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Multi-currency accounting is the process of recording and managing transactions in foreign currencies while maintaining books in your home currency (PKR). For Pakistani businesses dealing with imports, exports, or international clients, proper multi-currency handling is essential for accurate financial reporting.

This guide explains how multi-currency accounting works, common challenges, and best practices for Pakistani businesses.

When You Need Multi-Currency Accounting

• Importing goods: Paying suppliers in USD, EUR, CNY
• Exporting products: Receiving payment in foreign currency
• International services: Billing foreign clients
• Foreign investments: Holding foreign currency accounts
• International remittances: Receiving funds from abroad

Key Concepts

Functional Currency

Your primary operating currency—for Pakistani businesses, this is PKR. All financial statements are presented in functional currency.

Foreign Currency

Any currency other than PKR—USD, EUR, GBP, AED, CNY, etc.

Exchange Rate

The price of one currency in terms of another. Rates fluctuate constantly.

Exchange Gain/Loss

The difference arising from exchange rate changes between transaction date and payment date.

Recording Foreign Currency Transactions

At Transaction Date

Record the transaction in both currencies using the exchange rate on that date.

Example: Purchase goods for USD 1,000 on Jan 15
Exchange rate: 280 PKR/USD

Record:
Purchases: PKR 280,000
Accounts Payable (USD): USD 1,000 / PKR 280,000

At Payment Date

When you pay, the rate may have changed.

Payment on Feb 15 for USD 1,000
Exchange rate: 285 PKR/USD

Record:
Accounts Payable: PKR 280,000 (clear original liability)
Bank: PKR 285,000 (actual payment)
Exchange Loss: PKR 5,000 (the difference)

Exchange Gain Example

If rate was 275 at payment:
Bank: PKR 275,000
Accounts Payable: PKR 280,000
Exchange Gain: PKR 5,000

Month-End Revaluation

Outstanding foreign currency balances (receivables, payables, bank accounts) should be revalued at month-end using closing exchange rates. This ensures your balance sheet reflects current values.

Example: USD 5,000 receivable recorded at 280
Month-end rate: 282

Revaluation:
Original value: PKR 1,400,000
Current value: PKR 1,410,000
Unrealized Gain: PKR 10,000

Realized vs Unrealized Gains/Losses

Type	When	Treatment
Realized	When transaction settles (payment/receipt)	Recorded in P&L immediately
Unrealized	Month-end revaluation of open balances	May be recorded in P&L or equity depending on policy

Foreign Currency Bank Accounts

Many Pakistani banks offer foreign currency accounts. Track these in both currencies:

• USD balance for actual foreign currency
• PKR equivalent for financial statements
• Revalue monthly to current rates

Challenges for Pakistani Businesses

1. Rupee Volatility

PKR fluctuates significantly against major currencies. This creates both risk and opportunity.

2. Multiple Rate Sources

Interbank rate, open market rate, bank’s selling/buying rate—which to use? Be consistent.

3. Timing Differences

Gap between invoice and payment can be weeks or months with significant rate changes.

4. Documentation

State Bank and tax authorities require proper documentation for foreign transactions.

Best Practices

1. Use consistent rate source: Pick one (SBP, your bank) and stick with it
2. Record at transaction date rate: Not when you receive the bill or enter data
3. Revalue monthly: Keep balance sheet current
4. Track in both currencies: Maintain foreign currency and PKR records
5. Separate forex P&L: Track exchange gains/losses distinctly
6. Consider hedging: For large exposures, forward contracts reduce risk

Multi-Currency in Software

Modern accounting software handles multi-currency automatically:

• Enter transactions in any currency
• Automatic conversion at specified rate
• Exchange rate table maintenance
• Automatic gain/loss calculation on settlement
• Month-end revaluation tools
• Reports in both foreign currency and PKR

Tax Implications

• Exchange gains: Generally taxable as income
• Exchange losses: Generally deductible as expense
• Documentation: Keep bank statements, LC documents, payment receipts
• Transfer pricing: Transactions with related foreign parties need arm’s length pricing

Frequently Asked Questions

Conclusion

Multi-currency accounting adds complexity but is essential for businesses with foreign transactions. With proper software and consistent practices, you can accurately track foreign currency exposure and report compliant financial statements.

Need multi-currency support for your business? HysabOne handles multiple currencies with automatic conversion, gain/loss tracking, and revaluation features. Contact us on WhatsApp for a demo.

Last Updated: December 2024

Trading company software is designed for businesses that buy and sell goods—particularly those involved in import/export operations. For Pakistani traders dealing with international suppliers, customs, and multi-currency transactions, specialized software streamlines complex operations.

This guide covers what trading companies need from their software, key features for import/export, and how to choose the right solution.

What is Trading Company Software?

Trading software manages the complete buy-sell cycle for trading businesses—from purchase orders to suppliers, inventory management, sales to customers, and financial tracking. Unlike retail or manufacturing software, trading systems handle bulk transactions, multiple currencies, and complex pricing.

Unique Challenges for Pakistani Traders

1. Multi-Currency Operations

Buying in USD/EUR/CNY, selling in PKR. Exchange rate fluctuations affect profitability.

2. Import Documentation

LC (Letter of Credit), customs declarations, duty calculations, shipping documents.

3. Costing Complexity

Landed cost includes: product price + freight + insurance + customs duty + port charges + inland transport.

4. Long Lead Times

Imports take weeks to months. Managing orders in transit and cash tied up is critical.

5. Credit Management

Large receivables from local customers, payables to international suppliers.

