Fleetio, a fleet maintenance software provider, has added new inventory valuation methods to its list of offerings, Last-In First-Out/First-In First-Out (LIFO / FIFO). This addition will help Fleetio customers accurately account for parts and inventory used for fleet repairs, gaining visibility into the full cost of in-house maintenance, while also resulting in a more organized and efficient fleet.
What is LIFO / FIFO? These acronyms are not new.
LIFO is an American invention, but the conceptual parent of LIFO, the base stock method, arose in the United Kingdom sometime in the late 1800s. The LIFO method is used to account for inventory. With LIFO, costs of the most recent products produced (or bought) are the first to be expensed. LIFO is used only in the United States and governed by the generally accepted accounting principles (GAAP).
The idea of FIFO was originally to help avoid food spoilage.
How Does LIFO / FIFO Improve Parts Inventory Management?
Today, LIFO / FIFO is an accounting method Fleetio customers can use to determine their organization’s inventory costs.
According to Fleetio, any organization that buys and resells units can use inventory valuation methods like LIFO / FIFO to attribute when parts came in and when they left:
- The LIFO method assumes that the last or most-recent unit to arrive in inventory is sold or used first, with the older inventory left over at the end of the accounting period.
- The FIFO method assumes that the first unit making its way into inventory, or the oldest inventory, is sold or used first.
With LIFO / FIFO, a fleet that keeps parts available for vehicle repair or performs in-house maintenance can now attribute the cost of parts to specific vehicles, providing a full view of the total cost of ownership. Technicians now have the ability to accurately account for costs on work orders based on the price of the part at the time of purchase, which can fluctuate.
Fleetio noted that this approach results in better alignment with accounting teams regarding the allocation of part costs on work orders.
Fleetio currently offers more than 25 key features within the cloud-based software and mobile app, Fleetio Go., including:
- Parts and inventory management.
- VIN decoding.
- Work orders.
With the addition of new inventory valuation methods to parts and inventory management, Fleetio noted that it is adding another layer to its library of features that help organizations track, analyze, and improve their fleet operations across the globe.
"We want to make sure our customers have all the information they need to make smart decisions about their fleets. This new feature is one more way we're helping them do that,” said Shay Misra, product marketer at Fleetio.
Fleetio and its customers are excited for the addition of inventory valuation methods and how it will add more precision to financial reporting and inventory tracking, from public sector fleets to vocational work truck operations.
"The FIFO/LIFO inventory valuation feature is necessary to track the value for financial reporting purposes and internal controls over the assets. It is easy to track and the valuation feature works well,” said Robin Patterson, deputy director, fleet services for the City of Harris County Texas.