Decree-Law no. 98/2015 of 2 June made a number of amendments to Decree-Law 158/2009 of 13 July, which approved the Accounting Standardisation System (SNC). Following these amendments, namely to article 12, the range of companies required to keep a permanent inventory was significantly widened from 1 January 2016.

Get to know the Permanent Inventory System (SIP) and discover how Openlimits helped Beiragel to implement this Accounting System in a simple and consistent way, through the computerisation of its general accounting.

I - The Permanent Inventory System

What is the Permanent Inventory System?

In the Permanent Inventory system, the purchases account must always be settled, and the values of inventories of goods, raw, ancillary and consumable materials, finished and intermediate products, products and work in progress, and by-products, waste and scrap must be recognised and presented in the accounts every month, as well as the consumption of goods and raw materials and changes in production inventories.

In this way, the inflow and outflow of goods is continuously controlled in both quantities and values, making it possible to know at any time the status of stocks and the cost of goods sold.

What are the accounting terms of the Permanent Inventory System?

The accounting terms for inventories are as follows:

• Carry out physical counts of inventories with reference to the end of the period or, throughout the period, on a rotating basis, so that each item is counted at least once in each period.
• Identify items by their nature, quantity and unit and total costs, so as to allow the correspondence between the physical counts and the respective accounting records to be verified at any time.

Which entities are required to use the Permanent Inventory System?

Companies that exceed 2 of the following 3 criteria:

• 350,000 euros balance sheet total
• 700,000 euros net sales
• 10 employees

Which entities are exempt from this type of Inventory System?

Companies classified as Micro-entities are exempt from this obligation, as are entities engaged in the following activities:

• Agriculture, livestock farming, beekeeping and hunting;
• Forestry and logging
• Fishing and aquaculture
• Retail outlets which, taken together, do not record sales in a financial year exceeding 300,000 or 10% of the total sales of the entity concerned.
• Provision of services, meaning those which, in a financial year, record a cost of goods sold and materials consumed not exceeding 300,000 euros or 20% of their operating costs.

For more information, please consult Decree-Law no. 98/2015.

II - The Beiragel Success Story

Founded in 1985, Beiragel trades in and processes frozen food products. The company has a physical storage and industrial facility covering 2500m2, with a cold storage capacity of around 2000 tonnes and a production capacity of 3000 kg/hour, with distribution carried out by suitably equipped vehicles.

- The Challenge

With the legal obligation, under Decree-Law no. 98/2015, for companies to have a permanent inventory system, Beiragel felt the need to ensure this system in an automated way.

- The solution

In response to the client's need, Openlimits developed a solution that automates the records associated with the permanent inventory system. The solution made it possible to systematise the record tables in the ERP associated with purchases, sales and inventory.

- The results

The answer provided by Openlimits enabled the computerisation of general accounting so that the legal requirement for a permanent inventory system can be met at any time. There was also an increase in efficiency since, by automating some accounting processes, they became quicker and simpler.   

Written by:
Openlimits

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