Accounting apparel company focused materials management, collection costs according to the segments, calculate the price of each order. Accounting not only recorded input – output – inventory accounting costs but also track consumption, allocate a reasonable cost as well as properly reflect the effect each contract. At the same time ensure the management of public debt, wages, assets and report accurate financial service compliance and governance.
In fact, the production chain multiple stages, the costs incurred in many parts, the data scatter between inventory – production – accounting made many businesses may difficult to control the exact price of each order. If data is not being gathered, collated timely reports to false and debased executive service. So, the organization of accounting according to the peculiarities garment industry is a necessary condition for business to control costs and limit risks as well as decisions based on reliable data.
The article below Lac Viet will analyze in detail the difficulties often encountered and solutions implementing effective accounting in business apparel today.
1. Operating characteristics garment directly affect the accounting
The garment industry operating primarily under the order, the seasonal variation in service, causing costs incurred persistent and difficult to control if accounted for by summing the usual. Accounting, so you need to track the cost details, keep abreast of actual production to ensure the price reflects the true business performance.
From the peculiarities operated on, the work of accounting in business apparel directly influenced from a number of core elements follows:
1.1. Manufacturing process multiple stages, multiple workshop
Chain garment manufacturing consists of many steps such as designing, cutting, sewing, finishing, quality control and packing. Every stage of incurred expenses in various different influences to the price.
- If the accounting system does not collect costs according to each stage and workshops, this will be the source of deviation in the calculated price.
- When only aggregate cost of the business doesn't detect the stages of cost overruns, for example cost in stitch cut higher than the estimate due to low productivity.
- No dissection cost according to the workshop that price does not reflect the true effect, make leadership difficult to assess interest – hole parts.
The solution is applied the accounting system collects costs in real time, allocated automatically according to the standard procedure, as well as reports according to the order, stages and workshops.
1.2. The rate of wastage of raw materials, high
A characteristic of garment manufacturing is wastage of raw material (fabric, just, buttons, locks,...) due to the cutting action. Raw material costs often account for 60-80% of the total cost of production, so if you don't control the exact price of products will be significant deviations.
Frequent consequences:
- False data inventory between books and reality warehouse, causing difficulty in financial reporting as well as tax settlement.
- Cost of the actual production is lower/ higher than the plan, leading to reported profit does not reflect the true business performance.
1.3. Form of production machining – FOB – ODM & affect accounting
Every form of production (machining, FOB, ODM) are way recorded revenue – cost of different requirements must be accounted for as well.
- With outsourcing, revenue recognition before delivery; costs, mainly labor cost and direct production.
- With FOB/ODM additional cost design, preparation of pre-production...need to allocate the correct accounting period.
If no standardized accounting under each type of contract, a report deviation states revenue – cost does not reflect the true business performance.
2. The accounting profession apparel company core is important
In accounting, corporate apparel, business applicable accounting regime according to Circular 99/2025/TT-BTC or circular 133/2016/TT-BTC. With special production according to orders, multiple stages as well as the proportion of the raw material. Accounting systems need just regulatory compliance, medium support, cost management, operating efficiency.
2.1. Accounting raw materials, garment accessories
Raw materials, auxiliary materials accounted for the largest share in the price of garments. Therefore only a minor deviations in recorded can also do significant fluctuations in profit. Accounting should focus on:
- Keep track of materials according to the details (fabric, thread, buttons, buckles, labels...).
- Recorded input – output – inventory in stock, in each order or production order.
- Ensure data supplies attached directly to objects bear the cost.
If only inventory management aggregate level, the business will not detect promptly the orders beyond the level or arising waste materials in the production process.
The account:
Buy supplies warehouse:
- Debt TK 152
- Debt TK 1331 (if deductible VAT)
- Have TK 111/112/331
As for production:
- Debt TK 621 (details as per order/production order)
- Have TK 152
The shipping cost of raw materials:
- Debt TK 154
- Have TK 621
Good management of raw material not only helps calculate the right price but also the important foundation to control waste, protect the profit margin in the garment industry.
2.2. Cost accounting production by stage
Garment manufacturing typically includes multiple stages such as cutting, sewing, finishing, packing. Each stage has characteristics as well as consumption costs are different. If only set general expenses and allocations, the average price will be inaccurate and difficult to service management.
The role of accounting in this case is:
- Classification of costs according to each stage of production.
- Recorded costs associated with the actual birth.
- Allocation of indirect costs under the form of logical (hours, hours, machine, production...).
