Service Items: Sell and Buy Work, Not Stock

Every item in AWRA has an item type: Stock item or Service. A stock item is goods on a shelf — it has quantities per location, check-ins and check-outs, reservations, counts, transfers, batches and serials, low-stock alerts, a reorder point and a cost of goods sold when it leaves. A service is work you sell or buy: installation, support hours, cleaning visits, delivery, consulting. It sits in the same catalogue, carries a name, code, category, price and barcode like any item, and appears on the same quotes, invoices and purchase orders — but it never carries stock, so none of the stock machinery ever touches it.

There are three ways to put work on a document, and choosing between them is the first decision. A Service is for work you sell or buy repeatedly at a known price: it is priced from your price lists, reported by item, and keeps its own cost and income account. A Stock item is for anything you hold and count. A Custom line — free text with a typed description and price — is still there for the genuine one-off that will never be repeated and does not deserve a catalogue entry. On every line editor the choice reads Item, Service or Custom line. New workspaces start with a Sample Service item and a Services category, described as work you sell or buy that carries no stock.

In practice: a solar installer in Nairobi quotes a church in Karen for 4 panels at KES 18,500 each (stock items, KES 74,000), one Standard rooftop installation at KES 12,000 (a service, because the team sells it every week), and a custom line “Remove old water heater” at KES 3,500 (a one-off nobody will ask for again). The quote’s subtotal is KES 89,500; with 16% VAT of KES 14,320 it totals KES 103,820. Only the panels will ever be checked out of the warehouse; the installation is tracked in sales reports by name, and the water heater line is simply text on this one quote.

A service is created from the same item form as anything else: choose Service in the Item type select at the top, or use the item type toggle on the Android app’s add and edit item screens. The form then hides everything that only makes sense for goods — inventory account, stock, reorder point and reorder quantity, tracking, preferred vendor and FEFO. Two price rules differ from a stock item. The selling price is typed, where a stock item’s is worked out from cost plus markup. The buying price — what the work costs you to deliver — is optional; it feeds margin reports only, and a service with no cost shows its margin as n/a rather than a flattering 100%. An optional Income account decides where the sale is booked; left empty, it books to Sales Revenue.

An item can change type, with one rule in each direction. A service can always become a stock item, starting at zero stock. A stock item can only become a service when there is nothing left to account for: AWRA refuses the switch while the item holds stock or a shelf quantity, has a reservation or hold, sits in an unfinished count, or has serial or batch records. Item type is also a governed field in item master governance, so where your workspace requires approval for item changes, a type change waits for an approver — and the same refusal is checked again at the moment the approval applies, in case stock arrived in between. In the item list a type filter and a Service badge pick services out, and their stock and reorder columns show “—”; the item’s own page leaves out the Stock, Adjustments and Predictive tabs.

In practice: an IT support firm in Westlands creates “On-site support — 1 hour” as a Service in the Services category, typed at KES 4,500 a unit, with a buying price of KES 2,000 for the technician’s time and the income account Support Income that its accountant created. Each hour sold shows KES 2,500 of margin. Later a colleague tries to turn “Toner cartridge 85A”, with 6 on the shelf, into a service to stop it appearing in counts; the switch is refused until those 6 are sold or written off. A labour item that was set up as a stock item by mistake, holding nothing, switches to Service at once.

A service is a catalogued line on quotes, sales orders, proformas, invoices, recurring invoice schedules and price lists, priced like any item: leave the price blank and the customer’s list, then your default list, then the service’s own selling price decide it. Because there is nothing on a shelf, nothing is checked or held: an invoice or the point of sale never runs a stock check on a service line, confirming a sales order never reserves or backorders it, and a POS return never puts it back into stock. The same is true at the till on the web and in the Android app. Quantities are whole units, so work billed by time is sold in the block you charge for — an hour, or a “30-minute block” item at its own price.

Revenue timing follows what is on the invoice. An invoice of services only books its revenue when it is issued, to each service’s income account, falling back to Sales Revenue; there is never a cost of goods sold for a service. A mixed invoice, carrying goods and services together, books its whole revenue once, at stock checkout, exactly as before — so the services on it are booked at the same moment as the goods. An invoice with nothing on it that tracks stock has no Checkout button at all, because there is nothing to check out. With KRA eTIMS switched on, a service line files under the services item class code 8020891800 and goods under 5059690800, and any item can carry its own eTIMS classification code that overrides the default.

In practice: the Westlands IT firm invoices a law firm for 6 hours of On-site support at KES 4,500 — KES 27,000 plus 16% VAT of KES 4,320, KES 31,320 in all. The invoice has no Checkout button; the moment it is issued, KES 27,000 is booked to Support Income and the line files to eTIMS under 8020891800. The next week it sells the same client a router at KES 9,000 with 2 hours of setup at KES 9,000. That mixed invoice books its KES 18,000 of revenue, router and setup together, when the router is checked out of the store.

