NAQIXInventory and purchasing for trading companies in Oman
Many of Oman's small and mid-sized businesses are traders: they import or buy locally, hold stock in a warehouse or showroom, and sell on credit to contractors, retailers and other businesses. Their profit depends on knowing what each item really cost, where it is, and who owes money for it. Here is how to set that up.
Start with how the stock moves
Before choosing settings, sketch the journey of a typical item. Who orders it, from where and in what unit? Where is it received, and where is it sold from? Does it carry a batch or an expiry date? Is it sold for cash at a counter, or on credit with a delivery note? The answers decide how many locations you need, which items need batches or serial numbers, and which approvals make sense.
A common structure is a main warehouse, a showroom and perhaps a second branch in another city, all within one legal entity. Each is a location with its own stock, sharing one set of books.
Purchasing: get the unit cost right
Gross margin is only as good as the cost behind it, and cost goes wrong in a few predictable ways.
Cartons and pieces
Suppliers often invoice by the carton or box while you sell by the piece. If the bill is entered as twelve pieces instead of twelve cartons of twenty-four, the cost per piece is wrong and so is every margin report after it. Set a purchase unit and a conversion factor on the item, so the bill is entered the way the supplier wrote it and the stock is held the way you sell it.
Discounts and free goods
A bill-level discount reduces the cost of the goods on that bill, and bonus quantities supplied free reduce the cost per unit received. Both should flow into the stock cost, not sit in a separate income account that flatters one month and distorts the rest.
Freight, duty and clearing
Imports carry freight, customs duty and clearing charges. Agree with your accountant whether these are added to the cost of the goods or expensed, and apply the rule consistently. Whichever you choose, keep the customs declaration with the bill.
Foreign-currency suppliers
Suppliers in the UAE, Saudi Arabia or further afield may invoice in their own currency or in US dollars. Decide the rate source and the date used, and record the bill in Omani rials at that rate so the stock value and the payable agree with what the bank actually pays.
Stock by location
- Transfers with two ends. Stock moved from the warehouse to the showroom is dispatched by one location and received by the other. A short receipt should be recorded as a difference, not silently absorbed.
- Batches and expiry. Food, cosmetics, chemicals and medicines need batch numbers and expiry dates at receipt, with the oldest expiry sold first.
- Serial numbers. Machines, tools and electronics are easier to support when the serial sold is recorded on the invoice, with the warranty date.
- Counts. Count fast-moving lines often and everything at least once a year. Post adjustments with a reason, and review large ones.
- Reorder levels. Set minimum levels for each location, and review suggested reorders weekly rather than ordering from memory.
Selling on credit
Business customers in Oman often buy on credit terms, and some pay with post-dated cheques. Protect cash with a few rules:
- set a credit limit per customer and require an approval to exceed it;
- deliver against a delivery note and invoice promptly, so the receivable exists in the books;
- send statements that show which payment settled which invoice;
- record post-dated cheques in a register with their presentation dates, and follow up bounced or postponed cheques the same day;
- review receivables ageing weekly with the sales team, not only at year end.
VAT on every movement
Most sales carry VAT at 5%, while some items may be zero-rated or exempt under Oman's law. Set the treatment on each item with your adviser. Input VAT on supplier bills and on imports is generally recoverable when it relates to taxable sales and is supported by valid documents. Stock transfers between your own locations within one legal entity are not sales and should not create VAT. Our guide to preparing the Oman VAT return from the ledger covers the quarterly review.
A weekly routine for the owner
- Review stock value and slow-moving items by location.
- Check transfers that were dispatched but not yet received.
- Look at items sold below cost, and confirm their purchase cost was entered correctly.
- Review receivables ageing and cheques due for presentation.
- Approve the reorder list.
How NAQIX fits an Omani trader
NAQIX runs purchasing, inventory, sales and accounting on one ledger, for a company set up in OMR. Purchase orders, goods received, supplier bills and returns are tracked with approval workflows and supplier price history. Items can be bought in boxes and stocked in pieces, and the stock cost on a bill reflects line and bill discounts and free goods. Freight is recorded on the bill as a separate charge rather than spread into item cost, so agree its treatment with your accountant. Supplier bills are recorded in the company's base currency.
Stock is held per location, with transfers that are dispatched and received, batches, expiry and serial numbers, counts, reorder alerts and valuation at weighted average cost, including inventory as of any past date. On the sales side there are credit limits with approvals, delivery notes, customer statements, a post-dated cheque register and receivables ageing. Products carry a default VAT rate, from the 5%, zero and exempt rates set up for an Oman company, and each invoice carries a tax treatment.
The Inventory and Purchasing pages list the features, the multi-branch inventory overview shows the head-office view, and the NAQIX page for Oman describes the local setup.