The account illustrates:
Wage production workers:
- Debt TK 622
- Have TK 334
Production costs, general:
- Debt TK 627
- Have TK 111/112/214/331...
The shipping cost into the products unfinished:
- Debt TK 154
- Have TK 622, 627
The dissection costs according to the segments helps enterprises not only to know the total cost, but also clearly identify the costs are “the team” in a stitch how to make timely adjustments in the organization of production.
2.3. Accounting price of garments
Price is the basis to value selling, contract negotiations and assess the effectiveness each order. If the price of delay, costs or allocated false, businesses can fall into the situation that revenue, but lower profit or loss.
In fact, the price should be calculated according to:
- Order
- Product code
- Or customer group key.
The account when the finished product:
Enter the warehouse of finished products:
- Debt TK 155
- Have TK 154
When selling finished products:
- Debt TK 632
- Have TK 155
Pricing is accurate, timely, is the basis for business decisions right about the selling price. Pick order matching, building customer strategy effective.
2.4. Accounting payroll & workers, garment industry
The garment industry has peculiarities paid by product, by passes and increased ca seasonal. If you recorded the wrong cost, not only the price but they also incurred the risk of taxes and insurance.
The accountant should ensure:
- Recorded true output, now the reality.
- Allocation of costs in the correct order or stage.
- Full compliance with regulations on income tax, insurance, according to current legislation.
The account:
Payroll workers:
- Debt TK 622
- Have TK 334
Deduct SOCIAL insurance, health INSURANCE:
- Debt TK 622
- Have TK 338
Pay salary:
- Debt TK 334
- Have TK 111/112
Properly account for labor costs while ensuring compliance with legal, just help businesses control the cost of labor in the context of production fluctuations in seasonal and orders.
3. Common difficulties when doing accounting apparel company
In fact, hard not because of the lack of regulation, but because of the commissioning of the complex, distributed data and pressure-time high. Three main difficulty here clearly reflect the point of congestion popular make a direct impact on the effective management if not handled properly.
3.1. Manage raw material inaccuracy
Raw material accounts for a large proportion in the cost of apparel manufacturing, so minor deviations can also make a significant deviation price and profit.
Frequent difficulties:
- Inventory book does not match inventory practice.
- Data export supplies doesn't match the completed output.
- The level of raw materials has update or not real.
Consequence management:
- The profit is reflected wrong.
- Difficult explanations when settlement due to the difference in inventory.
- Leadership lack of reliable data to assess efficient use of supplies.
When accounting and inventory related data, businesses can detect early attrition, adjust the level in a timely as well as good control of input costs – the key element in accounting apparel company.
3.2. Hard to control costs in order
Sewing business primarily produced according to orders, but many places still set the cost by month or by machine instead of by each specific application.
Consequence:
- Not determined to be interest – hole under each menu.
- Don't know simple how profitable menu, which offset losses.
- Decided to get the unit price low teen database.
When control cost, according to each order, leaders can properly assess the effectiveness of contract, actively adjust the selling price as well as cost structure, to avoid revenue up but profit does not increase, enhance effective management for accountants company apparel manufacturing.
3.3. Pressure reports quickly and accurately, for the leader board
Leaders need to report not only the right but also timely, including price according to the menu, inventory supplies effective according passes, workshop.
Fact, the data scatter in the inventory, manufacturing, human resources and accounting makes the synthesis of slow, easy to errors.
Consequence:
- The decision is delayed or missing data.
- Opportunities for improved efficiency is miss.
- Pressure grew up accounting, increasing the risk of errors.
When data is contact information, enterprise reporting near real-time help leaders respond quickly raise the role of accounting from recorded to aid administration.
4. Tailoring business need accounting system like?
In production environments, the garment has the profit margin is low, volatility of raw materials, large on-demand delivery system accounting is not just “right” but also to “timely” and “useful for decision management”. Here are important factors to accounting apparel company just comply with standard, medium support effective governance.
A system of accounting in accordance with accounting the textile industry need to meet three core requirements, the following:
4.1 detailed tracking of raw material, commodity code & orders
As analyzed, raw materials accounted for 60-70% of total production costs. If no tracking details according to the code of supplies and orders. Business can't control the drain realistic than the norm, as well as not timely detection losses.
The accounting system should allow:
- Recorded input – output – inventory by type of fabric, material.
- Attach each export warehouse with order specific.
- Compare attrition reality with the initial levels.
Value brings is to help the business know the exact orders how are consuming more materials than expected, from which adjust the process or re-negotiate the sale price if need.
