & COGS Timing: Stop Margin Spikes
Stabilize ecommerce margins with correct inventory valuation and COGS timing. Item-level or periodic COGS, landed cost, and month-end tie-outs. CPA-reviewed in QuickBooks or Xero.
If your inventory and COGS don’t track reality, channel margins swing and decisions stall. We run an ecommerce bookkeeping workflow that locks valuation and timing into a monthly rhythm you can trust. First, we standardize SKU mapping across Shopify/Amazon/gateways and choose the right method, item-level COGS (perpetual) or periodic COGS (from IMS/FBA exports). Then we handle landed cost (freight/duty) and reconcile Inventory Asset to your inventory system while aligning COGS to the sales period, not when bills were paid. Every month, we reconcile bank/credit/loan accounts to statements, clear Undeposited Funds, tie payouts to deposits, and deliver a CPA-reviewed report pack (P&L by channel, Balance Sheet, cash highlights) with a period-lock recommendation. The outcome: consistent margins, clean audit trails, and lender-ready statements, without spreadsheet heroics.
Choose the Right COGS Method (and Stay Consistent)
Item-Level (Perpetual)
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Each sale relieves item quantity × standard/actual cost - Requires clean SKU mapping and stock movements (receipts/adjustments)
- Best for higher-ticket SKUs or tighter gross-margin controls
Periodic (IMS/FBA Export)
- End-of-month: COGS = Beginning Inventory + Purchases – Ending Inventory
- Leverages IMS/FBA valuation; simple when SKU-level costing is messy
- Best for large SKU catalogs or 3P-fulfilled mixes
Landed Cost That Doesn’t Distort Margins
- Capitalize freight/duty/clearance into inventory value (PO allocation or monthly capitalization entry with schedule)
- For periodic: add landed cost to “Purchases” before computing COGS
- Document allocation logic (by quantity, weight, or value) and keep it fixed
Month-End Tie-Outs
- Confirm SKU map consistency across channels/IMS
- Reconcile receipts and adjustments to IMS/FBA activity
- Compute ending inventory from IMS/FBA; reconcile to Inventory Asset
- Post COGS timing entry (item-level relief or periodic computation)
- Validate gross margin by channel; explain deltas in a variance note
- CPA review → finalize → period-lock guidance
Stop the 6 Common Margin Killers
- Purchases expensed to COGS (no capitalization)
- Periodic COGS posted late or into the wrong month
- Returns not restocking inventory (or restocking at wrong cost)
- Bundles/kits mis-mapped; parent/child SKUs off
- FX revaluation missing on foreign purchases/settlements
- Dual sourcing without separate landed-cost profiles
IMS & FBA Integrations We Normalize
- Shopify + IMS (e.g., TradeGecko/DEAR/Cin7)
- Amazon FBA settlement valuation and long-term storage adjustments
- POS or WMS to accounting Item (or Purchases) mapping
- Stripe/PayPal fee extraction so gross→net bridge stays intact
Reports You’ll Trust
- Inventory Valuation vs Inventory Asset reconciliation summary
- COGS trend by month and by channel
- Gross margin by channel/SKU group with variance drivers
Frequently Asked Questions
Choose item-level if stock movements are clean and you need tight margin control; choose periodic if catalog breadth or 3P fulfillment makes perpetual messy. We can switch methods, but we plan the transition carefully and disclose it in the variance note.
We restock inventory at the correct standard/actual cost; revenue and COGS reversals align with the return period, and damaged/unsellable items route to a separate write-down account.
We capitalize landed cost using a fixed allocation basis (qty/weight/value), document the schedule, and apply it consistently each month.
Yes, one-time cleanup reconciles IMS/FBA valuation to Inventory Asset, realigns COGS to the right periods, and we move you into a monthly cadence.