What is weighted average cost?
It is the cost per unit of a material when you have bought it at different prices. Instead of tracking which bag of cement came from which purchase, the stock carries one average cost, weighted by the quantity of each purchase.
For example, if you hold 100 units that cost 30 each and buy 100 more at 36, the average cost becomes 33 per unit. The numbers are only an illustration of the arithmetic.
How does each purchase recalculate it?
At every purchase, the value already in stock is added to the value of the new purchase, and the total is divided by the total quantity. The result is the new average cost, used from then on to value the material that leaves for the sites.
Exits and adjustments do not change the average cost, only the quantity. That is why every purchase, exit and adjustment should be recorded: a balance that is not updated makes the average wrong.
Balance by location and minimum stock
A balance of 500 bricks means little if 400 are in the warehouse and the site that needs them tomorrow has 100. Keep the balance by location, such as the central warehouse and each site, and record transfers as a movement from one to the other.
Set a minimum and a maximum for each material. The minimum warns you in time to buy, considering how long delivery takes, and the maximum avoids tying up money in material that will sit for months.
Every purchase generates a payable
A purchase has two sides: material that enters the stock and money that will leave the cash. If they are recorded in different places, the stock says one thing and the cash flow says another.
Registering the payable at the same moment as the purchase, with the supplier and the due date, lets you see the commitment before the invoice is due. Taxes and invoice rules depend on the case and on the accountant who answers for it.
Contracts that turn into installments
On the receiving side, a contract with a client usually defines a number of installments. When the contract becomes active, those installments should appear in finance with their due dates, so nobody has to type them again.
The terms of a contract, and the deadlines and obligations it creates, depend on the case and on the lawyer who reviews it. The tool only keeps track of what was agreed.
One cash book per company or SPE
Construction groups often run each project through its own company, such as an SPE. Mixing their receipts and payments in a single cash makes it hard to know how each project is doing and complicates the accounts.
A separate cash book for each company keeps its receivables, payables and material purchases apart, while a consolidated view still shows the group as a whole.
How Verbum helps
In Verbum Construction, you register materials with code, category, price, minimum and maximum stock and image, and suppliers as companies with a validated CNPJ. Each purchase recalculates the average cost, the balance never goes negative and the payable is created for you.
Items marked as available on request are released per customer, and the ready-made contract templates are drafts that await your legal review.
- Balance by location, such as a depot or a site, with a low stock alert (available on request)
- Reports of value, turnover and consumption of the material
- When the contract is activated, the installments enter finance, and the team gets a task 30, 15 and 7 days before it expires
- Contracts sent for signature through Clicksign
- Each company of the group, such as each SPE, with its own receivables and cash, and a consolidated view (available on request)