Table of Contents
IMPORTANT: Inventory Valuation Methods are only available with the Fleetio Premium plan.
Overview of Inventory Valuation Methods
Before setting up Fleetio with your preferred Inventory Valuation Method and deciding if you'd like to change from the default option, let's walk through the default and advanced methods first:
Default Method
Static Pricing
In the static pricing inventory valuation method, the unit cost on each part is set manually and will not automatically change based on inventory adjustments or purchase orders. Part unit cost is the default price applied when the part is added to work orders. This is Fleetio's current part pricing method and will be defaulted on the inventory valuation screen.
Advanced Methods
FIFO
In the first-in, first-out inventory valuation method, Fleetio will keep a dated inventory record for inventory at each part location. The price applied to the work order will be the price from the earliest quantity until depleted.
NOTE: FIFO is the inventory valuation method used most frequently for customers.
LIFO
In the last-in, first-out inventory valuation method, Fleetio will keep a dated inventory record for inventory at each part location. The price applied to the work order will be the price from the latest quantity until depleted.
IMPORTANT: LIFO is only an acceptable inventory valuation method in the United States using the Generally Accepted Accounting Principles (GAAP). LIFO is specifically prohibited under International Financial Reporting Standards (IFRS). This is the least common inventory valuation method, so ensure you are confident in the accounting methods in your jurisdiction before enabling LIFO.
Average Cost Method
With the Average Cost inventory valuation method, Fleetio will keep a dated inventory record for inventory at each Part Location. The price applied to Work Orders will be the average cost of each unit, calculated by dividing the total cost of all units in the Part Location by the total number of units in that Part Location. You can learn more about the Average Cost Method in Advanced Inventory Valuation: Average Cost Method.
Inventory Valuation Setup & Migration
PERMISSIONS: Only Account Owners have access to change the Inventory Valuation Method.
Navigate to your Account menu and select Settings.
Under the Parts & Inventory section, click Inventory Valuation Method.
NOTE: Static Pricing, FIFO, and LIFO are Inventory Valuation Methods that your organization may apply in order to determine parts inventory pricing for accounting purposes. The method you select has important tax consequences and other financial implications.
IMPORTANT: Once you change your Inventory Valuation Method to FIFO or LIFO, you will NOT be able to change your Valuation Method again due to the accounting implications this may cause for your organization. Be sure that the method you are choosing is the correct method for your organization and your jurisdiction.
Before you can activate the Inventory Valuation Method and start the migration process, you will want to review the items that appear in yellow on this screen:
There will be three areas to address before you can move to the next step:
- Fix negative part quantities: All parts must have a current quantity greater than or equal to 0 (e.g., cannot be a negative value). You can fix your part quantities by performing an Inventory Import or by manually updating parts.
- Fix part unit costs: All parts must have a unit cost of $0.01 or greater. Any unit cost less than $0.01 will be stored as $0.00 and prevent you from making a FIFO or LIFO selection. You can fix your part unit costs by performing a Part Import or manually updating parts.
- All incomplete Work Orders with part line items must be completed: An incomplete Work Order at the time of migration will cause the migration to fail.
IMPORTANT: The Bulk Manage Parts & Inventory feature is not available when using an Advanced Inventory Valuation Method.
TIP: Follow the order of the steps in the instructions listed on the page EXACTLY as they appear on the screen (e.g., download the first CSV for parts with a negative quantity and correct this information prior to downloading the CSV for parts that have a unit cost less than or equal to $0). The links in the instructions will take you directly to the area of the system to correct these issues.
Once all issues have been corrected, check the box next to "I am aware the change I am about to make is permanent and cannot be reversed." Then, click Activate.
After the migration is requested, you will see on the screen what time the migration will occur. There could be up to a 24-hour delay before the new Inventory Valuation Method is available in your Fleetio account.
What You Need to Know About Past Records After Migration
- Enabling Inventory Tracking for a Part's Locations: Any parts with inventory tracking disabled for a location cannot be enabled for tracking after this migration
- Disabling Inventory Tracking for a Part's Locations: Any parts with inventory tracking enabled for a location cannot be disabled for tracking after this migration
- Part Line Items on Work Orders: Part line items on Work Orders created before this migration will be permanently uneditable after this migration
- Deleting Parts: Parts with any inventory sets cannot be deleted. This includes previously used inventory sets.
Inventory Sets
You can think of Inventory Sets in Fleetio as rows in the ledger of your Purchase History. These sets are combinations of a Part, acquired on a specific date, for a specific Unit Cost, at a specific Part Location. One part at one part location can have many sets when it was acquired for a specific cost.
NOTE: After the migration to FIFO or LIFO, each part in your inventory will automatically be assigned its own Inventory Set and the price for that Inventory Set will be the price you currently have listed as the Unit Cost for the part.
You will be able to attribute exact part costs to vehicle maintenance and be able to know the exact value of inventory sitting on your shelf at any point in time.
Example:
If you purchase 10 tires, with a unit cost of $100 each in February for the Boston location, Fleetio will create one Inventory Set.
If you then purchase 12 tires for $115 each in March for the Boston location, Fleetio will then create another separate Inventory Set.
