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Selling item at zero selling price

Please, which is the best way to treat an item, if you want to sell it at zero amount?

  1. Should I use the Pricing rule? or,
  2. Should I use stock entry type Material Issue

An example is when I want to give sportswear to a celebrity for influencing purposes.
I want to recognize the cost value of the item in my profit and loss but don’t want the sales price to reflect because I gave it out for free.

@olamide_shodunke sir, what’s the best way to handle this kind of transaction?

There are many ways to achieve this it’s not a one way best way thing

  1. give a 100% discount
  2. issues a credit/debit note against acc after sales of items

Hope this helps.

Thank you.
Yes it helped

Yeah… What @spryng said!

I always sell it on a sales invoice and give a 100% discount and that way the accounting stays correct.

BKM

To keep the accounting correct you might actually want to use Material Issue.

Using Material Issue you will be able to choose a specific expense account for the cost of the item. In the example giving by the poster, the expense account should be Marketing Expense.

If you execute the transaction using Sales invoice and 100% discount, the cost will be buried in Cost of Goods Sold and that might not be accurate from a purely accounting/reporting perspective.

Just an opinion

Yeah thare are many good angel to see it from, @olamide_shodunke point of view is a good one too, but the first question that comes to mind is

  1. is that solution easy for an end user to implement (not an accountant) and still not distrupt basic bookkeeping principle.

@emmakezie another way could be creating a loyalty or coupon code to apply to vouchers, in such cases.

Can you please give outline to the process to achieve this
Material issues will it be to party or will it be to a warehouse?

Step 1 - Stock entry
Step 2 - Stock Entry Type will be Material Issue
Step 3 - Choose the source warehouse (No need for Target Warehouse)
Step 4 - Choose the item(s) in the item table
Step 5 - Click on Edit to access the Difference Account


Step 6 - choose the expense account you want to use to write off the cost of the items issued out
Step 7 - Save and Submit

Interesting, I think this can also apply to items given to various customers for sampling/displays campaign, after awareness period one can charge it to their accounts if need be.

Would this feature (https://github.com/frappe/erpnext/pull/26359) address your second concern about separating the discount amount?

In Proper accounting procedures, you may not want the cost of the item to be absolved by the Cost of Sales due to the nature of the transaction.
The best ledger to take the hit is Marketing Expenses. especially when you have set your default expense account on Item Master
@olamide_shodunke is actually right.

This is cool. I really like the concept. It will solve the problem.

I see it was merged to frappe develop branch. Guess we will wait a bit to check it out

You are right.
Though a non Accountant doing ERPNEXT Implementation may find it difficult alligning the ledgers accounts to report properly on the differences btwn COST OF SALES and MARKETING EXPENSES as it relates to absorbing cost value of an item.
Classifying expenses when faced with below scenarios may differ:
i. The item is utilized internally as Consumable
ii. The Item is used for Markeing purpose
iii. Item is properly sold to customer.

This is good
It will create a more clear reporting if implemented.

@olamide_shodunke This is already part of v13. Latest releases.

yes, ERPNext should support posting to different expense account per business scenario, i.e the material movement type(purpose) of the same item.