The life cycle of a perishable item can be from several hours to several years, but the shorter it is, the higher the risk of write-off, so management must be clearly structured and transparent. How you can combat write-offs is discussed in the article.
Perishable food products (perishable) are food products that can be consumed by humans and are subject to a number of restrictions throughout their life cycle from production to consumption. Among them:
- conditions (temperature, humidity, air ventilation) of production, storage, transportation, sale;
- shelf life subject to conditions;
- control of state institutions (Rospotrebnadzor, Rosselkhoznadzor, IC of Russia);
- legislative framework that protects both the food products themselves and the producer, consumer and subjects of purchase and sale relations in the trade market: federal retail chains, distributors, HoReCa, vending (technical regulations of the Customs Union TR CU 022/2011 “Food products in terms of their labeling ", Law of the Russian Federation "On the Protection of Consumer Rights", Federal Law No. 381-FZ "On the Fundamentals of State Regulation of Trade Activities in the Russian Federation", Article 238 of the Criminal Code of the Russian Federation "Production, storage, transportation or sale of goods and products that do not meet safety requirements" , Federal Law No. 29-FZ “On the quality and safety of food products”).
The shelf life (life cycle) of perishable items can range from several hours to several years, but the shorter it is, the higher the risk of write-off, so management must be clearly structured and transparent.
Who is to blame and why?
Using the above formula, you can specifically understand who is to blame and why, that is, identify problem areas (hot spots) in the structure of the company and identify the reasons that influence the value of k.
Below, in tabular (matrix) form, an example is shown of how you can visualize the cause-and-effect relationship of variable formulas with the functional sectors of the company (departments of the organizational structure) and problems (causes) that have a direct or indirect impact on the value of k, as well as confirmation of the statement of the ancient Greek healer , physician and philosopher Hippocrates: “Nothing happens without a reason. If something happened, you can be sure there was a reason for it.”
In Fig. Figure 2 shows a matrix showing “who is to blame?”
The following is a matrix with the help of which the relationship of causes (problems) with formula variables is visualized, answering the question “why is it to blame?” (Fig. 3).
An axiom that is born after analyzing the two matrices presented above: the value of the perishables write-off ratio is consciously or unconsciously influenced by each employee of the company (each functionally responsible unit of the organizational structure).
We calculate write-off standards
The next important issue that you need to pay attention to is the write-off standard (market statistics). For example, you opened a cafeteria, purchased ready-made (perishable) food from a kitchen factory, worked for the first quarter, and calculated the percentage of perishables written off from total revenue. And the questions arise: “is this a lot or a little, what standard should we be equal to, what values should we strive for?” To answer these questions, you identify yourself and compare your write-off rate with that of the market.
I also recommend paying special attention to the need to know what specific formula (using what data) the calculations were made.
Example
The cafeteria sells pies with bigus, the purchase price is 10 rubles/piece, the selling price is 25 rubles/piece, 537 pieces were sold over the past month, 59 pieces were written off due to expiration.
If you calculate the write-off percentage using the first formula from this publication, the result will be 9.9%.
If you calculate using the second formula - 4.39%.
Therefore, when they tell you or when you come across statistics on the write-off of perishable goods in the media, always clarify the calculation formula; without it, the numbers are meaningless.
You also need to understand that the write-off standard that the company is guided by (which it strives for) cannot be the same value over a long period (for example, the company has set a standard of 4% and is guided by this figure for 7 years).
I am convinced that this standard should be different for different time cycles, since over a long period of time there are fluctuations in the profit-making area, as well as changes within the company itself: staff training, mechanization of manual processes, etc. I consider normalizing write-offs by cycle a more productive and reasonable approach, which is visualized in Figure 4.
Next, let’s return to the cafeteria from the example: “you opened a cafeteria, you purchase ready-made food (perishable goods) from a kitchen factory, worked for the first quarter, calculated the percentage of write-off of perishable goods from the total revenue.” You decide that you need to fight write-offs in order to reduce their size, in the process of fighting, build all business processes and scale your business with lower risks (costs).
