Uploading Receipts to Asset Category "Raw Materials"
maleckson
Member Posts: 1
How can I record a purchase through Wave Receipts and categorize it to an asset account such as "Raw Materials". I buy raw materials to manufacture into finished goods using a corporate credit card, and thus want to use Wave Receipts to upload the receipt and record the purchase as raw materials.
It appears I may only purchase such items and enter them as "Cost of Goods Sold" entries, which is incorrect.
Thank you!
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May I ask why you are saying that is incorrect?
It is incorrect because I am purchasing raw materials (an Inventory Asset account) that are converted over time into Finished Goods and then ultimately sold (at which time I should be recording them against an account in the Cost of Goods Sold category.
Proper accounting practice (and with regard to IRS regulation) is to record the cost of the good sold in a "Cost of Goods Sold" account only when it is sold - not when the raw materials used to make the product are purchased. Raw materials stay "raw materials" until they are being used to build product (becoming, perhaps "Work in Process Inventory" until they are sold, at which time the cost of the finished good should be recorded against a "Cost of Goods Sold" account.
Wave allows me to create a "Raw Materials" asset account - it just doesn't let me record a purchase in the Receipts app into that "Raw Materials" account. Thus, I must correct every transaction generated from the receipt processing functions on raw materials purchases in order to properly record them as "Raw Materials" assets.
Hi @maleckson and @Mikey.
This is because of rules around receipt upload making it so receipts are locked to expense categories. Fortunately, there's a pretty simple workaround.
Choose uncategorized expense when creating the receipt. Then, log in through the website and change the category of the transaction to your asset account on the Transactions page.
It adds an extra step, but it'll allow you to keep your receipt stored and make for accurate bookkeeping. If you don't need to store your receipts, you might prefer doing it through the **Bills* page, which is the intended way to process transactions like this one (although I totally understand wanted to keep a scanned copy of your receipts handy).
Let me know if you have any questions.
Mikey, we had this issue as well, however with our "unused stock" we would have the asset account like you mentioned, say at 10K or so (very small). Then we would just use the cogs account for those materials used.. The only time we would ever need to asses the value is when looking at the balance sheet.. It never really changed annually above or below that amount, So we would not need to "account" for the fluctuation as it was always moot.
sigh... is it only me that think Receipt by Wave is overdesigned and lack simplicity and flexibility? Why not simply allow us to upload the receipt and categorise it to our hearts' content? Cause a receipt can be Asset (for we do need to pay for assets too) or Expense.. why put such un-necessay constraint on the system... and force workarounds upon workarounds?
Hi @kitsky, this is because we intend for users to use Bills for transactions like this, rather than Receipts, which are really just meant to track smaller expenses.
Thank you, Alexia, for your response. I think that your use of the phrase "we intend..." could be a part of my problem with this part of your beautiful (and mostly awesome!) accounting system.
I fully understand that you intend for me to use a Bill for purchase of raw materials.
However, please understand my (and I'm sure many other small manufacturing business owners' situations) - we at times buy raw materials while out shopping for who-knows-what, and pay for these raw materials with cash or a credit card.
We do not have a purchase order, we do not want to create a purchase order - there is no purchase order! We don't know the Vendor in advance (maybe we're walking through a craft fair down at the local park and find a who-knows-who vendor selling cool cloth or some such thing).
We want to buy a bolt of said cloth, upload a receipt and record the purchase against an asset account (such as Raw Materials) - plain and simple!
But again I fully understand how you want us to use the Bills/Vendors functionality within Wave.
So here's a possible solution that'd make Wave even more appealing to small business owners like me...
Why doesn't Wave give us a "Bills and Vendors" mobile app that provides all the sweet functionality of your Receipts app (receipt scanning, OCR of vendor name/dollar amounts/SALES TAX amount, etc) that automatically creates bills, vendors, products and all necessary journal entries from a receipt scan.
That way, your existing workflow and underlying conceptual design would be preserved, and business owners like me would not have to be told "go manually create a bill, manually create a vendor and manually create a product.
And now Wave will create the journal entries for that bolt of cloth you just bought..." or "in the Reciepts app, just record your purchase against some kind of a holding account, and then manually change the transactions to reflect an Asset purchase".
