BC - Handling Software Sales

TheJBird

Was wondering how people manage software sales?

For example, a business buys and sells software from 3rd parties. It does not develop it in-house.

Within the Item, there is a "Type" which allows "Service" and "Non-Inventory". This to me appears to be designed for software companies which develop their own software, not reselling software from 3rd parties.

Reason being is that it doesn't appear on Req Worksheet (like a drop-shipment for an inventory item does), plus does not have the protection that the Purchase Order needs to be posted before the Sales Order is posted.

Headaches then could appear with reporting periods, as for example a Purchase Order could be posted in one period, but then the Sales Order posted the next period.

As this is what Microsoft Partners have to do on a daily basis. (Order licences from Microsoft in the customer's name, once delivered hand these over to the customer and invoice.) Is Inventory Items with Purchase Orders and Drop shipment the correct way of handling this? Or is there a better way?

Thanks!

bbrown

I've worked for Microsoft Partners for over 30 years. I've never known either of them to use inventory for this. They'd just handle it as AR\AP transactions direct to GL accounts. Not saying no one ever would, just not seen it done. I don't think the volume really calls for inventory. As with many of these transactions today, there is no physical product.

TheJBird

bbrown wrote: »

I've worked for Microsoft Partners for over 30 years. I've never known either of them to use inventory for this. They'd just handle it as AR\AP transactions direct to GL accounts. Not saying no one ever would, just not seen it done. I don't think the volume really calls for inventory. As with many of these transactions today, there is no physical product.

Cheers for this.

I guess we're in a unique scenario with this one, I'm not sure on volumes, but if it was say 100+ sales per day, keeping on top of them is quite complex. I feel that straight to G/L would loose a lot of control.

I do agree though that there is no physical product. At most its a slip of paper with a licence key on. That licence key may be a generic one which works with any software (e.g. MS Server licence key), or one locked to a specific customer (Like a Nav licence).

A generic licence key which could be used by any customer could be classed as inventory. A non-generic licence key doesn't have any net-realisable value as it's useless (unless your name is on it) is a grey area.

Pardeevitchok

I totally get what you're saying about the headaches of managing software sales, especially when you're dealing with third-party software. Have you considered using inventory items with purchase orders and drop shipments to handle it? That might be a more streamlined way of managing the whole process. Have you heard about software sales recruitment agency? They're the real deal when it comes to getting the best deals on software and tools for your business. Definitely worth checking out if you're looking to up your software game. In any case, I wish you good luck.