Procedure for determining the expiration date
The procedure for determining the storage duration consists of the following operations:
- Applying for testing.
- Providing a package of documents.
- Signing a contract for the provision of services.
- Providing product samples.
- Directly carrying out all necessary tests.
- Formalization of results and provision of them to the customer.
By contacting us, you can confirm the shelf life of your product in accordance with all regulatory requirements. All applicants receive a free consultation, during which you will receive answers to all your questions. All services are offered at reasonable prices and complete confidentiality is guaranteed regarding information provided by the client and obtained during testing. We are waiting for your applications!
Who sets expiration dates and storage conditions for food products?
Shelf life of products is established on the basis of actual studies or according to GOST / TU. If products are manufactured in strict accordance with GOST standards and the manufacturer indicates on the label the expiration date specified in the regulatory documentation, there is no need to confirm this fact. The manufacturer can independently declare that the goods it produces have expiration dates different from those specified in the technical documentation. To officially confirm this fact, you need to obtain official confirmation. This confirmation is the test report. It is drawn up based on the results of testing samples in laboratory conditions. Only upon receipt of a test report, the manufacturer, without violating the TR standards, can provide information about extended or reduced shelf life of goods.
How to confirm expiration dates of food products?
To confirm the shelf life of products, laboratory tests must be carried out. They must be organized in accordance with the MUK, SanPin and other regulations. The essence of the assessment is to determine the actual period during which the product can retain the consumer properties declared by the manufacturer. After completion of the tests, a protocol is drawn up. This is an official document in which information about the results obtained is entered. It contains information about: • names of goods; • name of the manufacturer; • the methodology that was used to conduct the research; • date of organization of the assessment; • research results – official conclusions.
Who sets the warranty period for a product?
Initially, warranty periods are established by law - Articles 471, 472, 473 of Chapter 30 of the Civil Code of the Russian Federation. However, the manufacturer may increase the warranty period at its discretion.
How is the shelf life of a product calculated?
It’s more correct to say that expiration dates are not considered, but set. If we are talking directly about how to correctly count the period, then it starts from the moment you start using / opening the package. If it is necessary to establish the shelf life of a product, then research is carried out - samples are taken and placed in specified storage conditions that exactly comply with regulatory requirements - temperature, humidity, etc. After the specified shelf life ends, the samples are examined for several indicators that may indicate the possibility of consuming the product. These indicators include: • organoleptics; • microbiological and sanitary indicators; • physical properties. A conclusion about a reduced or extended shelf life is made only if all the determined indicators meet the standards.
Strategy and tactics to combat write-offs
To reduce the amount of write-off to a reasonable rate, it seems advisable to use the following strategies and tactics.
The strategy is a continuous movement towards achieving an acceptable value of write-off of perishable goods at each stage of the company’s growth and comfortable balancing within the real boundaries of the achieved values of write-off of perishable goods in seasonality cycles, systematically narrowing and shifting the boundaries of the corridor to smaller values.
In Fig. 5 visualizes the proposed strategy.
The “Ladder” tactic is a constant movement towards the set strategic goal, solving problems step by step, taking them under dynamic control (reducing the influence of the reasons on the amount of write-off).
Let us illustrate the sounded tactics in Fig. 6. Each company sets the order of stages (steps of the ladder) itself, depending on the priority of the problems being solved.
For example:
Stage 1 - collection, accounting, storage, analytics of variables from the above formulas for calculating the write-off ratio;
Stage 2 - use of equipment and implementation of technology for packaging perishable food in a container for sealing with a gaseous environment (increasing shelf life);
Stage 3 - development of a product line using shock freezing.
Practical recommendations
I propose to briefly familiarize yourself with a small pool of solutions in the fight against the amount of write-offs of expired perishables:
- Creation of a working group (dispatch center) to combat write-offs - involving only practicing experts with a knowledge base and proven practical experience in solving the problem.
- Development of a central paradigm (concept) that permeates all processes of the company as a whole, as well as personal study with each employee of the issues of his personal responsibility in the fight against write-offs of perishable goods.