Though this particular aspect of your system is unfortunate and really should be changed - I want you and Wave leadership to know I love so much about Wave accounting, and I'm happy to continue recommending it to my fellow business owners. (But please do consider my suggestions above!)
Hi @Mikey.
Thank you so much for your input. Posts like these really give us better insight into our users' workflow and how to best direct our resources. I know how valuable your time is as a business owner, and I truly appreciate you taking the time to write this post.
For now, however, your best option is to record them as receipt and change the account in your transactions to an asset account. I can recognize that it isn't ideal, but it's the fastest way to assign receipts to asset categories.
One thing I can tell you is that you can expect a lot of work to go into improving Wave on mobile platforms in the near future, so stay tuned!
Also, thank you for the love! We're always working to make Wave easier to work with and for it to better suit the needs of our users, it's always heartening to hear that our work pays off.
FWIW, the way Alexia thinks it should work is the only way I can think that it would work. Now, I'm new to accounting (something no small business owner deals with, right?) so there is some terminology I'm not familiar with. However, my business is also one where raw materials are bought (wood mostly) from local suppliers. There are no invoices or special contacts, I simply walk in, find what I need or what looks good, and purchase it. When I walk out I'm holding a flimsy piece of paper that I need to keep track off, and it seemed obvious to me that using the "receipt" wave app would be what I use for, you know, receipts?
Anyway, I'd seriously consider opening up the receipts app in this way so that it can be used by small businesses, as well as tiny businesses. Thanks for listening!
Hi @EarendilStar. I can absolutely see how it would make things easier for you.
You're right when you say that a lot of small business owners don't have much accounting knowledge. One of our biggest goals with Wave is to offer software that's friendly enough to use to allow those business owners who don't know much about accounting to do accurate bookkeeping without it taking away too much valuable time. We know you have plenty to worry about in your day-to-day, and we want to make sure you don't have to worry about your books on top of everything else. Thank you for adding to this.
@EricBlade There still isn't a way to process receipts to associate them with a specific asset account (you will need to manually create an expense in Wave and associate it with the asset account there) -- however, you should be able to bulk upload receipts into your Wave account... This help centre article should provide more detail on how to accomplish this; https://support.waveapps.com/hc/en-us/articles/208622136-How-to-email-your-receipts-to-your-Wave-account
@JamieD is this on Wave's roadmap to give an option or a setting to allow for associating receipts to asset accounts or at the very least an asset account for inventory? As a few people have mentioned above, I think there has been a big focus on making the process of categorizing receipts easy, but almost to a detriment. If the 'ease' factor needs to be preserved, perhaps this could be a setting that an admin could change in the settings for Wave?
Hey @JPEEZY Barsin here from Wave support.
I reached out to our receipts team and they have mentioned that unfortunately with our current workload ahead of us they won't be able to get to any major updates in the near future. My apologies for this. The team is brainstorming future ideas for updates in the new year, so the more feature ideas we post here the better.
@BarsinA ,
Thanks for the update. I completely understand, especially since the service being offered is free. Thanks for what has been created so far. It's nice not having to pay for a bunch of software when you are just starting a business.
This works when I upload a receipt from the website. when we try to upload a receipt with the iOS receipts app, however, there is no "Uncategorized Expense". The options for category jumps from "Telephone - Wireless" to "Utilities". So my workflow is longer than suggested above
If there's a way to do this with less steps I would love to know!
Hey @sthapit! Thanks for letting us know what your current workflow is here. If you were to cut out steps 3 and 4, and go directly to your Transactions page, are you still able to see that receipt's transaction there?
It doesn't show up in transactions till I click on "Post to Accounting", either on the mobile app or on the web page. And on the mobile app I can't click on "Post to Accounting" without selecting a category where "Uncategorized Expense" is not listed. I can select something random like "Alcohol & Tobacco" from the mobile app and then in Transactions I can change the category. Only "Uncategorized Expense" shows up as "Choose a category" in red which is nice so there's a chance it would get missed with other entries if I choose a random category.
+1 from me t be able to select the Asset from the receipts app directly