Essential Features for Trading Software

1. Multi-Currency Support

• Record purchases in supplier currency
• Convert to PKR at purchase or payment rate
• Track exchange gains/losses
• Update exchange rates easily

2. Landed Cost Calculation

Automatically allocate additional costs to inventory:

Cost Component	Amount (USD)	PKR @ 280
Product Cost	10,000	2,800,000
Freight	500	140,000
Insurance	100	28,000
Customs Duty (20%)	2,000	560,000
Port Charges	–	50,000
Transport	–	30,000
Landed Cost	–	3,608,000

3. Purchase Order Management

• Create and track international POs
• Expected arrival date tracking
• Partial shipments handling
• PO to GRN (Goods Receipt) matching

4. Inventory with Batch/Lot Tracking

Track inventory by shipment for proper costing and traceability. See our inventory management guide.

5. Sales and Quotation Management

• Multi-tier pricing by customer
• Quotation with validity period
• Sales order to delivery tracking
• Commission management

6. LC and Import Document Tracking

• LC opening and amendment tracking
• Document submission dates
• Shipping and customs document storage
• Payment schedule tracking

7. Comprehensive Reporting

• Profit by shipment/lot
• Currency exposure reports
• Inventory reports with costing
• Customer/supplier analysis
• Cash flow with foreign payments

Trading vs Distribution Software

Feature	Trading Software	Distribution Software
Focus	Buy-sell, import/export	Local distribution
Currencies	Multi-currency essential	Single currency usually
Costing	Landed cost	Simple purchase cost
Lead time	Weeks to months	Days
Documentation	LC, customs, shipping	Invoice, delivery note
Pricing	Cost-plus with forex	Fixed price lists

Industry Applications

Electronics Importers

• Model/variant tracking
• Warranty management
• Serial number tracking
• Fast-changing prices

Textile Traders

• Lot-based costing
• Quality grade tracking
• Both import and export
• Commission agents

Chemical/Raw Material Importers

• Batch tracking mandatory
• Safety documentation
• Bulk quantity handling
• Multiple units of measure

Machinery Traders

• High-value items
• Long sales cycles
• Spare parts inventory
• After-sales service tracking

Implementation Considerations

Data to Prepare

• Product master with HS codes
• Supplier list with currencies
• Customer list with credit terms
• Opening balances (inventory, receivables, payables)
• Historical exchange rates if needed

Process Mapping

• Import process flow
• Costing methodology
• Sales and delivery process
• Payment collection process

Frequently Asked Questions

Conclusion

Trading companies face unique challenges that generic accounting software cannot address. Multi-currency support, landed cost calculation, and import documentation are essential for profitable trading operations.

Looking for trading-ready business software? HysabOne provides multi-currency accounting, inventory with costing, and comprehensive reporting for Pakistani traders. Contact us on WhatsApp to discuss your requirements.

Last Updated: December 2024

Inventory reports provide visibility into your stock levels, movement, and value. For Pakistani businesses dealing with physical goods, these reports are essential for avoiding stockouts, reducing dead stock, and maintaining profitability.

This guide covers essential inventory reports, what insights they provide, and how to use them for better inventory management.

Why Inventory Reports Matter

• Prevent stockouts: Know before you run out
• Reduce excess: Identify slow-moving items
• Accurate valuation: Know your inventory worth
• Improve turns: Track and improve inventory efficiency
• Better purchasing: Data-driven ordering decisions

Essential Inventory Reports

1. Stock on Hand Report

The most basic report—current quantity of each item in stock.

Shows: SKU, item name, quantity, location (if multi-location)

Use for: Quick stock checks, order fulfillment verification

2. Stock Valuation Report

Shows the monetary value of your inventory using your valuation method (FIFO, LIFO, or weighted average).

Shows: Item, quantity, unit cost, total value

Use for: Financial statements, insurance, bank financing

3. Inventory Aging Report

Shows how long items have been in stock. Critical for identifying dead stock.

Item	0-30 Days	31-60 Days	61-90 Days	90+ Days
Product A	500	200	0	0
Product B	100	150	300	500

Use for: Dead stock identification, clearance planning

4. Low Stock / Reorder Report

Items at or below reorder point.

Shows: Item, current stock, reorder point, suggested order quantity

Use for: Purchasing decisions, avoiding stockouts

5. Stock Movement Report

Shows all inventory transactions for a period—receipts, sales, adjustments, transfers.

Shows: Date, transaction type, quantity in, quantity out, balance

Use for: Audit trail, discrepancy investigation, trend analysis

6. Inventory Turnover Report

How quickly inventory sells and is replaced.

Inventory Turnover = Cost of Goods Sold / Average Inventory

Days of Inventory = 365 / Turnover Ratio

Use for: Efficiency analysis, comparing product performance

7. Stock Take Variance Report

Compares physical count to system quantity after stock audit.

Shows: Item, system qty, counted qty, variance, variance value

Use for: Shrinkage analysis, process improvement

8. Purchase History Report

What you bought, from whom, at what price.

Use for: Supplier analysis, price trend tracking, negotiation

9. Sales by Product Report

Which items sell most/least.

Use for: Product decisions, marketing focus, discontinuation

10. Gross Margin by Product

Profitability of each item sold.

Use for: Pricing decisions, product focus, identifying unprofitable items

Report Frequency

Report	Frequency	Reviewed By
Stock on Hand	Daily/On-demand	Store staff
Low Stock Alert	Daily	Purchasing
Stock Movement	Weekly	Stock manager
Stock Valuation	Monthly	Accountant/Owner
Inventory Aging	Monthly	Stock manager
Turnover Analysis	Monthly/Quarterly	Management
Variance Report	After each count	Stock manager

Key Metrics to Track

Inventory Turnover Ratio

Higher is generally better—means stock sells quickly. Industry benchmarks vary:

• FMCG/Grocery: 12-20 times/year
• Retail clothing: 4-6 times/year
• Electronics: 6-8 times/year
• Industrial equipment: 2-4 times/year

Days Sales of Inventory (DSI)

How many days of sales your current inventory covers.

DSI = (Average Inventory / COGS) × 365

Example: If DSI = 45, you have 45 days of stock on hand.

Stockout Rate

Percentage of time items are out of stock. Target: under 5%.