- Training staff in methods of combating write-offs - accessible information about the real state of affairs in the company, testing staff for knowledge and understanding of the situation with write-offs. Studying the world's best practices.
- Automation and mechanization of repetitive manual processes.
- The use of gamification (game practice) to motivate staff at all levels.
- Creating alliances with suppliers of perishable goods - joining the shareholders to control the cost and purchase price, as well as product quality and production safety.
In conclusion, let me remind you of the statement of the ancient Greek philosopher, mathematician and mystic Pythagoras: “The one who walks will master the road, and the one who thinks will master mathematics” and paraphrase it a little: “The patient, the doubtful, the curious will conquer writing.” Bon appétit!
Accounting for perishable products
Summer brings with it not only long-awaited warmth, holidays, joyful and cheerful recreation, but also seriously complicates the work of retail enterprises. Retail trade itself is a rather difficult type of activity, and the sale of perishable products is one of the most problematic areas. We will try to consider some points on the organization of accounting when trading food products.
In the fight for the customer's health
Any consumer wants to purchase a high-quality and safe product, especially when it comes to food. This desire is reinforced in the Federal Law of January 2, 2000 No. 29-FZ “On the quality and safety of food products,” as well as in the laws and regulations of the constituent entities of the Russian Federation.
Food products somehow deteriorate in quality over time and acquire properties hazardous to human health. In this regard, expiration dates are established for them and they are divided into non-perishable, perishable and especially perishable. This division is established by the Sanitary and Epidemiological Rules and Standards SanPin .3.2.1324-03 “Hygienic requirements for shelf life and storage conditions of food products” (approved by Resolution of the Chief State Sanitary Doctor of the Russian Federation dated May 22, 2003 No. 98). Perishable and especially perishable products include products that must be stored in cold conditions and intended for the shortest possible sale in order to ensure the safety of human health.
Federal executive authorities at the location of manufacturing organizations, based on an examination, issue sanitary and epidemiological conclusions on the possibility of establishing expiration dates for food products.
attention
A reduction in the price of a product by more than 20 percent of the market value significantly increases the interest of the tax authorities.
Common practice
Today, most sellers are trying to enter into contracts with conditions for the return of unsold expired goods. In this case, it is necessary to strictly follow the terms of the contract, namely the procedure for transferring ownership. If the goods become the property of the buyer, upon return a situation of “reverse sale” arises with all the ensuing consequences. Therefore, when drawing up a supply agreement, it is necessary to take into account the provisions of Article 458 of the Civil Code. The return of purchased goods will be accompanied by the preparation of primary documents and the issuance of invoices.
Difficulties in this case will arise when accounting for the costs associated with the “buyback”. According to the Ministry of Finance, these expenses do not meet the criteria of economic justification (clause 1 of Article 252 of the Tax Code of the Russian Federation) and are not aimed at generating income, since the purchased goods are not subject to further sale (letter of the Ministry of Finance of Russia dated May 24, 2006 No. 03-03 -04/1/475). In this case, the judicial authorities support taxpayers, recognizing that expenses aimed at ensuring the activities of the company as a whole can be considered economically justified (rulings of June 4, 2007 No. 320-O-P and No. 366-O-P, resolution of the FAS Povolzhsky district of December 3, 2005 in case No. A55-2176/05-10), since the validity of expenses recognized for tax purposes cannot be assessed from the point of view of their expediency, rationality, effectiveness or the result obtained.
Such transactions are reflected in accounting as follows:
Debit 62 Credit 90-13 - revenue from sales is reflected;
Debit 90-2 Credit 41 - cost of goods sold is written off;
Debit 90-3 Credit 62 - VAT payable has been accrued;
Debit 51 Credit 62 - payment received for shipped goods;
Debit 68 subaccount “Calculations for VAT” Credit 51 - VAT is transferred to the budget;
Debit 41 Credit 60 - returned goods are capitalized;
Debit 19 Credit 60 - VAT on returned goods is taken into account;
Debit 68 subaccount “Calculations for VAT” Credit 19 - accepted for deduction of VAT on returned goods;
Debit 91-2 Credit 41 - expired goods written off;
Debit 60 Credit 51 - returned goods paid for.
