Capitalization is an important concept in inventory management, especially when it comes to enhancing the value of your units. Whether you're adding rust protection to an ATV, installing rock rails, or renovating a used RV with new fixtures, appliances, and flooring, Windward Software provides a robust system to track these upgrades effectively.
What is Capitalization?
Capitalization involves adding value to a unit, making it more valuable than its original state. This could be through enhancements, modifications, or upgrades that are considered permanent improvements. For example, adding rust protection to an ATV or renovating a used RV with new fixtures and flooring are forms of capitalization.
How Windward Software Tracks Capitalization
Windward Software's System Five offers a comprehensive approach to tracking capitalization. Here's a step-by-step overview of how it works
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Service Invoices: When you add value to a unit, such as installing new appliances in an RV, you create a service invoice. This invoice allows you to reduce inventory stock and allocate the value to the unit-type inventory.
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Units: Indicate the unit/VIN being capitalized from the unit tab. This ensures that the specific unit receiving the upgrade is accurately tracked
3. Inventory Tracking: From the items tab, identify the inventory being added to the unit. This could include new fixtures, flooring, or any other enhancements
4. Total Landed Cost: The unit's base cost plus the add-on cost becomes the total landed cost of the unit. This total cost is recorded when the unit is sold, reflecting its enhanced value
5. General Ledger Entries: Windward Software tracks the inventory sub-ledger and general ledger entries from ordering right through to selling and capitalization. This ensures that all financial aspects of the capitalization process are accurately recorded
6. Internal Labor Capitalization: If internal labor is involved in the upgrade, Windward Software allows for the capitalization of labor costs to the unit. This means that the cost of labor is added to the unit's value, providing a comprehensive view of the total investment
Benefits of Tracking Capitalization
- Accurate Valuation: By tracking capitalization, you ensure that the enhanced value of your units is accurately reflected in your financial records.
- Improved Inventory Management: Knowing the true value of your inventory helps in making informed decisions about pricing, sales, and future investments.
- Enhanced Reporting: Windward Software provides detailed reports that help you understand the impact of capitalization on your business, aiding in strategic planning and analysis.
Windward System Five is a powerful tool for businesses looking to modify units to suit customer needs. From adjusting capitalized total costs to enhancing inventory management, System Five offers a range of features that streamline operations and enhance customer satisfaction.
How To Get Started:
To discover how Windward Software's ERP can transform your shop, book a live system demonstration today and take the first step toward improved operational efficiency and profitability.
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