The method used to value inventory affects the value at which stock appears on the balance sheet and how high the costs are when items are issued for consumption — in other words, it directly impacts the profit/loss result and the tax base. ABRA Flexi supports two methods: the weighted average (default, simpler) and FIFO (more precise, available from the Premium plan).
The method is set at the company level in Tools → Settings → Company → Goods tab. This means one method applies across all warehouses for a given company.
Based on the configured method, all issue notes for goods that you create within this company will be valued accordingly.
Average Price Method
Also known as the weighted average method.
With every receipt into stock, the average acquisition price of the stock card is recalculated. The value of the issue note is then determined as the quantity issued multiplied by the current average price at the time of issue.
Formula for the new average price after a receipt:
new price = (stock × old price + received quantity × acquisition price) ÷ (stock + received quantity)
When to choose it: Suitable for companies with relatively stable purchase prices and for smaller warehouses where there is no need to track the origin of specific units. The method is computationally simple and less prone to errors in everyday operation.
The calculated average price can be found on the stock card of the relevant item.
The image above shows 950 units of an item totaling CZK 95,000. The average price corresponds to the calculation 95000/950, i.e., CZK 100.
💡 Note: If, after a price change or a document correction, the values on the stock card don't match up, use the Stock Recalculation function. By default, this runs automatically, but in rare cases it may not. Stock recalculation goes through all movements chronologically and recalculates the values.
⚠️ In extreme cases, stock recalculation can take anywhere from several to a few dozen hours. We recommend running it only when no users are working in the application — typically over the weekend.
FIFO Method
(First In, First Out)
FIFO works on the principle of "first in, first out" — stock is issued in the order in which it arrived at the warehouse. Each issue note is therefore linked to a specific receipt note (or several receipt notes) from which it draws its quantity and acquisition price.
Technically, these links are stored in a table of so-called FIFO links, which connects an issue note item with the corresponding receipt note item (or items). This makes it possible to trace which specific receipt a given unit was issued from, and at what acquisition price.
When to choose it: Suitable for companies with fluctuating purchase prices, importers, or for product ranges where batch traceability matters. From an accounting perspective, it provides a more accurate picture of inventory value during periods of rising or falling prices.
The current FIFO price of an item can only be determined within a specific issue note, after the relevant item has been added.
In addition to the average price, the stock card also records the last price, which corresponds to the price at which the item was most recently purchased.
ℹ️ The Average Price field on the stock card is always populated, even if the company has FIFO configured. However, with FIFO, this value is not used for the issue note. It should therefore not be used to estimate the price at which items will be issued.
💡 Note: If FIFO links are missing (for example, after bulk retroactive document corrections), the Stock Recalculation function will again help by restoring the links based on the chronology of movements.
⚠️ In extreme cases, stock recalculation can take anywhere from several to a few dozen hours. We recommend running it only when no users are working in the application — typically over the weekend.
Changing the Valuation Method
🚨 The valuation method is set globally for the entire company. Never switch it for warehouses that already have recorded movements — the existing stock will remain valued using the original method, resulting in discrepancies in inventory value and hard-to-trace accounting errors.
The only recommended approach is to change the method globally and transfer inventory, with the correct opening balances, to a newly created warehouse that will use the new method going forward.
Recommended step-by-step procedure:
Change the valuation method in the company settings. This choice is global and takes effect for the entire company from this point forward.
Create a new warehouse in Warehouses → List of Warehouses. This warehouse will operate with the newly set method going forward.
Transfer the correct opening balances to it — by issuing stock from the original warehouse and receiving it into the new one, or through an inventory adjustment as of a set date.
Set an expiration date for the original warehouse set the validity period until the end of the nearest accounting period (after you have issued all of its stock).
Check the valuation of the new warehouse after the first receipts, to confirm it matches expectations based on the chosen method.
If you're unsure about the transition or need help with a specific situation (work-in-progress orders, open orders, batches), contact technical support before making any changes.
FAQ
Which method should I choose for a new company? Unless you have a specific reason for FIFO (fluctuating prices, batch traceability, an auditor's requirement), start with the weighted average. It's simpler to understand and operate.
Can different methods be set for different warehouses within the same company? No. The valuation method is set at the company level and applies to all warehouses within it. If you need separate valuation, you'll need to maintain a separate company.
Is the choice of valuation method related to the inventory accounting method (A/B)? Not directly — these are two independent choices. Method A/B determines whether movements are posted continuously or only at closing. The valuation method (average/FIFO) determines the value at which a movement is posted.