Procurement requests, RFQs, supplier quotations and purchase orders all accept services. A procurement request for a service always goes to an RFQ when it is approved, because there is no stock to issue it from, and a request made up only of services cannot be checked out. When a supplier quotation is awarded, it updates the service’s cost — its buying price — and never its selling price, so winning a cheaper cleaner does not reprice what you charge your own customers.

A service is received by confirming delivery. On the purchase order page the Services on this order panel lists each service with Ordered, Confirmed and Outstanding, and a Confirm delivery column where you enter a quantity, an optional note and press Confirm; the Android app has the same as a Confirm services sheet on the order. Confirmation is in whole units and never beyond what is outstanding. Each confirmation books Dr Purchases, Cr Accounts Payable at the order’s price, and appears in the history with when, which service, quantity, amount, who and the note. It needs the same permission as checking in goods. Three-way matching counts a confirmation as received, and the order is marked delivered only when every line is in — goods checked in and services confirmed. Every pay path applies one rule: each line must be received or confirmed before it is paid, and a services-only order is paid through the vendor payments ledger. Landed costs skip service lines; a supplier return refuses a service, so a shortfall in work is handled with a debit note. On the vendor portal, a services-only order shows its Work status to the supplier.

In practice: a Mombasa distributor orders 4 warehouse deep-cleans at KES 15,000 (KES 60,000) and 10 cartons of floor detergent at KES 1,200 (KES 12,000) from one contractor — KES 72,000 net. After the first visit the warehouse supervisor confirms 1 clean with the note “Bay 3 to 7”, booking KES 15,000 to Purchases and Accounts Payable; Outstanding drops to 3, and an attempt to confirm 4 more is refused. The detergent is checked in the next day. Only when the fourth clean is confirmed is every line in, the order is marked delivered, and the full KES 72,000 can be paid.

Withholding tax on a supplier bill is levied on service fees, so AWRA works it out on the bill’s service lines and free-text lines only. Goods on a mixed bill — lines for items that track stock — are left out of the base. The rate is applied to the net of those lines before VAT, for both income-tax and VAT withholding, and the balance due is the bill total less the withholding. A bill made entirely of free-text lines is withheld on all of it, as before, and a bill of goods only has nothing to withhold.

Everything else about withholding is unchanged. The bill starts with the supplier’s default rate and you can change it, or choose none, on that bill. Nothing is booked when the bill is captured: each payment and each applied debit note books its share — the withholding times what was settled, divided by the bill’s net — dated when it happened, and the share appears on that month’s Withholding Tax register, export and supplier certificate.

In practice: the Mombasa contractor bills the order above — 4 cleans at KES 60,000 and detergent at KES 12,000, a KES 72,000 subtotal plus KES 11,520 VAT, KES 83,520 in total. The supplier carries a 3% income-tax withholding rate. The base is the KES 60,000 of service lines, so KES 1,800 is withheld, not KES 2,160 on the whole subtotal, and the balance due is KES 81,720. The accountant pays half, KES 40,860, at the end of the month, which books KES 900 to withholding tax payable (1,800 × 40,860 ÷ 81,720); the other KES 900 books with the second payment.

Reports treat a service as revenue, never as stock. Sales by item lists services with “· Service” beside the name, shows a margin of n/a when no cost is recorded, and carries a Goods vs Services revenue split. The custom report builder has an Item Type column and dimension. Every stock report, low-stock alert, dead-stock scan, reorder suggestion, forecast and the nightly reorder-point recalculation leave services out. Global search tags a service as Service, scanning a service’s barcode offers only open and print label, and asking the in-app assistant how many of a service you have is answered that it is a service and carries no stock.

Bulk import has an Item Type column — stock or service, blank meaning stock. A service row needs no inventory account, ignores the Stock and Reorder Point columns, takes its Selling Price as typed and its Buying Price as optional; an item that already exists keeps its type on import, and Excel and PDF exports carry the type. In the web API and Developer API v1 every item has an item_type, lists can be filtered with ?item_type=, and a service’s stock fields come back as null — a contract change worth passing to anyone who integrates with you; low-stock results and the public stock API leave services out. The Android app carries the type in its offline cache, shows the Service badge and no stock pill, check-in, check-out or transfer for a service, and offers Item, Service or Custom line on invoices. QuickBooks Online receives a service as its Service item type, with an income and an expense account and no asset account, while goods stay NonInventory.

In practice: a Nakuru agrovet imports 40 new catalogue rows, 12 of them marked service — spraying, soil testing and farm delivery — with no inventory account and a blank buying price on three. Its Sales by item report for September shows KES 1,600,000 of revenue, split KES 1,240,000 goods and KES 360,000 services, and the three services with no cost read n/a for margin. The low-stock alert that morning names 5 fertiliser lines and none of the services, and its developer’s nightly sync calls the items endpoint with ?item_type=stock so stock fields are never null in his warehouse feed.