Automating Inventory Valuation with QAD’s Periodic Costing Component

Posted on: June 13, 2025 | By: Alexa Leitner | QAD Business Process

In today’s fast-paced manufacturing environment, accuracy and efficiency in inventory costing are critical to informed decision-making and financial integrity. At Logan Consulting, we recently hosted a training session on one of QAD’s most powerful but often underutilized tools: the Periodic Costing component. This functionality allows businesses to automate and streamline FIFO and Weighted Average inventory valuation methods to eliminate time-consuming and error-prone manual calculations in Excel. 

What Is the Periodic Costing Component? 

QAD’s Periodic Costing component provides companies with an automated solution to manage inventory cost flows according to specific valuation methods. It’s ideal for businesses that want their financial books to reflect the real cost movement of inventory over time, particularly in environments with volatile pricing, multiple receipt transactions, or complex production processes. 

Whereas QAD’s standard costing offers a static view based on predetermined cost assumptions, periodic costing gives a dynamic picture, updating values at the end of each period based on actual transactions. 

The Business Problem: Manual Inventory Costing 

Many companies without periodic costing enabled rely heavily on Excel spreadsheets to track inventory flows and apply FIFO or weighted average methods. This process often involves: 

  • Exporting transactional data manually 
  • Sorting and grouping by part or date 
  • Applying customized macros to calculate costs 
  • Manually adjusting general ledger entries 

This approach not only consumes hours of labor each month but also introduces opportunities for inconsistency, data error, and lack of auditability. 

How QAD Automates Cost Calculations 

With QAD’s Periodic Costing component enabled, businesses can configure and execute automated costing using a few key steps: 

  1. Configure Cost Sets: QAD allows you to create separate cost sets that support FIFO or Weighted Average methods. These sets are configured to reflect each company’s valuation policy. 
  2. Set Up Cost Elements: Define the cost elements relevant to your business (e.g., material, labor, overhead) and how they flow through the cost buckets. 
  3. Run the Periodic Cost Calculation: This function aggregates all the actual transactions within a defined period, calculates costs based on the selected method (FIFO, Weighted Average), and updates the inventory value accordingly. 
  4. Post Cost to General Ledger: Once validated, the system can automatically post the adjusted costs to the general ledger, aligning accounting with operational reality. 
  5. Audit and Traceability: QAD stores all costing layers and provides robust audit trails, making it easy to trace each inventory movement and its associated cost. 

Business Benefits 

  • Increased Accuracy: Remove the risk of human error in manual calculations. 
  • Audit Compliance: Automated traceability supports financial audits and internal controls. 
  • Efficiency: Save time by eliminating spreadsheets and repeated monthly tasks. 
  • Scalability: Accommodate growth without adding overhead to the costing process. 

Final Thoughts 

Activating and optimizing the QAD Periodic Costing component can transform how your business handles inventory valuation. At Logan Consulting, we’ve guided clients across industries through the configuration and implementation of this functionality—helping them reduce cost variance issues and improve financial transparency. 

If your organization still relies on spreadsheets to manage inventory costs or struggles to reconcile general ledger entries with actual inventory movement, now is the time to consider upgrading your process. 

Need help implementing QAD Periodic Costing? 

If you’re ready to elevate your team’s QAD expertise, we’re here to help. Logan Consulting specializes in QAD training tailored to your organization’s unique needs. Contact us today at info@loganconsulting.com or call (312) 345-8817 to learn more about how we can support your team’s growth and development.