Xero is a popular cloud-based accounting software used by small businesses. It helps keep books clean, track invoices, and manage inventory. But sometimes, things break. And when you’re dealing with inventory — numbers matter a lot! Here’s a story about an inventory valuation freeze, a CSV import gone wrong, and how a journal entry saved the day.
TL;DR (Too long, didn’t read)
Xero’s inventory got stuck after a CSV file import glitched. This caused stock balances and inventory valuation reports to freeze. The system wouldn’t update correctly, leaving users frustrated. A smart journal adjustment came to the rescue and helped patch the numbers.
What Went Wrong with Inventory?
Inventory in Xero works using something called weighted average cost. This means every time you buy or sell items, Xero recalculates the average cost of the products still in stock. Sounds cool, right?
But when you import inventory items using a CSV file, things can get messy. That’s what happened here.
Imagine you tried to upload a list of 300 products, along with initial quantities and costs. But something in that file — maybe a typo, duplicate SKU, or missing unit price — messed things up. Xero didn’t like it, and it stopped updating the inventory value report.
How to Spot a Frozen Inventory Valuation
The first sign? The Inventory Valuation Summary in Xero wouldn’t update. It remained exactly the same, even though stock was bought and sold after the import.
Users also noticed:
- Items had wrong or missing purchase costs
- Some products disappeared from the report
- Stock on hand showed 0, even though items existed
- Reports from the day before and after the import were identical
It was like time froze for inventory. 👀
Why the CSV Import Broke Everything
To understand what happened, we need to peek inside the CSV file.
The file that was imported had a mix of tracked and untracked items. Tracked items are inventory products where Xero monitors quantities and costs. Untracked items just show as simple expenses or sales — no inventory value.
The problem arose when:
- Some items were imported without proper cost data
- Other items were accidentally set as “Untracked” even though Xero was tracking them earlier
- Old SKUs were duplicated
And boom 💥 — the entire inventory system panicked. Xero couldn’t calculate cost-of-goods-sold (COGS) anymore. So it just stopped trying.
The Real-Life Symptoms Business Owners Saw
Here’s what it looked like in the real world:
- Invoices showed $0 for COGS
- Inventory on hand became negative or over-inflated
- Net profit swung wildly because COGS was missing
- Reconciliations didn’t match physical stock
One shop even reported that they showed $19,000 in profit — but had $0 in the bank. Yikes!
Calling in Expert Help
At this stage, most business owners didn’t know what to do. The Xero help forums were filled with similar complaints.
Eventually, one clever accountant found the fix. And it wasn’t through another CSV — it was with a journal entry. 📘
The Magic Fix: Journal Adjustment
A journal entry in accounting is where you manually adjust values in ledger accounts. It’s like saying to the system, “Hey, I know what this should really be.”
In this case, the account used was the “Inventory Asset” account. Using a journal entry, you can adjust the value of stock on hand to match physical balances.
Here’s how it worked:
- The team reviewed the correct inventory quantities and average costs (outside of Xero)
- They manually calculated what the inventory value should be
- They posted a journal entry that debited or credited the Inventory Asset account
- The other side of the journal landed in a temporary “Stock Adjustment” expense account
And just like that — the Inventory Valuation Summary started responding again. 🎉
Step-by-Step Guide to Make the Journal Adjustment
If you’re facing something similar, here’s a simple step-by-step to correct your balances:
- Export your Inventory Item Summary from Xero
- Check real-life stock levels and average cost using Excel or other tracking tools
- Total up the expected inventory value
- Compare it to what Xero is currently showing in the “Inventory” asset account
- Make a journal entry using the difference
Example:
Debit: Inventory Asset $8,000 Credit: Stock Adjustment $8,000
Or vice versa if you’re correcting an inflated value.
Bonus Tips to Avoid Future Inventory Freezes
This problem was scary. But it taught some great lessons. Here are tips to avoid it:
- Always double-check CSV files before importing
- Never mix tracked and untracked items in one import
- Use unique SKUs — no duplicates!
- Back up your file or export product data before a major import
- If stuck, contact Xero support or your accountant early
Is This a Bug? Or a Feature?
Some users believe Xero should alert you when inventory valuation freezes. But currently, there’s no error message. You’ll only notice if you’re watching closely.
Xero support may tell you “this is expected behavior” if you use imports incorrectly. But for most small business owners, it’s not obvious how delicate the system is when it comes to tracking inventory via file uploads.
Final Thoughts
Inventory can be your best friend — or your worst enemy in accounting. When working with software like Xero, a small import hiccup can cause major number drama.
The good news is: there’s a way out. Journal entries, accurate reconciliation, and a basic understanding of how inventories work will save you a lot of stress.
If you’re ever unsure, talk to a professional. Or simply pause before pushing that “Import CSV” button. Your future self will thank you.