Dead Stock Percentage

Value of items not sold in 6+ months as percentage of total inventory. Target: under 5%.

Shrinkage Rate

Stock loss from theft, damage, or errors. Target: under 2%.

Using Reports for Better Decisions

Purchasing Decisions

• Low stock report → What to order now
• Turnover report → How much to order
• Purchase history → Best supplier/price

Pricing Decisions

• Margin report → Adjust prices on low-margin items
• Aging report → Discount slow movers

Space Allocation

• Sales velocity → Prime shelf space for fast movers
• Turnover → Reduce space for slow items

Frequently Asked Questions

Conclusion

Inventory reports transform raw stock data into actionable insights. Regular review of key reports helps prevent stockouts, reduce waste, and improve profitability. Make inventory reporting a regular habit, not an annual exercise.

Need comprehensive inventory reporting? HysabOne provides all essential inventory reports with real-time data, customizable views, and mobile access. Contact us on WhatsApp for a demo.

Last Updated: December 2024

Double entry bookkeeping is an accounting method where every transaction affects at least two accounts—a debit and a credit. This system has been used for over 500 years because it provides accuracy, completeness, and error detection that single-entry methods cannot match.

This guide explains double entry bookkeeping in simple terms for Pakistani small business owners, even if you have no accounting background.

What is Double Entry Bookkeeping?

In double entry, every transaction has two sides—something is given and something is received. When you sell goods for cash:

• Cash increases (you receive money)
• Sales increases (you give goods)

Both sides are recorded. The total debits always equal total credits—this is the fundamental rule that keeps your books balanced.

Why Double Entry Matters

1. Accuracy

If debits do not equal credits, you know there is an error. Single-entry bookkeeping has no such self-checking mechanism.

2. Complete Picture

Double entry tracks both the Balance Sheet (assets, liabilities, equity) and Income Statement (revenue, expenses). You see the full financial picture.

3. Audit Trail

Every transaction is documented with both sides. Tracing any amount back to its source is straightforward.

4. Required for Compliance

FBR and SECP require proper books of accounts. Double entry is the accepted standard for business accounting in Pakistan.

Understanding Debits and Credits

Debits and credits are simply the left and right sides of an account. What increases with a debit or credit depends on the account type:

Account Type	Increases With	Decreases With
Assets (Cash, Inventory, Receivables)	Debit	Credit
Expenses (Rent, Salaries, Utilities)	Debit	Credit
Liabilities (Loans, Payables)	Credit	Debit
Equity (Capital, Retained Earnings)	Credit	Debit
Revenue (Sales, Service Income)	Credit	Debit

Remember: Assets and Expenses are “Debit accounts” (increase with debit). Liabilities, Equity, and Revenue are “Credit accounts” (increase with credit).

Common Transaction Examples

1. Cash Sale (PKR 10,000)

Account	Debit	Credit
Cash	10,000
Sales Revenue		10,000

Cash (asset) increases with debit. Sales (revenue) increases with credit.

2. Credit Purchase (PKR 50,000)

Account	Debit	Credit
Purchases/Inventory	50,000
Accounts Payable		50,000

Inventory (asset) increases with debit. Payables (liability) increases with credit.

3. Paying Rent (PKR 25,000)

Account	Debit	Credit
Rent Expense	25,000
Bank		25,000

Rent (expense) increases with debit. Bank (asset) decreases with credit.

4. Customer Pays Outstanding Invoice (PKR 30,000)

Account	Debit	Credit
Bank	30,000
Accounts Receivable		30,000

Bank (asset) increases with debit. Receivables (asset) decreases with credit.

5. Owner Invests Capital (PKR 500,000)

Account	Debit	Credit
Bank	500,000
Owner’s Capital		500,000

Bank (asset) increases with debit. Capital (equity) increases with credit.

The Accounting Equation

Double entry maintains this fundamental equation:

Assets = Liabilities + Equity

Or expanded:
Assets = Liabilities + Capital + Revenue - Expenses

Every valid double entry transaction keeps this equation balanced. If it becomes unbalanced, there is an error.

Single Entry vs Double Entry

Aspect	Single Entry	Double Entry
Records	Cash only (like a checkbook)	All transactions, both sides
Error detection	Difficult	Built-in (must balance)
Financial statements	Cannot produce complete	Full Balance Sheet & P&L
Suitable for	Very small cash businesses	All businesses
Compliance	May not meet requirements	Meets all standards

How Accounting Software Helps

You do not need to manually record debits and credits. Modern accounting software handles double entry automatically:

• Enter a sale → software debits cash/receivables and credits sales
• Record expense → software debits expense and credits cash/payables
• Trial balance always balances
• Financial statements generate automatically

You work with familiar forms (invoices, bills, payments) while the software maintains proper double entry behind the scenes.

The Chart of Accounts Connection

Your chart of accounts defines what accounts exist for recording transactions. Each account is classified as Asset, Liability, Equity, Revenue, or Expense—determining whether debits or credits increase it.

Common Mistakes to Avoid

• Unbalanced entries: Total debits must equal total credits
• Wrong account type: Debiting revenue instead of crediting
• Missing entries: Recording only one side of transaction
• Wrong accounts: Using expense account for asset purchase

Frequently Asked Questions

Conclusion

Double entry bookkeeping is the foundation of reliable accounting. While it sounds complex, modern software makes it accessible to every business owner. The accuracy and completeness it provides are essential for financial management, compliance, and growth.

Ready for proper business accounting? HysabOne handles double entry automatically while you work with simple, intuitive forms. Contact us on WhatsApp for a demo.

Last Updated: December 2024

Business reports transform raw data into actionable insights for decision-making. For Pakistani SME owners managing daily operations, the right reports reveal what is working, what needs attention, and where opportunities exist.

This guide covers essential business reports, how to create them, and how to use them for better decisions.