4.2 Calculate the price according to many criteria
In accounting, the textile industry, the price does not only serve for financial reporting period-end but also the administration tool important to evaluate the effectiveness of each order and each customer.
An accounting system efficiency need to allow enterprises to calculate the price according to:
- Each order, in order to know the exact interest – hole of each contract.
- Each product code, to compare the results between the different product lines.
- Each customer or customer group strategy, to assess the quality of our client portfolio.
When there is data rates of the multi-dimensional as such, leaders can:
- Recognition orders bring good profits, orders, potential risks hole.
- Priority decision production capacity for orders with profit margins accordingly.
- Proactive adjustment strategies price, instead of reacting passively when has incurred losses.
The greatest value of price calculation, multi-dimensional lies not in numbers, which is located in the ability to help business decisions based on data instead of hunches.
4.3 data connection between the production – inventory – accounting
One of the common causes of false data in the tailoring business's data is distributed between multiple departments: warehouse, manufacturing, hr and accounting operation separated from each other. When there is no system related information, accountants must synthetic manually, just take the time just to flaws.
Therefore, the accounting system should play the role as the “data center”, the connection information from the repository and manufactured to:
- Shorten the duration of the report.
- Increase the reliability of the data.
- Provide information in near real-time leader board.
When data is connected, standardized accounting in apparel company no longer is the department that handles the data end of the period, which became part of the early warning system, help businesses detect risk and expense, inventory and productivity as soon as they start to arise.
5. Experience in implementing effective accounting for apparel company
Implemented accounting system in business apparel is the process of changing the way recorded, using data and decision-making, not merely install the software. This is the key element to accounting apparel company just comply with standard, medium support effective governance. Here are three experiences critical to effective implementation.
5.1. Standardized process from warehouse – production – accounting
Tool only effective when the process is standardized; if each division operated in its own way, the data will lack consistency.
Businesses need to clear the basic process follows:
- Process import – export – refundable supplies: clean, responsible person, the time recorded and comparing.
- Process recorded output: unified way certify to the passage, passes.
- Process of cost allocation & lock window: specified time point data, target allocation formula as well as handling costs incurred late.
When the process is standardized, business to reduce dependence on personal, limiting flaws to create a platform for digitization, automation later.
5.2. Accounting training to understand the production process may
If accounting only understand the book without understanding the production, the cost analysis has detected unusual will be very limited. When the process of cutting, sewing, finishing, packing, accountants will look at data in management view.
The training content includes:
- Direct observation of the production process.
- Learn how to build norms and productivity.
- Read report production, contact with accounting data.
When out production, accounting, company garment manufacturing cost allocation more reasonable, early detection of unusual and effective coordination with the department. Thereby, the role of accounting is lifted from recorded to analyze as well as alert the administrator.
5.3. Combined software tools to reduce the risk of errors
Processed with Excel handmade difficult to meet the requirements of speed, accuracy, analysis in production environment more volatile.
Accounting software & ERP help:
- Automatically recorded, aggregated data from the warehouse, manufacturing, accounting.
- Reduce data entry, duplicate, restricted flaws craft.
- Support, cost analysis, price & effective multi-dimensional.
Core value lies not in technology but in data timely, consistently accurate; software is just the tool, the effect depends on the process, people using data in the admin.
6. Accnet ERP – accounting System intensive for textile business
With business apparel, selecting software not only meet the accounting profession but also support management, cost control, commissioning. Accnet ERP is designed to retrieve data accounting apparel company as the foundation for management helps businesses track, analyze, executive producer more efficient.
- Control of raw materials according to the code of each row & single row: Accnet ERP help track from entering the warehouse to the use, refund. Businesses understand consumption compared to the early detection loss, cost analysis each unit, especially important in the textile industry, where the cost of supplies and accounts for a large proportion.
- Track & allocation of production costs in real-time: the System recorded the cost for each stage, passes and orders. Business know simple how profitable or cost overruns, early detection stage unusual to coordinate resources based on data instead of hunches.
- Contact information accounting data – warehouse – production: Accnet ERP data connection between the parts, removing the status of each place management panel private cause deviations, time-consuming reconciliations. Thanks to that data consistency from the top, time reporting shorten, leader board access to information more quickly.
- Standardized vouchers & operating procedures: a standardised System of vouchers, processing flow, and decentralization, reduction depends on the action, limit errors – fraud, at the same time increase transparency as well as the ability to control internal.
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