Initially published June 2017, updated May 2019, updated May 2020
As our drinks manufacturing business (https://rline.co.nz/) evolved, we have gone from Banklink to MYOB, to Xero. All changes were significant and took a lot of time and effort. We have also used plugins and extensions over the years that have managed inventory and pushed orders right through from our website into Xero (Unleashed and Tradegecko), but have now gone back to a more simple and less automated system. In the long run, the automation was too unreliable, costly, and ironically it was time-consuming. As a result, we have a fair bit of financial experience on top of the food technology and science consultancy expertise. I do all my own GST and PAYE, and only get help with end of year tax returns from my accountant.
If you have a food business and have ambitions to get into Foodstuffs, you currently require a “priced packing slip”. When you send out your goods it needs to go with a packing slip, and that packing slip needs to have the pricing information on it like an invoice. You are not supposed to send an invoice to the store, though. The invoice has to be sent (previously via courier or post) to Foodstuffs headquarters rather than the store purchasing your goods. Thankfully they now accept emailed invoices. They also have some other digital systems for invoices for larger traders, but we haven’t used them. Foodstuffs is introducing SAP so some big changes have been going on over the past few years. My understanding is that Foodstuffs don’t particularly like this packing slip requirement, but it has been forced upon them by the Inland Revenue.
That priced packing slip is a problem if you are using Xero, it took me several hours to get it right. I’m very computer literate and knew what I was doing, and how to do it, or at least I thought so. It’s just tricky and needs a lot of trial and error to get it right. Don’t expect help from Xero on this.
Since I first wrote this article several years ago, this page has gained more web traffic than the rest of my blog articles combined. Foodstuffs take on a lot of new suppliers and a lot of people out there need help with this. A google search usually brings them here.
Firstly, you need to download the template file from Xero. I used to describe where to find this, but Xero have changed the format a little, so it is no longer there. If you Google “Edit Custom Templates Xero” then you will find up to date info on exactly how to do this.
You need to make some changes to this template, then upload it again to Xero. It’s not just formatting changes either. You need to change fields. The template looks up your company data from Xero and the particular invoice numbers and amounts so this has a markup language that you need to read, understand, and manipulate. The key is that you need to add the Foodstuffs North Island details separately to the lookup fields.
Once the markup fields are sorted, the next problem you will find is how you structure your customers. For instance, you want to send your product out to Mount Maunganui New World, but you need to be invoicing Foodstuffs North Island. We entered Mount Maunganui New World as a customer entry in Xero with the store number in the name i.e. New World Mount Maunganui (307602) and with the invoice theme set to the Foodstuffs template we just uploaded. The theme will ensure that the wording of the invoice will be to Foodstuffs North Island.
This approach introduces a problem though. Each month you need to send through a statement to Foodstuffs. If you just try to send statements, Xero will produce a statement for Mount New World, then a separate statement for Papamoa Pak’ nSave etc. The only way I know of getting around this is to manually check every invoice/statement, and summarise them on a spreadsheet which we have designed for Foodstuffs. This is a pretty simple spreadsheet, but its labour intensive to fill in. It helps to have a dropdown field for all the stores you supply so you don’t have to type in store names and numbers every time. Update: I now have an automated spreadsheet that can summarise hundreds of entries in minutes, see below.
Now for the last tricky bit. Foodstuff’s head office will want their cut of the deal, let’s say 2.5%. So if you invoice them $100, they will pay you $97.5. This means it won’t reconcile in Xero. You have to manually go through every invoice and raise a credit note for 2.5%, then go back through and reconcile. Foodstuffs sends out a monthly remittance and I find it best to print this out first and go through each invoice on that remittance to get it right.
One client recently asked why they can’t just add the 2.5% to the initial invoice. You can’t. The way I explained it to him was that he might want to offer the discount to the store of 10%. He’ll then be sending through an invoice with a discount of 12.5% showing. That gets complicated and confusing. You just need to invoice the full price and deal with the 2.5% later.
In all the time I have been invoicing Foodstuffs, there is one thing that I haven’t figured out 100%. If Foodstuffs requests a credit note, this totally messes the system up, because you end up not paying the 2.5% fee. This results in the balance being out by a small amount. I typically just create a manual entry (e.g. minor adjustment) to settle this amount. It’s not ideal, but mathematically it gets a bit confusing otherwise.
When you create your priced packing slip above, remember to also create a suitable credit note. You’ll need one at some stage and it is best to create it first otherwise you’ll forget the process and have to figure it all out again.
I was asked by one client, “can’t I just send them 20 different statements for 20 different stores?” I asked my contact at Foodstuffs this and the answer was “yes you can, but you still have to write out a summary spreadsheet as well”. So, no, not really, it saves nothing.
I hope to find out a more simple way of managing Foodstuffs and Xero, but its been more than 2 years and am still doing it more or less the same way. I have asked Foodstuffs what other people do for statements and they are unsure – they don’t know what systems people are using, but they did say that most statements are being sent via a speadsheet which suggests other people are also doing it the way I figured out. Update: I now have an automated spreadsheet that can summarise hundreds of entries in minutes, see below.
My understanding is that producing a priced packing slip via MYOB is a lot easier. I have a couple of clients who have done it themselves, and neither of them are advanced with their IT skills.
Confused? This is a tricky process and even writing a blog article that is clear and concise is challenging. I help my clients set all this up and have set up some clients remotely via a phone call and session on their computer using something like Teamviewer. It takes a little less than an hour to get it all sorted out and the client trained on what to do. If you want help with this process, then email firstname.lastname@example.org. Update: I have created some online videos showing how to do this process which has sped up the process considerably.
Don’t use Xero? We have also figured out how to manage this process without any accounting software at all. Check out this article here.
Update: another thing to consider with Foodstuffs is that you don’t want to be automatically sending them invoice payment reminders like some of your other contacts. The settings for automatic reminders are explained here https://central.xero.com/s/article/Set-up-invoice-reminders
Update: we now have a Xero template to import all the store details into Xero so you don’t have to manually add them all. This is not always a great idea to use though, we can advise on when you do and don’t want to do this.
Update: we have now done a little work for a client to investigate various software solutions. There are a few options out there that allow you to import Foodstuffs orders via EDI directly into your accounting software like Xero or MYOB and Unleashed, or other software packages that can directly plug into Foodstuffs. This includes www.flowsoftware.com, www.accredo.co.nz, www.crossfireedi.com among others.