General accounting programs record amounts in dinars. A gold shop works in two units at once: dinars and grams. It buys from suppliers by weight, sells at today's price, earns from the making charge, and may be owed gold or owe it. That is why it needs accounting software that understands gold, not a ledger that figures are copied into by hand at the end of the month.
This guide covers what integrated accounting software should do in a gold shop, and the questions to ask to check it before you choose.
What makes software integrated?
Integrated means that sales, purchasing and accounting are one system. Every sales or purchase invoice, every receipt or payment voucher, and every expense, transfer or write-off creates its own accounting entry automatically the moment it is approved. Nothing is keyed in twice, and your accountant does not wait for the end of the month to know where the shop stands.
What is common instead: one program for sales, another for the accounts, and an employee who copies figures between them. Every manual copy is a chance for an error, and every delay puts off finding it.
A chart of accounts that knows gold
The chart of accounts in general software has cash, banks, customers, suppliers and inventory. A gold shop needs accounts alongside them that such a chart does not have:
- Gold inventory, whose value follows the gold price.
- Precious stones, at cost and separate from the gold.
- Gold held by wholesale customers and gold held by the manufacturer, each tracked by weight.
- Supplier balances in two accounts: cash and making charges in one, gold by weight in the other.
- Making-charge revenue, which is the profit on your work.
- Metal gains and losses, realized and unrealized, kept apart from making-charge revenue.
- Casting and refining losses, and stock-count losses and write-offs.
Debts in grams, not only in dinars
When you buy from a supplier by weight, you owe a debt in grams, and the making charge is a debt in dinars. In wholesale, a customer may owe you both. Integrated software tracks both debts, and produces a statement for every supplier and customer in cash and gold.
And when you settle a gold debt in cash, the price per gram is fixed on the day of payment, and the difference between the fixing price and the market price is recorded as a metal gain or loss, not as profit from sales.
Two profits in every invoice
The price of a piece has two parts: the metal at today's price, and the making charge. The making profit comes from your work; the metal gain or loss comes from the price moving. Mixing them into one figure hides the truth: a month can look profitable because gold went up while the margin on sales itself is thin.
| Illustrative example | Amount |
|---|---|
| A 21K piece weighing 10 grams, at 38 dinars per gram | 380 dinars |
| Making charge | 20 dinars |
| Invoice total | 400 dinars |
| Your cost of the making | 12 dinars |
| Making profit | 8 dinars |
The metal result depends on how the gold price moves between buying and selling, and it is recorded in a separate account: realized when the price is fixed, and unrealized when the balance is revalued at the market price. That way your income statement shows the profit on your work and the effect of the price, each on its own line.
Closing: the shift, the day, the month and the year
At the end of every shift, cash and gold are reconciled for each branch, and at the end of the day a daily settlement is prepared. At month end the month is closed, and no entry dated inside it is accepted until it is reopened with the finance manager's authority. That way the figures of a month whose reports have been delivered do not change.
At year end, a checklist is reviewed before closing, and a closing package is kept: the income statement, the statement of financial position and the trial balance.
Controls that protect the books
- A manual entry is not posted until someone other than its creator approves it.
- A posted entry is never deleted. If it is wrong, it is reversed by an opposite entry that stays visible in the ledger.
- Every document has a sequential number that is never repeated.
- Permissions separate sales from finance: the cashier sells, and the finance officer approves purchase valuations, expenses and supplier settlements.
- A report that reconciles the general ledger with the operational books account by account, so any difference shows before it grows.
The reports it should produce
- The trial balance, the general journal, and a statement for every account.
- The income statement, the statement of financial position, the statement of cash flows and the statement of changes in equity.
- Annual statements with a comparative column for the previous year, with their notes, exported to Excel for your auditor.
- Customer and supplier statements in cash and gold.
- A VAT return for your branches in countries that apply VAT.
Questions to ask before you choose
- Are entries created automatically from sales, purchases and vouchers?
- Does the software track debts in grams alongside debts in dinars?
- Does it separate making profit from metal profit in the income statement?
- Does it block entries in a closed month?
- Does a second person approve manual entries?
- Does it produce annual financial statements with a comparative column?
How it works in ZMZMGold
In ZMZMGold you manage treasuries and banks, expenses, customer collections and supplier settlements, statements in cash and gold, shift closing and the daily settlement for each branch, and month-end and year-end closing.
The Integrated Accounting module adds the general ledger: an automatic entry from every financial transaction, a gold chart of accounts you can extend, the trial balance, the general journal and a statement for every account, the four financial statements, annual statements with a comparative column, their notes and export to Excel, manual entries approved by a second person, and a report that reconciles the ledger with the operational books. Its accounting model for gold is based on IAS 2.3(b): the making margin is operating profit, and changes in the value of the metal are shown separately.
Details are on the gold and jewellery shop management software page, and in our articles How to choose the best gold and jewellery shop software in Kuwait and How to manage gold inventory by weight and karat in your shop.
The bottom line
The right accounting software for a gold shop counts in grams as well as in dinars, creates the entry from the transaction itself, separates the profit on your work from the movement of the price, and protects a closed month from changes. Ask about these four things before you choose, and try the software on your real work.