Handling free samples

If you are sending out free sample products to your customers, here are some recommendations and ideas on how you can handle the tracking of the inventory, shipping of the samples and even how to associate the cost against a particular marketing campaign.

Tracking sample inventory

It's important that you don't over complicate your product lines, so you should always use unique SKUs to identify physically different products.

When it comes to samples, they may be physically the same as the item you sell and so you should have only one product (i.e. one SKU) and the total inventory quantity (items for sale + samples) recorded against that SKU.

In order to manage the items set aside as samples, we suggest creating a separate warehouse where the portion of inventory that are samples can be recorded. You can call this warehouse something like "Sample stock". This way you have an individual SKU but you still have visibility of your inventory and items are easily transferred between stock and samples.

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If your samples are not the same as the items you sell (for example, cosmetic samples are often smaller sized bottles or pots), they should have different SKUs, as they are different items.

In this case you can use the same warehouse since the quantity of samples is separated by SKU.

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Inventory value

If you buy samples from your supplier, then you should be accounting for the cost of those samples as assets. The samples will automatically be brought into stock with the value you pay for them as long as you use a purchase order (ensuring the prices are correct).

If your supplier provides samples for free you can receive the items with a zero cost. This can be done using a purchase order with zero prices, or you can use a stock correction to add the items. It's up to you which method you use - perhaps your supplier wants a purchase order?

Shipping a free sample

To ship a free sample you can use a normal sales order, adding the sample product as a line item, but with a zero price. To track orders that included free samples you can add a custom field to your sales orders, such as "Free sample?" "Yes/No".

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Remember, if you're storing samples in a separate warehouse you'll need to change the warehouse on the order. If you've added a custom field for monitoring deliveries of free samples, make sure you complete the field before going on to fulfill and ship as normal.

If you don't need to send the goods-out note down to the warehouse for shipping (perhaps samples are kept in the office and thrown in the post tray), you can easily fulfill and mark as shipped in a single step.

If you're shipping a sample along with other items the customer has purchased and you're using a separate warehouses for tracking your sample inventory, you can use partial/advanced fulfillment to ship the purchased items from your normal warehouse and the sample from your samples warehouse.

Learn more about partial/advanced fulfillment here.

Reporting on free samples

If you've made use of custom fields on orders, you can view your shipments of samples using filters on your recent sales list (i.e. filter for orders where the custom field "Free sample?" is set to "Yes").

To do this, go to Sales > Recent sales and click 'Show filter', Edit the dates to cover a suitable period, then click 'Add filter' under the 'Additional filters' section.

Select your custom field and an appropriate condition (for example, 'Where Free Sample? is equal to Yes'), then filter the report.

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Alternatively, if you edit the item name on the row to include the word 'Sample', you can use the sales list or the sales detail report (Reports > Sales Detail) to search for orders containing rows whose descriptions include 'Sample'.

To do this go to Sales > Recent sales and click 'Show filter'. Enter 'Sample' into the search box on the left hand side of the filter and check the box to allow you to look up order rows:

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Or simply type 'Sample' into the 'Product name' field on the sales detail report.

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Attribute samples cost to marketing expenses

In order to attribute sample costs to marketing expenses, you'll need to edit the cost of sales figures. Each time an item is shipped Brightpearl posts an accounting journal to account for cost of sales (when cost of sales is on); it's this journal that needs to be edited in order to change the value from "cost of sales" to "marketing expenses".

Once you have shipped the order, change the quick search drop down in the top right to Accounting, type the order number and press Go. You should see a journal type of GO against your order. Click on the journal ID to amend the journal.

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You can now amend the nominal code on the debit line (normally 5000 Purchases) to your marketing expenses nominal code (you may need to add a new code for this).

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Note: If using deferred cost of goods sold, you will need to perform this step after invoicing instead.

Amending each journal could become quite an administration task so consider using the report above to find the total of free samples shipped in a given day/week/month to create a manual daily/weekly/monthly journal to move this aggregated cost.

This cost would take the form of:

Account code Debit Credit
Marketing expense X  
Cost of goods sold   X

Learn more about entering manual journal entries here.

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