Why Business Reports Matter

Running a business without reports is like driving without a dashboard—you do not know your speed, fuel level, or if something is wrong. Reports provide:

• Visibility: See what is happening across your business
• Trends: Identify patterns over time
• Alerts: Spot problems before they become critical
• Accountability: Track performance against targets
• Planning: Make informed decisions about the future

Essential Reports for Every Business

1. Sales Reports

Track revenue and sales performance:

• Daily/Weekly/Monthly Sales: Revenue trends over time
• Sales by Product: What is selling best
• Sales by Customer: Who your top buyers are
• Sales by Salesperson: Team performance
• Sales Comparison: This month vs last month, this year vs last year

2. Profit and Loss Report

The core financial statement showing revenue minus expenses equals profit. Review monthly to understand profitability.

3. Cash Flow Report

Track actual money movement—more important than profit for daily operations. See our cash flow management guide for details.

4. Accounts Receivable Aging

Shows who owes you money and for how long. Critical for managing collections.

Customer	Current	30 Days	60 Days	90+ Days	Total
ABC Traders	50,000	25,000	0	0	75,000
XYZ Stores	30,000	40,000	20,000	15,000	105,000

5. Inventory Reports

• Stock on Hand: Current inventory levels
• Stock Valuation: Total inventory value
• Low Stock Alert: Items below reorder point
• Stock Aging: Dead stock identification
• Stock Movement: What is selling, what is not

6. Expense Report

Track spending by category. Identify areas for cost reduction. See our expense management guide.

Report Frequency Guide

Report	Frequency	Who Reviews
Daily Sales Summary	Daily	Owner/Manager
Cash Position	Daily/Weekly	Owner/Accountant
Receivables Aging	Weekly	Credit Manager
Inventory Status	Weekly	Stock Manager
Profit & Loss	Monthly	Owner/Accountant
Balance Sheet	Monthly/Quarterly	Owner/Accountant
GST Summary	Monthly	Accountant
Annual Comparison	Yearly	Owner

Creating Effective Reports

1. Define the Purpose

Each report should answer a specific question:

• “How much did we sell this week?”
• “Who owes us money past 60 days?”
• “What items need reordering?”
• “Are we profitable this month?”

2. Include Key Metrics

Every report should have clear KPIs (Key Performance Indicators) relevant to its purpose.

3. Show Comparisons

Numbers alone mean little. Compare against:

• Previous period (last month, last year)
• Budget or target
• Industry benchmarks

4. Make It Visual

Charts and graphs communicate trends faster than tables of numbers. Use:

• Line charts for trends over time
• Bar charts for comparisons
• Pie charts for composition (use sparingly)

5. Highlight Exceptions

Draw attention to items needing action—overdue invoices, low stock, unusual expenses.

Using Reports for Decisions

Pricing Decisions

Product profitability reports show which items make money and which do not. Adjust pricing or discontinue unprofitable products.

Inventory Decisions

Stock movement reports show what to order more of and what to stop ordering. Inventory management improves with data.

Credit Decisions

Customer payment history helps decide credit limits. Slow payers should have reduced credit or cash-only terms.

Staff Decisions

Salesperson performance reports identify top performers and those needing training or motivation.

Expansion Decisions

Location-wise reports show which areas perform best. Guide decisions about new branches or closing underperformers.

Reports in Accounting Software

Modern accounting software generates reports automatically:

• Real-time data: Reports reflect current transactions
• Custom date ranges: Any period you need
• Filtering: By customer, product, location, salesperson
• Export options: PDF, Excel for further analysis
• Scheduled reports: Automatic email delivery
• Dashboard views: Key metrics at a glance

Common Reporting Mistakes

• Too many reports: Focus on essential ones, not every possible report
• Not reviewing: Reports are useless if not acted upon
• Wrong frequency: Daily reports for monthly trends waste time
• No context: Numbers without comparison are meaningless
• Delayed data: Last month report arriving mid-next-month is too late

Frequently Asked Questions

Conclusion

Business reports are only valuable when used for decisions. Start with essential reports, review them consistently, and take action on what they reveal. Good reporting habits transform data into business growth.

Need better business visibility? HysabOne provides real-time dashboards and customizable reports designed for Pakistani SMEs. Contact us on WhatsApp for a demo.

Last Updated: December 2024

Multi-location inventory management is the process of tracking and controlling stock across multiple warehouses, stores, or storage locations. For Pakistani businesses expanding beyond a single location, managing inventory across sites is essential for efficiency and customer satisfaction.

This guide explains how to manage inventory across multiple locations, common challenges, and best practices for Pakistani distributors, retailers, and manufacturers.

What is Multi-Location Inventory?

Multi-location inventory refers to managing stock that exists in different physical locations—main warehouse, branch stores, distribution centers, or even vehicles. Each location maintains its own stock levels while contributing to a unified inventory view.

When Do You Need Multi-Location Management?

• Operating multiple retail stores
• Main warehouse plus satellite locations
• Regional distribution centers
• Manufacturing with separate raw material and finished goods stores
• Consignment stock at customer locations
• Vehicle stock for delivery/sales teams

Challenges of Multi-Location Inventory

1. Visibility

Knowing what stock is where in real-time. Without proper systems, you may have excess at one location while another faces stockouts.

2. Stock Transfers

Moving stock between locations while maintaining accurate records. Transfer in transit creates temporary discrepancies.

3. Reordering

Setting reorder points that consider total company stock vs. location-specific needs.

4. Fulfillment Decisions

Deciding which location should fulfill which orders for optimal cost and speed.

5. Reporting

Consolidated reports while maintaining location-specific detail for management.