In the event that ownership of the sold goods has not passed to the buyer, and the goods are returned, Seller LLC makes the following entries:
Debit 45 Credit 41 - the cost of the shipped goods is written off;
Debit 76 Credit 68 subaccount “Calculations for VAT” - VAT is charged upon shipment;
Debit 41 Credit 45 - returned goods are capitalized;
“Red” reversal Debit 76 Credit 68 subaccount “VAT Calculations” - reversal of previously accrued VAT.
If, under the terms of the contract, the goods do not become the property of the buyer, then the latter does not have the right to dispose of them, including to sell them. The best way out of this situation is to enter into a commission agreement, where the buyer acts as a commission agent and the seller as a principal.
Fast implementation
Any trade organization is looking for ways to increase trade turnover. Discounts are one of the most effective tools for achieving your goal. For sellers of perishable products, they are often a lifeline in a situation where it is difficult to fulfill the conditions for preserving the goods or their sale period is about to expire. Prices in these cases are reduced significantly. It is quite obvious that transactions for which prices are below market prices instantly attract the attention of tax authorities. The interest is quite obvious, because if the price of a product is reduced by more than 20 percent of the market value, then during a tax audit, additional taxes and penalties will most likely be assessed. And of course, they will not fail to impose penalties. When defending their interests, sellers of perishable products must be guided by paragraph 3 of Article 40 of the Tax Code. It determines that when carrying out additional tax assessments, it is necessary to take into account the possibility of applying discounts when goods lose quality or other consumer properties. The same rule applies when the expiration or sale dates are approaching (the expiration date is approaching).
Conflicts with fiscal authorities can be prevented by drawing up marketing plans indicating the “line of discounts”, as well as drawing up primary documents for the formation of seasonal discounts (for example, form No. MX-15 “Act on the depreciation of inventory items”).
for reference
The use of strict reporting forms from May 21, 2008 is carried out according to new rules.
"Hit or miss"
An equally piquant situation arises when there is a power outage at a retail outlet. In such a situation, not only refrigerators and freezers do not work, but also cash register equipment. This situation attracts tax authorities like honey - after all, sellers selling perishable goods are forced to violate the law and continue trading, because their goods lose their attractiveness and deteriorate right before our eyes. The consequences of this situation are administrative fines for non-use of cash registers (Article 14.5 of the Code of Administrative Offenses of the Russian Federation).
Legislators have brought this situation to the point of time pressure. Before the Federal Law of May 22, 2003 No. 54-FZ “On the use of cash register equipment when making cash payments and (or) payments using payment cards” came into force, in such a situation it was possible to use strict reporting forms.
Currently this provision is not in effect. Therefore, there is only one way out: when imposing fines, go to court, having previously received a certificate of power outage indicating the number and time of the interruption in supply. The main argument is that this violation is not intentional, but arose as a consequence of the prevailing circumstances (resolutions of the Federal Antimonopoly Service of the Far Eastern District dated April 14, 2004 in case No. FOZ-A37/04-2/269, dated May 5, 2004 in case No. FOZ -A04/04-2/776, resolution of the Federal Antimonopoly Service of the Volga District dated November 1, 2007 in case No. A12-9872/2007-C24).
The good news for trading enterprises is that on May 21, 2008, Decree of the Government of the Russian Federation of May 6, 2008 No. 359 “On the procedure for making cash and (or) settlements using payment cards without the use of cash registers” came into force. . They established that strict reporting forms are used, designed and produced in a certain way. The possibility of their use does not depend on their approval by the Ministry of Finance of the Russian Federation.
How to account for losses
Losses and shortages of goods are eternal companions of trade and public catering. They arise both during the acquisition of goods and during their transportation, during loading and unloading, storage and sale. Natural decline is one of them.
