Avarage cost vs. FIFO (first in first out)

The cost of your products and thus the financial inventory value depend on the inventory principle you use. In Rackbeat, you can choose between "average cost" or "FIFO". We will go through the difference between the two here.

If you use the inventory principle of 'average cost', your financial inventory value is calculated based on the average of your purchases.

If you use 'FIFO' (First In, First Out), the total financial inventory value is calculated differently - here, the value of the inventory is determined based on the principle that the first-purchased goods are also sold first.

The choice of whether to use 'average cost' or 'FIFO' is always made during the installation and setup of your Rackbeat agreement.

NOTE! Once you have made a choice, it is not possible to change the principle at a later time.