Key Features Needed

1. Location Master

Define all your locations with details:

• Location code and name
• Address and contact
• Location type (warehouse, store, transit)
• Manager/responsible person

2. Location-Wise Stock Tracking

• Stock quantity by location
• Location-specific reorder levels
• Stock valuation per location
• Aging analysis by location

3. Inter-Location Transfers

• Transfer request and approval workflow
• Stock in transit tracking
• Transfer cost allocation
• Transfer history and audit trail

4. Location-Based Transactions

• Purchases received at specific location
• Sales fulfilled from specific location
• Location selection during transactions

5. Consolidated and Location Reports

• Company-wide inventory value
• Location-wise stock report
• Stock movement between locations
• Location performance comparison

Setting Up Multi-Location Inventory

Step 1: Define Your Locations

List all physical locations where stock will be tracked. Include:

Code	Name	Type	City
WH-KHI	Karachi Main Warehouse	Warehouse	Karachi
WH-LHR	Lahore Distribution Center	Warehouse	Lahore
ST-01	Gulshan Store	Retail	Karachi
ST-02	DHA Store	Retail	Karachi
VH-01	Delivery Van 1	Vehicle	Mobile

Step 2: Assign Opening Stock

Conduct physical stock counts at each location and enter opening balances by location.

Step 3: Set Location-Specific Parameters

• Minimum and maximum stock levels per location
• Default receiving location for purchases
• Default fulfillment location for sales

Step 4: Define Transfer Workflows

• Who can request transfers?
• Who approves transfers?
• How is transit stock handled?

Stock Transfer Process

A typical inter-location transfer follows these steps:

1. Transfer Request: Receiving location requests stock
2. Approval: Sending location or management approves
3. Issue: Stock removed from sending location, marked “in transit”
4. Shipment: Physical movement with transfer note
5. Receipt: Receiving location confirms receipt
6. Completion: Transit stock moves to receiving location

Best Practices

1. Maintain Accurate Location Stock

Conduct regular counts at each location. Discrepancies at one location affect company-wide accuracy.

2. Use Barcode Scanning

Barcode systems reduce errors in multi-location environments, especially during transfers and receiving.

3. Real-Time Sync

Use cloud-based systems for instant visibility across locations. Delayed sync causes fulfillment problems.

4. Optimize Stock Distribution

Analyze sales patterns by location. Stock fast-sellers at high-demand locations; keep slow-movers centralized.

5. Minimize Transfers

Transfers cost time and money. Better forecasting reduces emergency transfers.

Inventory Strategies by Business Type

Retail Chain

• Each store maintains selling stock
• Central warehouse for bulk storage
• Regular replenishment based on sales
• Cross-store transfers for urgent needs

Distribution Business

• Regional warehouses for faster delivery
• Vehicle stock for direct sales
• Distribution software for route management

Manufacturing

• Separate raw material and finished goods stores
• Work-in-progress location
• Dispatch warehouse near shipping

Frequently Asked Questions

Conclusion

Multi-location inventory management adds complexity but is essential for growing businesses. With proper systems, processes, and software, you can maintain visibility and control across all your locations.

Need multi-location inventory tracking? HysabOne supports unlimited locations with real-time sync, transfer management, and location-wise reporting. Contact us on WhatsApp for a demo.

Last Updated: December 2024

A chart of accounts (COA) is the foundation of your accounting system—a complete list of all accounts used to record financial transactions. For Pakistani businesses setting up accounting software, a well-designed chart of accounts ensures accurate reporting and easier financial management.

This guide explains what a chart of accounts is, how to set one up, and best practices for Pakistani SMEs.

What is a Chart of Accounts?

A chart of accounts is an organized list of all accounts in your general ledger, each with a unique code and name. It categorizes every transaction your business makes—sales, purchases, expenses, assets, and liabilities.

Think of it as the filing system for your finances. Every rupee that flows through your business gets recorded in one of these accounts.

The Five Main Account Types

Type	Description	Examples	Normal Balance
Assets	What you own	Cash, inventory, equipment, receivables	Debit
Liabilities	What you owe	Loans, payables, accrued expenses	Credit
Equity	Owner’s stake	Capital, retained earnings, drawings	Credit
Revenue	Income earned	Sales, service income, interest	Credit
Expenses	Costs incurred	Rent, salaries, utilities, purchases	Debit

Standard Account Numbering System

Account numbers help organize and quickly identify accounts. A typical numbering system:

Range	Account Type	Example Accounts
1000-1999	Assets	1000 Cash, 1100 Bank, 1200 Receivables, 1300 Inventory
2000-2999	Liabilities	2000 Payables, 2100 Loans, 2200 GST Payable
3000-3999	Equity	3000 Capital, 3100 Retained Earnings, 3200 Drawings
4000-4999	Revenue	4000 Sales, 4100 Service Income, 4200 Other Income
5000-5999	Cost of Sales	5000 Purchases, 5100 Freight Inward
6000-6999	Operating Expenses	6000 Salaries, 6100 Rent, 6200 Utilities
7000-7999	Other Expenses	7000 Interest, 7100 Bank Charges, 7200 Depreciation

Sample Chart of Accounts for Pakistani SME

Assets (1000-1999)

1000 - Cash in Hand
1010 - Petty Cash
1100 - Bank - HBL Current Account
1110 - Bank - UBL Savings Account
1200 - Accounts Receivable
1210 - Advances to Suppliers
1300 - Inventory - Trading Goods
1310 - Inventory - Raw Materials
1320 - Inventory - Finished Goods
1400 - Prepaid Expenses
1410 - Prepaid Rent
1500 - Fixed Assets - Furniture
1510 - Fixed Assets - Equipment
1520 - Fixed Assets - Vehicles
1530 - Fixed Assets - Computer/IT
1600 - Accumulated Depreciation - Furniture
1610 - Accumulated Depreciation - Equipment
1620 - Accumulated Depreciation - Vehicles

Liabilities (2000-2999)

2000 - Accounts Payable
2010 - Advances from Customers
2100 - Short Term Loan
2110 - Bank Overdraft
2200 - GST/Sales Tax Payable
2210 - Withholding Tax Payable
2220 - Income Tax Payable
2300 - Accrued Expenses
2310 - Salaries Payable
2400 - Long Term Loan
2410 - Vehicle Financing

