Sales Reports: Understanding How it Works

Relationship between Sales Orders and Sales Report

The Sales Report creates summaries of total sales, quantity sold, and other metrics from each Sales Order you receive. It then allows you to break down those metrics easily by dimension such as customer name, product, etc.

Applied creatively, the TradeGecko Sales Report can be a powerful tool which can help you find useful insights in your sales data.

Note
Keep in mind that Sales Report uses data from Active and Finalized reports only. It does not distinguish between Sales Orders that were fulfilled or invoiced.
 

Accounting for total sales, profit, and tax

Understanding the difference between fulfilled and unfulfilled orders

Your Cost of Goods Sold, profit, discount and tax are calculated by separating fulfilled orders from unfulfilled. Consequently, all metrics from Sales Orders (except Total Sales and Quantity) are split into “realized” and “potential”.

Realized” sales metrics come from fulfilled sales orders, and “potential” sales metrics come from unfulfilled sales orders. For example, items that have not yet left your warehouse will contribute to your potential profit, tax, discount, and cost of goods.

We call such profits and taxes “potential” because there is a chance that those orders are cancelled.

Note: Potential vs. realized profit, tax, and others
Potential profit, tax, discount, or cost of goods describe products that have already been committed, but haven’t been shipped yet.
 

Understanding calculations of sales, profit, tax, and other metrics

Sales report calculates sales metrics separately for each SKU in your sales order, and then makes a summary of sales for each SKU. This means that Sales Report performs rounding of subtotal sales values and taxes by order line item.

Such approach has both an advantage and a disadvantage. On the upside, it allows to us to aggregate and break down sales of each SKU by different dimensions: product, customer, etc. On the downside, it may lead to accumulation of rounding errors and result in an overall 1-2% error in reported sales, profits, and taxes.

For example, let’s take a look at two mock sales orders:

Sales Order #1 / Date: January 1, 2016

Order line item

Price

Quantity

Tax

Subtotal

Gecko Plushie

$10

20

10%

$220

Awesome Pen

$100

1

10%

$110

Sales Order #2 / Date: January 1, 2016

Order line item

Price

Quantity

Tax

Subtotal

Gecko Plushie

$10

10

10%

$110

Regular Pen

$15

10

10%

$165

Sales Report will then combine sales of Gecko Plushie from each mock Sales Order above, resulting in the following table:

Output of Sales Report

Order line item

Quantity

Tax charged

Subtotal

Gecko Plushie

30 (20+10)

$30 (20 + 10)

$330 (220 + 110)

Regular Pen

10

$15

$165

Awesome Pen

1

$10

$110

As you can see from the output above, Sales Report combined sales of Gecko Plushie from two mock sales orders and created an aggregated view.

Sales Report can visualize sales not only based on SKU of each order line item, but also by product, customer, and other dimensions.

Note: Rounding is done by order line item
Sales Report performs rounding of subtotal sales values, profits, and taxes independently for each order line item. This approach has a downside, because in such case rounding errors add up. On the upside, it allows for a granular look into sales of individual SKUs by customer, shipping country, and other dimensions.
 

Treatment of Landed Costs

The Sales Report excludes all freeform order line items such as Shipping costs from computations.

For example, if some of your Sales Orders contain shipping fee as a separate order line item, those shipping fees will not be accounted for.

 

Using preset reports

You might have noticed that in this document we refer to a single Sales Report only, whereas in the Intelligence Hub TradeGecko provides links to multiple reports:

The reason behind this is that Sales Report is an application within TradeGecko that generates a unique set of data which contains summary information about all your sales of all your products to all customers. It only generates one set of data like this per each account.

However, users can filter that set of data in many ways. The multiple types of Sales Reports that you see in Intelligence Hub are quick links to specially configured preset filters.

If you need more granular control over your reports, you can always modify and customize filters. TradeGecko makes creating your own presets simple and painless.

Print Friendly Version of this pagePrint Get a PDF version of this webpagePDF
Have more questions? Submit a request
Was this article helpful?
1 out of 1 found this helpful

Comments

NEW TO TRADEGECKO? START A 14 DAY FREE TRIAL, NO CREDIT CARD REQUIRED