To view an Inventory Set or manually adjust inventory on a part:
- Click Parts & Inventory in the Sidebar Navigation and select Parts List.
- Click the part you would like to view or add inventory to.
- Scroll down to the Location section of the Parts Overview.
- Here, you can view current quantities for the part based on location, the average unit cost, inventory value, reorder point, pending PO quantity, and WO current quantity.
- If you hover over the icon in the Current Qty column, you can see the current inventory sets for this location:
- Click the +/- button to adjust inventory for the part.
- Adjust Quantity, Unit Cost, Vendor and Reason.
- Click Save.
Each time you add inventory to a specific part, Fleetio will create a new Inventory Set with the date it was entered, the Unit Cost and the Quantity. In the Locations section of the Part, hover over the icon under the Current Qty column to view more details on the specific inventory sets for each location.
NOTE: Unit Cost cannot be edited for past inventory sets.
Transferring Inventory Between Locations
Transferring inventory between locations when FIFO or LIFO is enabled works similarly to manually moving inventory between locations. To transfer inventory to another location:
- Click Parts & Inventory in the Sidebar Navigation and select Parts List.
- Select the Part to view the Part Details.
- Under the Locations section, click the Transfer button for the specific location.
- Select the quantity to transfer and the new location.
- Click Save.
NOTE: When transferring parts to another location with FIFO or LIFO enabled, the original Inventory Set creation date will remain the same when transferred to the new location. You can view the details of any inventory transfer in the Inventory Activity tab of the Parts Overview.
Using Inventory
Putting Part Inventory Quantities on a Work Order
When you add parts to a Work Order, you will see the Unit Cost cannot be edited. Fleetio will determine which inventory set to pull from based on the Inventory Valuation Method you selected in Account Settings and the location you've chosen.
NOTE: When FIFO or LIFO is enabled, an inventory location is required on Work Order Part Line Items. This setting cannot be disabled.
EXAMPLE: We want to add four brake pads through a Work Order. We will consume two through Set 1 because we have FIFO enabled (First-in, First-out) at $26.99 each. Then, we will consume the remaining two from Set 2 (that was acquired later) at $31.99 each.
EXAMPLE: In contrast, if we have LIFO enabled as the Inventory Valuation Method, like in the example below, we want to consume five brake pads. Therefore, we will pull four brake pads from Set 1 (Last-in Last-Out) and one from Set 2, which we acquired first.
If you use a part on a work order, Fleetio knows exactly where the part came from, the unit cost, date, etc. For example, if we create a Work Order and add a Part to it, you will see the parts from each location, but you will also see the parts that came from the specific Purchase Order we just added.
You may click the Purchase Order link to view the specific Purchase Order. You will also be able to see this information on the Line Items in the Work Order and Work Order Details page.
NOTE: For users who do not have Purchase Order view access or Purchase Order access, the user will only see the Purchase Order number in the Work Order, but will not be able to click through and view the actual Purchase Order.
Acquiring Inventory
When you acquire inventory through a Purchase Order, once the Purchase Order is set to Received, you will notice a change in the Inventory Set of the Part. Let's review the example below:
EXAMPLE: In this Purchase Order, we ordered six brake pads for $37 each from the Houston location.
Then, we received six of the brake pads that were ordered in the purchase order.
Click the name of the Part in the Purchase Order Line Items section to view the Parts Show page.
Hover over the icon next to the Current Quantity, and you will see that Fleetio has automatically created an Inventory Set from the six parts you received for $37 each for the Houston location.
Deleting a Purchase Order
If you use the FIFO or LIFO Advanced Inventory Valuation Method, you have the ability to delete Purchase Orders, even after units have been received.
IMPORTANT: You cannot delete a Purchase Order if:
- Units received from that PO have been used on a Work Order.
- Units received from that PO have been used via manual inventory adjustment
- The PO is for a non-inventory-tracked location
PERMISSIONS: Users must have the "Delete" permission for Purchase Orders in their User Roles & Permissions to delete Purchase Orders.
To delete a Purchase Order:
- Click the More Actions button at the top of the Purchase Order and select Delete.
- In the pop-up that appears, click Delete Purchase Order to confirm.
Parts & Inventory Imports
In Fleetio, imports can create new data or update existing data. A Part Import is used to make changes to the Part record (e.g. Description, Manufacturer), while a Parts Inventory Import is used to make changes to a specific Part Location (e.g. Aisle/Row/Bin, Available Quantity). Once FIFO or LIFO is enabled, there will be some functionality changes with the import process for these imports.
For a LIFO/FIFO enabled account, the Unit Cost on inventory-tracked parts is configured through Inventory Sets. You may use the Part Inventory Import Template, Headers & Data File to either create new inventory sets, or to decrement current sets, for your existing inventory-tracked parts. The available_quantity field in this template contains the current quantity. Increase this value to create a new set, or decrease this value to decrement an existing set. If a new set will be created as the result of an increase in this value, the unit_cost_of_added_inventory field will also be required, and will determine the unit cost of parts in the new set.
Inventory Valuation Method with Fleetio Go
Fleetio Go users also have access to Advanced Inventory Valuation Method functionality. Learn more in Using Advanced Inventory Valuation Methods in Fleetio Go.
