If you manufacture, assemble, or bundle products, your Bill of Materials (BOM) isn’t just an operational document—it’s the backbone of accurate financials. When BOMs aren’t tied into your accounting system and operations system, your Cost of Goods Sold (COGS) and margins are basically guesses.

 

Focal Software helps eCommerce and omnichannel sellers connect BOMs directly to inventory and financials so every unit sold reflects real costs.

 

What Is a Bill of Materials in eCommerce and Light Manufacturing?

A Bill of Materials lists all the components and resources needed to produce a finished product, such as:

 

Raw materials

Sub-components or parts

Packaging materials

Assembly labor

Overhead allocations (if applied)

For example, a “Gift Box Bundle” might include three SKUs, custom packaging, and packing materials. If you don’t track the BOM accurately, you’ll understate your COGS and overstate your profit.

 

How BOMs Tie into Accounting and COGS

In a modern Operations Suite like Focal Software, BOMs are not static documents—they drive real-time accounting entries.

Here’s how:

 

1. Cost Roll-Up

The system calculates the total cost per finished good by rolling up:

 

Material costs (pulled from inventory)

Labor costs (if tracked)

Overhead (if applied per unit or batch)

This gives you a precise unit cost for each product.

 

2. Inventory Valuation

Every time you build or assemble a product, the Operations Suite:

 

Consumes components from inventory

Increases finished goods inventory at the rolled-up cost

Your inventory valuation on the balance sheet becomes accurate and up to date.

 

3. COGS at the Time of Sale

When you sell a finished product, the system automatically:

 

Reduces finished goods inventory

Books COGS using the correct rolled-up cost

This means your profit margins are based on real production costs—not rough estimates.

 

Why This Matters for Financial Reporting and Growth

When BOMs and accounting are disconnected, it leads to:

 

Inaccurate COGS and gross margin

Mispriced products

Poor inventory planning

Misleading financial statements

By tying BOMs directly into your operations and accounting:

 

Your COGS reflects actual material and labor usage

You can identify unprofitable products quickly

You gain the confidence to scale production and invest in new SKUs

For eCommerce and DTC brands, especially those working with marketplaces and multiple channels, this level of financial clarity is a competitive advantage.

 

Connect Operations and Finance with Focal Software

Focal Software links your Bill of Materials, inventory, and accounting so every sale reflects true costs. That translates into better pricing decisions, healthier margins, and reliable financials.