In Navigator, FIFO (First-In, First-Out) and LIFO (Last-In, First-Out) are two cost control methods used to manage stock valuations and part costs. These methods determine which purchase price is applied when stock is sold or returned, which is particularly important when parts are returned to suppliers at different prices than they were bought.
Understanding how these cost models apply in Navigator is essential for ensuring that credit notes and sales transactions reflect accurate costs — especially in cases where purchase prices have changed over time.
Why This Matters
When parts are purchased at different prices over time, returning them or selling them without a defined cost methodology could distort financial reporting and profitability. Navigator uses FIFO for sales and LIFO for credit notes to ensure cost allocations follow a predictable, auditable logic.
FIFO (First-In, First-Out)
When is FIFO used?
When selling stock
How does FIFO work?
Navigator assumes the oldest purchased stock (by cost, not physical item) is sold first.
The cost of the earliest batch is recorded as the cost of sale.
Important: FIFO in Navigator refers to cost flow, not physical stock movement. The system applies the oldest cost on record, even if a newer item is physically sold.
LIFO (Last-In, First-Out)
When is LIFO used?
When issuing credit notes, such as when parts are returned to suppliers
How does LIFO work?
Navigator assumes the most recently purchased items are returned first.
The latest purchase price is used as the cost on the credit note.
This is especially important when the price of a part has changed over time — the credit note will reflect the most recent price, not necessarily the price originally paid.
Comparison of Methods
| Method | Used For | Costing Logic |
|---|---|---|
| FIFO | Selling stock | Applies the oldest purchase price first |
| LIFO | Producing credit notes | Applies the most recent purchase price first |
Example
You purchase the same part in three batches:
10 units at £100
10 units at £110
10 units at £120
Later:
You sell 5 units — Navigator will apply the £100 unit cost (FIFO).
You return 5 units to the supplier — Navigator will apply the £120 unit cost (LIFO).
This ensures that costs reflect the logic of the transaction type and maintain consistency with stock valuation rules.
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