Equity (3000-3999)

3000 - Owner's Capital
3100 - Retained Earnings
3200 - Owner's Drawings
3300 - Current Year Profit/Loss

Revenue (4000-4999)

4000 - Sales Revenue
4010 - Sales Returns and Allowances
4020 - Sales Discounts
4100 - Service Income
4200 - Interest Income
4300 - Other Income

Cost of Sales (5000-5999)

5000 - Purchases
5010 - Purchase Returns
5020 - Purchase Discounts
5100 - Freight Inward
5200 - Customs Duty
5300 - Direct Labor (Manufacturing)

Operating Expenses (6000-6999)

6000 - Salaries and Wages
6010 - Staff Benefits
6100 - Rent Expense
6110 - Utilities - Electricity
6120 - Utilities - Gas
6130 - Utilities - Water
6140 - Telephone and Internet
6200 - Office Supplies
6210 - Printing and Stationery
6300 - Marketing and Advertising
6310 - Sales Commission
6400 - Travel and Conveyance
6410 - Fuel Expense
6500 - Repairs and Maintenance
6600 - Insurance Expense
6700 - Professional Fees
6710 - Audit Fees
6720 - Legal Fees

Other Expenses (7000-7999)

7000 - Bank Charges
7010 - Interest Expense
7100 - Depreciation Expense
7200 - Bad Debts
7300 - Miscellaneous Expense

Setting Up Your Chart of Accounts

Step 1: Identify Your Needs

• What type of business? (Trading, manufacturing, services)
• What reports do you need? (P&L by department, project tracking)
• What level of detail? (One utilities account vs. separate for each)
• Tax requirements? (GST tracking, withholding tax)

Step 2: Start with Defaults

Most accounting software includes a default chart of accounts. Start with this and customize rather than building from scratch.

Step 3: Customize for Your Business

• Add accounts specific to your industry
• Remove accounts you will never use
• Rename accounts to match your terminology
• Set up sub-accounts for detailed tracking

Step 4: Set Up Tax Accounts

For Pakistani businesses, ensure you have:

• GST/Sales Tax Payable
• GST Input (for claiming)
• Withholding Tax accounts
• Income Tax Payable

Best Practices

1. Keep it simple: Start with fewer accounts; add more as needed
2. Be consistent: Use same naming conventions throughout
3. Think ahead: Design for future reporting needs
4. Use sub-accounts: For detail without cluttering main list
5. Review periodically: Remove unused accounts, add new ones
6. Document: Keep a guide explaining each account’s purpose

Common Mistakes to Avoid

• Too many accounts: Creates confusion and slows data entry
• Too few accounts: Limits reporting and analysis
• Inconsistent naming: “Phone Expense” vs “Telephone” vs “Mobile”
• No numbering system: Makes navigation difficult
• Mixing account types: Asset in expense category

Frequently Asked Questions

Conclusion

A well-designed chart of accounts is the foundation of good financial management. Take time to set it up properly, and your financial statements, tax filings, and business decisions will all benefit.

Need help setting up your accounting system? HysabOne comes with a pre-configured chart of accounts for Pakistani businesses, ready to customize for your needs. Contact us on WhatsApp for a demo.

Last Updated: December 2024

Manufacturing ERP is specialized software that manages production processes, inventory, procurement, and financial operations for manufacturing businesses. For Pakistani small factories and production units, the right ERP system can transform operations and enable growth.

This guide explains what manufacturing ERP offers, key features for Pakistani factories, and how to choose the right solution for your production business.

What is Manufacturing ERP?

Manufacturing ERP extends beyond standard accounting software to include production-specific functionality. It integrates all aspects of manufacturing operations:

• Production planning and scheduling
• Bill of materials (BOM) management
• Raw material and finished goods inventory
• Work order processing
• Quality control
• Cost accounting

Challenges for Pakistani Manufacturers

1. Production Tracking

Knowing exactly what is in production, at what stage, and expected completion dates.

2. Material Costing

Accurately calculating product costs with fluctuating raw material prices, especially imports.

3. Inventory Management

Managing raw materials, work-in-progress (WIP), and finished goods across locations.

4. Quality Control

Tracking quality at each production stage and managing rejects/rework.

5. Compliance

Meeting regulatory requirements, documentation for exports, and tax compliance.

Essential Manufacturing ERP Features

1. Bill of Materials (BOM)

Define what raw materials and quantities are needed to produce each finished product. Multi-level BOMs support products made from sub-assemblies.

Product: Wooden Chair
BOM:
- Wood plank (2 sq ft)
- Screws (8 pieces)
- Varnish (0.2 liters)
- Labor (1.5 hours)
- Cushion (1 piece) [sub-assembly]
  - Foam (0.5 kg)
  - Fabric (0.8 sq m)
  - Thread (10 m)

2. Production Planning

• Plan production based on sales orders or forecasts
• Check material availability before scheduling
• Balance workload across production lines
• Schedule maintenance windows

3. Work Order Management

• Create work orders for production batches
• Issue raw materials to production
• Track progress through production stages
• Record output quantities and waste
• Receive finished goods into inventory

4. Raw Material Management

• Track raw material inventory by batch/lot
• Reorder point alerts for materials
• Manage multiple suppliers per material
• Track material costs by purchase batch

5. Work-in-Progress (WIP) Tracking

Know exactly how much material is in production at any time. Essential for accurate inventory valuation and financial reporting.

