Vinsight has great features for B2B sales and inventory management, but if you are also retailing as a part of your business, you may want to use a specific Point of Sales (POS) app to help with this.
POS systems are optimised for simple quick sales processing, accepting cash or payment at the time of sale and don’t need to focus on things like payment terms, price list etc that you need for B2B sales.
If retail is not your core business but still represents an important part of your income, adding a POS system can give appropriate tools to the people running that part of the business and give them a level of autonomy. If you are running a connected accounting app like Xero, you don’t need to compromise on the information sharing between systems and indeed parts of the business.
An idea that we quite like is to treat your retail operation as a business within a business. This might mean making sure you code retail expenses and revenue to different ledgers so you can treat the retail part of your business as a separate profit centre.
1. Sell inventory from Vinsight to the retail part of the business using your normal wholesale pricing. This sees your core business earning a normal wholesale margin with regular Gross Profit and Cost of Sales. These get posted to your wholesale revenue and cost of sales ledgers from Vinsight.
2. Have the retail operation process purchase orders from Vinsight, using the purchase price as the cost of sales, just as any other retailer would. Then this allows the store to earn their retail margin independently to the wholesale margin. These get posted to your retail revenue and cost of sales ledgers from your POS system.
By running this way, it is transparent what the retail part of your business is contributing to the bottom line and avoids hidden cross-subsidies between profit centres.
It is great news if all parts of the business are pulling their weight, but equally it might be that you are only making good retail returns during the high season and that your retail operation is a net cost. That too may be OK, but then you have the information to decide if some of that cost can be attributed to your marketing and brand awareness costs.
If you sell wine and your normal business has to deal with WET tax then there may also be implications for your Tax Liability arising from your wine retail activities.
Another complicating factor is that, while Vinsight is well setup to deal with WET tax, many POS systems do not explicitly handle what is considered a specialty tax.
So to simplify matters if you are going to have to pay WET tax on your retail sales, then you could look to incur this liability at the time you sell from the wholesale part of the business to the retail part. If you have any tax treatments that need to be classified differently such as ‘applications for own use’ like promotional samples, you can accrue these and credit and re-invoice these to the correct account and the correct tax handling at the end of the month or reporting period.
Beware there may be a compromise between simplicity and your tax liability:
If you use the profit centre approach mentioned above then you need to be aware that because you are recording the sale between profit centres, that this would trigger the “non-arm’s length” condition for this transaction and you must ensure the taxable value you use is a “reasonable” value. Luckily Vinsight offers automatic calculation of the 50% retail and use the notional average wholesale price calculation, both of which should be able to be considered “reasonable” given that they will be based on other sales data from the tax period.
a) so if you use the profit centre approach be sure to mark the customer account which represents the POS system as a “Related Party” in Vinsight so that is correctly triggers the “non-arm’s length” calculation.
b) the other approach would be to record the aggregate retail sales for each day or period from the POS system in Vinsight so that you get accurate sales values, be aware that aggregating sales may hide pricing anomalies that otherwise may have had a different taxable value.
Approach a) Setup a customer account that represents the retail part of the business and ensure this is configured as a Related Party. (see setting up customers for WET)
Approach b) setup the customer as if they were a retail customer and record the aggregate sales, ensuring you separate out any sales that would trigger different tax treatments eg staff discounted sales.