Kenyan stock records alongside eTIMS
What stock records a Kenyan business must keep alongside eTIMS, what Achekam's till and Warehousing add-on keep for it, and the gaps to cover yourself.
By Achekam · · 4 min read · For Running a business businesses in Kenya
eTIMS is usually talked about as an invoicing system, but the law behind it asks for more. A Kenyan business that sells goods must also keep stock records, and those records are expected to agree with what its eTIMS invoices say it sold. A hardware shop that issues eTIMS invoices for a month's sales of cement should be able to show where those bags came from and how many are left.
For many small businesses, the invoices are in order and the stock records are an afterthought. This article explains the duty, what Achekam keeps for you, which movements it does not yet put through the books, and a monthly check that keeps the two sides in line.
The duty to keep stock records
Under section 23A of the Tax Procedures Act, every business in Kenya must issue electronic tax invoices through KRA's eTIMS and keep stock records. KRA's page on stock management functionality for electronic invoicing explains the duty under section 23A(2)(b) to keep accurate stock records that match the invoices issued through TIMS or eTIMS.
In practice that means being able to show, for each product, what came in, what went out on eTIMS invoices, and what is left, and for the three to add up.
Stock that moves with each till sale
Achekam keeps products in the Item Master in the Accounting menu, with SKU, name, category, selling and cost price, opening quantity and VAT treatment. The Item Master needs the Point of Sale, Warehousing or Wholesale add-on.
When a product is sold at the till, the sale takes the quantity off stock in the same step, at the till's own location, and refuses to go below nil unless the business allows negative stock. Leaving negative stock switched off is worth considering for eTIMS purposes: a sale that would take stock below nil points to a delivery that was never recorded, and it is better found at the till than by KRA.
Set products up carefully the first time. No screen lets a business change a product's price, cost or VAT treatment after creating it, or deactivate it. Give each product a SKU and a name that match the way it is described on your eTIMS invoices and on your suppliers' eTIMS invoices, so that anyone comparing the two, including a KRA officer, can see at once that a bag of cement in one place is the same item as in the other. A product list that uses one set of names while eTIMS uses another makes every stock check harder than it needs to be.
How till sales themselves are fiscalised through eTIMS is a separate question, covered in till sales and eTIMS.
Locations and counts with the Warehousing add-on
With the Warehousing add-on, Achekam keeps stock locations on the server, such as warehouses, stores, bins and vans, with the quantity on hand at each. Stock transfers between locations go from draft to dispatched to received, and a short delivery is recorded as wastage. A stock count sets a location's quantity to what was counted and records the difference as an adjustment.
Those records are useful evidence. A count with its adjustments shows that the business compared its records with the shelves, and explains differences rather than hiding them.
Movements that do not reach the ledger yet
Not every stock movement reaches the general ledger. Stock counts, wastage, transfers and opening quantities do not post to it; only till sales and till returns move the inventory account.
So the stock quantities and the inventory value in the books can drift apart. When a count finds a shortage, the quantity is corrected but the inventory account is not. Tell your accountant about every count difference and every wastage entry, so the inventory account can be adjusted by journal and the books keep up with the stock records.
Goods received do not add stock
The other gap is on the way in. Goods received against a purchase order in Achekam do not add stock. A delivery of cement recorded against an order is a record that it arrived, not an increase in the stock quantity.
Until that changes, decide how incoming stock reaches your stock records. With the Warehousing add-on, the honest route is a count of the location after the delivery is put away, which sets the quantity to what is physically there and records the difference as an adjustment. Keep the supplier's eTIMS invoice and the delivery note with the count, so the increase can be traced to its source.
A monthly stock check
Once a month, for your top-selling products:
- Take the opening quantity from last month's count.
- Add deliveries received, from the supplier invoices and delivery notes.
- Subtract sales, from the eTIMS invoices and till sales for the month.
- Compare the result with a physical count of each location.
- Investigate every difference: an unrecorded delivery, a sale not put through eTIMS, breakage or theft.
- Record the count, and pass the differences to your accountant for the inventory account.
The third step is the one KRA cares about most. A shortfall that cannot be explained may look like sales that never went through eTIMS. If you are unsure which sales need an eTIMS invoice in the first place, which transactions need eTIMS sets out the exclusions.
Start small
Pick the handful of products that make up most of your sales, count them at the end of this month, and run the check above. Once it balances for those, widen it.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