6. Production Costing

• Material costs from actual purchases
• Labor costs (hours × rate)
• Overhead allocation
• Actual vs standard cost variance

7. Quality Control

• Inspection checkpoints in production
• Quality parameters recording
• Reject/rework tracking
• Quality certificates generation

Manufacturing vs Trading Software

Feature	Trading Software	Manufacturing ERP
BOM	Not available	Core feature
Work Orders	Not available	Full support
WIP Inventory	Not tracked	Tracked in detail
Production Costing	Simple margins	Multi-component costing
Material Consumption	Direct sale	Issue to production
Finished Goods	Purchased	Manufactured from materials

Industry Applications

Textile Manufacturing

• Yarn to fabric tracking
• Dyeing batch management
• Size/color variant production
• Export documentation

Food Processing

• Recipe (BOM) management
• Batch tracking for traceability
• Expiry date management
• PSQCA compliance

Metal/Engineering

• Job work tracking
• Machine utilization
• Scrap management
• Serial number tracking

Plastic/Packaging

• Mold management
• Material grade tracking
• Production run optimization
• Waste/reject tracking

Benefits of Manufacturing ERP

1. Accurate Costing

Know true product costs including materials, labor, and overhead. Price products profitably.

2. Better Planning

Plan production based on actual demand. Reduce overproduction and underproduction.

3. Inventory Control

Avoid stockouts of critical materials. Reduce dead stock of slow-moving items.

4. Quality Improvement

Track quality metrics. Identify and address quality issues systematically.

5. Compliance Ready

Maintain documentation required for audits, certifications, and export documentation.

Implementation Considerations

1. Process documentation: Map your production processes before selecting software
2. BOM accuracy: Ensure bills of materials are accurate and complete
3. Staff training: Production and inventory staff need thorough training
4. Data migration: Material masters, BOMs, and opening inventories
5. Pilot production: Run parallel with existing system initially
6. Continuous improvement: Refine processes based on software insights

Choosing Manufacturing ERP

Key Questions to Ask

• Does it support your type of manufacturing (process, discrete, job shop)?
• Can it handle your BOM complexity?
• Does it integrate with your accounting needs?
• Is it scalable as production grows?
• What is the total cost including implementation?
• Is local support available in Pakistan?

Frequently Asked Questions

Conclusion

Manufacturing ERP transforms how small factories operate—from guesswork to data-driven decisions. While implementation requires effort, the benefits of accurate costing, better planning, and improved quality control make it worthwhile for growing production businesses.

Looking for manufacturing-ready business software? HysabOne provides inventory management, production tracking, and financial reporting designed for Pakistani manufacturers. Contact us on WhatsApp to discuss your requirements.

Last Updated: December 2024

Barcodes and SKUs are systems for uniquely identifying products in your inventory. For Pakistani small businesses, implementing barcode and SKU management improves accuracy, speeds up operations, and enables better inventory tracking.

This guide explains the difference between barcodes and SKUs, how to set them up, and best practices for small businesses.

What is a Barcode?

A barcode is a visual representation of data that can be scanned by machines. The familiar black-and-white lines encode a number (like a product code) that inventory systems can read instantly.

Common Barcode Types

Type	Digits	Use Case
EAN-13	13	Retail products (most common globally)
UPC-A	12	Retail products (North America)
Code 128	Variable	Logistics, internal use
QR Code	Variable	Marketing, detailed product info

What is a SKU?

A SKU (Stock Keeping Unit) is an alphanumeric code that uniquely identifies each product variant in YOUR business. Unlike barcodes (which are standardized), SKUs are created by you.

SKU vs Barcode

Aspect	Barcode	SKU
Created by	Manufacturer/standards body	Your business
Format	Numeric only	Alphanumeric (letters + numbers)
Uniqueness	Global (same product, same barcode)	Internal (same product can have different SKUs in different businesses)
Purpose	Scanning at checkout	Internal tracking and organization
Readability	Machine readable	Human readable

Benefits of Barcode and SKU Systems

1. Speed

Scanning a barcode takes 1 second vs. 10+ seconds for manual entry. In high-volume retail, this transforms checkout speed.

2. Accuracy

Manual entry has 1 error per 300 entries on average. Barcode scanning has 1 error per 3 million scans. Fewer errors mean accurate inventory and correct pricing.

3. Tracking

Know exactly what sold, what is in stock, and what needs reordering. Track movement through warehouse locations.

4. Efficiency

Faster stock audits, quick receiving of goods, and streamlined order fulfillment.

Creating Your SKU System

SKU Naming Best Practices

• Keep it short: 8-12 characters maximum
• Make it meaningful: Include category, brand, variant info
• Avoid confusion: No O/0, I/1, or special characters
• Be consistent: Follow same pattern for all products
• Start with letters: Easier for sorting and recognition

SKU Structure Example

Format: CATEGORY-BRAND-PRODUCT-VARIANT

Examples:
CLO-NK-TSH-BLU-M = Clothing-Nike-Tshirt-Blue-Medium
ELE-SAM-PHN-A54-128 = Electronics-Samsung-Phone-A54-128GB
GRO-NES-MLK-1L = Grocery-Nestle-Milk-1Liter
PHM-PAD-PAN-500 = Pharma-Panadol-Panadol-500mg

Getting Barcodes for Your Products

Option 1: Use Manufacturer Barcodes

Most branded products already have barcodes. Simply scan and link to your SKU in your system.

Option 2: Create Internal Barcodes

For unbranded products, loose items, or custom products, create your own barcodes using Code 128 format based on your SKUs.

Option 3: GS1 Registration

If selling through major retailers or export markets, register with GS1 Pakistan to get official EAN barcodes. Cost varies based on company size.

Barcode Hardware

Barcode Scanners

Type	Cost (PKR)	Best For
USB Wired	3,000-8,000	Fixed checkout counters
Bluetooth Wireless	6,000-15,000	Mobile use, warehouse
2D/QR Scanner	8,000-20,000	QR codes, damaged barcodes
Mobile Phone App	Free	Basic use, testing

Barcode Printers

Type	Cost (PKR)	Best For
Desktop Thermal	15,000-40,000	Low-medium volume labels
Industrial	50,000-150,000	High volume, durability
Mobile Printer	25,000-60,000	Warehouse, on-the-go labeling

Label Materials

• Paper labels: Cheapest, indoor use
• Synthetic labels: Water resistant, durability
• Direct thermal: No ribbon needed, fades over time
• Thermal transfer: Longer lasting, needs ribbon

Implementation Steps

Step 1: Design Your SKU System

Create a consistent naming convention before entering products. Document the structure for all staff.