The natural loss of inventory should be understood as a loss (a decrease in the mass of a product while maintaining its quality within the limits of the requirements (standards) established by regulatory legal acts), which is a consequence of a natural change in the biological and (or) physico-chemical properties of goods. The procedure for its determination is established in the Methodological Recommendations for the development of norms of natural loss, approved by Order of the Ministry of Economic Development of Russia dated March 31, 2003 No. 95 (hereinafter referred to as the Methodological Recommendations). The formation of losses can occur due to shrinkage, weathering, cracking, spraying, leakage (melting, seepage) and other reasons. Accounting for losses resulting from natural loss is carried out in accordance with established standards. The Methodological Recommendations also define what does not apply to the norms of natural loss.
The application of actual loss norms is possible only when actual shortages are identified when receiving goods or when conducting an inventory. This norm is enshrined in paragraph 5.1 of the Methodological Guidelines for the Inventory of Property and Financial Liabilities, approved by Order of the Ministry of Finance of Russia dated June 13, 1995 No. 49. The application of the norms is carried out according to the name of the assets for which a shortage has been established. If standards are not established, then such a loss is considered as excess.
The determination of the amount of losses due to the norms of natural loss is carried out in accordance with the Methodological Recommendations for the accounting and registration of operations for the receipt, storage and release of goods in trade organizations (approved by letter of the RF Committee on Trade dated July 10, 1996 No. 1-794/32-5) according to the formula:
E = T × H: 100,
where T is the cost (weight) of the goods sold; N is the rate of natural loss, %.
Shortage of property or its damage within the limits of natural loss norms are attributed to production or distribution costs (clause 3 of Article 12 of the Federal Law of November 21, 1996 No. 129-FZ “On Accounting”).
For tax purposes, material expenses include losses from shortages and (or) damage during storage and transportation of inventory items within the limits of natural loss norms approved in the manner established by the Government of the Russian Federation.
To reflect losses identified during the procurement, storage or sale of inventory items, account 94 “Shortages and losses from damage to assets” is used. The debit of the account reflects the amount of losses in correspondence with the credit of accounts 60 “Settlements with suppliers and contractors”, 76 “Settlements with various debtors and creditors” - when a shortage is identified during the acceptance of inventory items or 10 “Materials”, 41 “Goods” - when a shortage is identified during the storage or sale of valuables. Next, from account 94, shortages and losses within the limits of natural loss are written off to the debit of the sales expenses account: Debit 44 “Sales expenses” Credit account 94.
Excessive shortfalls are attributed to the guilty parties (clause 3 of Article 12 of the Federal Law of November 21, 1996 No. 129-FZ “On Accounting”) and are reflected in the following entry: Debit 73 “Settlements with personnel for other transactions”, subaccount 2 “Calculations for compensation of material damage” Credit to account 94.
In cases where it is impossible to identify the perpetrators, losses from shortage of property and its damage are written off to the financial results of the organization by posting: Debit account 91 “Other income and expenses”, subaccount 2 “Other expenses” Credit account 94.
An important point for trade and public catering is the introduction from April 1 of this year of new norms of natural loss, approved by order of the Ministry of Economic Development of Russia dated September 7, 2007 No. 304 “On approval of norms of natural loss of food products in the field of public catering.”
Essentially, they have not undergone major changes. The changes systematized the previously used standards to a greater extent. An innovation is the division of trade organizations and public catering organizations into three climate groups, in contrast to the previously existing two.
Afterword
Strengthened control of business entities trading in perishable food products is aimed primarily at realizing the rights of citizens of the Russian Federation to protect health and a favorable environment. In addition to government control, it is necessary that sellers of such goods also understand that this is not just a formalism. First of all, these measures are aimed at eliminating the possibility of poisoning people, the occurrence of infectious diseases, and the creation of garbage dumps and garbage dumps in places where people can live and relax and children can play. Proper organization of accounting, compliance with expiration dates, timely and correct disposal will help avoid conflicts with government officials and human rights activists.
Let us remember that the country in which we live is our home, and let it be clean and bright, and its inhabitants healthy and happy.
A. Khimichev , expert of the magazine “Practical Accounting”