Step 2: Set Up in Software

Enter products in your inventory software with SKUs and barcodes.

Step 3: Get Hardware

Purchase appropriate scanners and printers for your volume.

Step 4: Label Products

Print and apply labels to products without existing barcodes.

Step 5: Train Staff

Ensure all staff know how to scan, enter products, and handle scanner issues.

Common Mistakes to Avoid

• Inconsistent SKUs: Different formats make searching difficult
• Too complex: 20-character SKUs are hard to use
• No documentation: Staff do not understand SKU meaning
• Duplicate barcodes: Same barcode for different products causes chaos
• Poor label quality: Unreadable labels defeat the purpose

Frequently Asked Questions

Conclusion

Implementing barcodes and SKUs is one of the most impactful improvements a small business can make for inventory accuracy and operational efficiency. Start with a well-designed SKU system, invest in basic scanning equipment, and integrate with your inventory software.

Looking for inventory software with barcode support? HysabOne includes barcode scanning, SKU management, and automatic inventory tracking. Contact us on WhatsApp for a demo.

Last Updated: December 2024

Accounts Receivable (AR) is money owed to your business by customers. Accounts Payable (AP) is money your business owes to suppliers. Understanding and managing both is essential for healthy cash flow in any Pakistani business.

This guide explains the difference between AR and AP, how to manage each effectively, and their impact on your financial statements.

Accounts Receivable Explained

Accounts Receivable represents money customers owe you for products or services delivered on credit. It appears as a current asset on your balance sheet.

AR Examples

• You sold goods worth PKR 100,000 to a retailer on 30-day credit
• You provided services and invoiced the client for payment next month
• A customer issued a post-dated cheque for goods received today

AR Management Goals

• Collect payments as quickly as possible
• Minimize bad debts
• Maintain customer relationships
• Optimize credit terms

Accounts Payable Explained

Accounts Payable represents money you owe to suppliers and vendors for goods or services received on credit. It appears as a current liability on your balance sheet.

AP Examples

• You purchased inventory from a supplier on 45-day credit
• You received services (accounting, legal) to be paid next month
• Utility bills due but not yet paid

AP Management Goals

• Pay on time to maintain supplier relationships
• Use full credit terms (dont pay early unless discounted)
• Avoid late payment penalties
• Optimize payment timing for cash flow

AR vs AP: Key Differences

Aspect	Accounts Receivable (AR)	Accounts Payable (AP)
Definition	Money owed TO you	Money owed BY you
Balance Sheet	Current Asset	Current Liability
Cash Flow Impact	Cash inflow when collected	Cash outflow when paid
Goal	Collect faster	Pay strategically
Related To	Sales/Revenue	Purchases/Expenses
Terms	You set credit terms	Supplier sets terms

Impact on Cash Flow

The balance between AR and AP directly affects your cash position:

If AR > AP: You are financing customers (cash tied up)
If AP > AR: Suppliers are financing you (using their credit)

Cash Conversion Cycle = Days to Collect AR + Days of Inventory - Days to Pay AP

A shorter cash conversion cycle means better cash flow efficiency.

Managing Accounts Receivable

1. Set Clear Credit Terms

• Define payment terms upfront (Net 30, Net 60)
• Set credit limits for each customer
• Document terms in writing

2. Invoice Promptly

Send invoices immediately upon delivery. Delayed invoicing delays payment.

3. Track Aging

Monitor receivables by age:

Aging Bucket	Status	Action
Current (0-30 days)	Normal	Monitor
31-60 days	Overdue	Send reminder
61-90 days	Seriously overdue	Call customer
90+ days	At risk	Escalate/stop credit

4. Follow Up Consistently

• Send payment reminders before due date
• Call on due date if not received
• Escalate overdue accounts
• Stop further credit for chronic late payers

5. Offer Early Payment Incentives

Offer 1-2% discount for early payment (e.g., 2/10 Net 30 means 2% discount if paid within 10 days).

Managing Accounts Payable

1. Track All Payables

Maintain a complete record of all amounts owed, due dates, and payment terms.

2. Use Full Credit Terms

If you have Net 30 terms, pay on day 30, not day 15. Keep cash working for your business longer.

3. Take Early Payment Discounts

If offered 2/10 Net 30, the discount is worth taking if you have cash—2% for 20 days equals 36% annual return.

4. Prioritize Payments

• Critical suppliers (will stop supply)
• Suppliers with late fees
• Tax obligations
• Less critical vendors

5. Negotiate Terms

Build relationships with suppliers to negotiate longer payment terms when needed.

AR and AP in Software

Modern accounting software automates AR and AP management:

• Automatic aging reports: See overdue receivables and payables at a glance
• Payment reminders: Automated customer follow-up
• Due date alerts: Never miss a supplier payment
• Cash flow forecasting: Project future cash based on AR/AP
• Statement generation: Customer and supplier statements

Key Metrics to Track

Days Sales Outstanding (DSO)

DSO = (Accounts Receivable / Credit Sales) × Number of Days

Lower is better—means faster collection.

Days Payable Outstanding (DPO)

DPO = (Accounts Payable / Purchases) × Number of Days

Higher means you are using supplier credit effectively (but dont strain relationships).

Frequently Asked Questions

Conclusion

Effective management of both accounts receivable and accounts payable is essential for business cash flow. Collect receivables quickly, pay payables strategically, and monitor both regularly to maintain financial health.

Need better visibility into your receivables and payables? HysabOne provides automated aging reports, payment reminders, and cash flow insights. Contact us on WhatsApp for a demo.

Last Updated: December 2024