Why Your POS Profit Figures Are Wrong (And How to Fix Them)

A shop owner in Kumasi looks at the system on Sunday evening. It says the month's profit was GHS 14,000. The bank account, the cash box and the feeling in his stomach all say something closer to GHS 8,000.

He assumes the software is wrong. It usually is not. The software is doing exactly what it was told — the problem is what it was never told.

This is the single most common reporting complaint in Ghanaian retail, and it has one dominant cause.

The Arithmetic That Creates a Phantom Profit

Profit on a sale is a subtraction: what you sold it for, minus what it cost you. Your POS knows the selling price with certainty — a cashier typed it or scanned it, and money changed hands.

The cost price is different. The system only knows it if somebody recorded the purchase. When stock reaches your shelves without being entered — a supplier delivered on a busy Saturday, someone bought a carton at the market with cash, a rep dropped goods and the paperwork followed later and then never did — the system has no cost to subtract.

So it subtracts nothing. And a sale with no recorded cost is recorded as pure profit.

A worked example

You sell 100 bags of rice in a month at GHS 50 each:

• Revenue: 100 × GHS 50 = GHS 5,000
• But only 60 bags were ever recorded as purchased, at GHS 35 each
• Recorded cost: 60 × GHS 35 = GHS 2,100
• Profit the system reports: 5,000 − 2,100 = GHS 2,900

Now the reality. All 100 bags cost you GHS 35:

• Actual cost: 100 × GHS 35 = GHS 3,500
• Actual profit: 5,000 − 3,500 = GHS 1,500

The system reported GHS 2,900 against a real GHS 1,500 — nearly double, from one product with a 40-bag gap.

Now multiply that across a catalogue. Forty products each with a small unrecorded gap will not announce themselves anywhere on your sales report. They will quietly add several thousand cedis of profit that never existed, every single month.

Why this is worse than a simple error

An obviously broken number gets ignored. A plausible number gets acted on. Owners restock the wrong lines, drop prices on products they believe carry more margin than they do, take drawings the business cannot support, or expand on the strength of a figure that was never real. The damage is not the wrong report — it is the decisions made on it.

How to Find the Affected Products

The test is simple and works in any system: for every product, compare quantity sold against quantity recorded as purchased. Any product that has sold more units than were ever bought into the system is inflating your profit, because the difference was sold at zero recorded cost.

In SellarPro this comparison is a single screen: Quick Data → Stock Reconciliation. It lists exactly those products — sold in greater quantity than was recorded as bought. Every row on that list is money your profit figure is currently inventing.

If you are working in a spreadsheet instead, build two columns per product — units sold and units purchased — and filter for rows where sold exceeds purchased. It is tedious, but the logic is identical.

Reading the list properly

Start with the products where the gap is largest in cedis, not in units. A 200-unit gap on sachet water matters far less than a 12-unit gap on a product costing GHS 400. Multiply the missing quantity by the real cost price and work down from the biggest number.

How to Fix It

Record the missing purchases — in SellarPro, Purchases → Add Purchase. Three details matter:

• Use the real cost price, not an estimate and not last year's. If the price moved during the period, use what you actually paid for that delivery.
• Date it close to when the stock actually arrived. Dating everything today fixes the total but distorts which month carried the cost, which matters if you are comparing months or filing anything.
• Record the supplier where you can. It costs seconds and turns the entry into something you can verify later.

Then re-run the list. Until it is empty, no profit figure from that period is trustworthy — and that includes any figure you have already shown to a lender, a partner or an accountant.

What you should not do is adjust the profit number directly. Profit is an output calculated from cost prices. Editing the output without fixing the input leaves every future report wrong in the same way, and removes the only signal that would have told you.

The Other Causes, in Order of How Often They Bite

Unrecorded purchases dominate, but once that list is clean and the figure still looks wrong, work through these:

• Expenses never recorded. Rent, electricity, fuel, transport, staff wages and MoMo charges do not appear in a gross profit figure. If you are reading gross profit and thinking of it as money you can take, you are skipping every cost that keeps the doors open. Record expenses by category so the picture reflects reality.
• Opening stock entered wrong. If the count you started with was inaccurate, everything calculated from it inherits the error. This is why the first physical count matters more than any later one.
• Returns processed as new sales. A refund handled as a fresh transaction records revenue that never arrived and leaves stock counts wrong in both directions. Always process returns through the returns function so stock restocks properly.
• Damaged, expired or stolen stock never written off. Stock that will never sell still sits in your figures as an asset. Write it off through a stock adjustment with a reason attached — see preventing stock theft in retail shops and, for pharmacies and food businesses, expiry date tracking.
• Transfers sent but never received. In a multi-branch business, stock signed out of one branch and never signed in at the other sits in limbo and throws both branches' numbers.
• Cost price and selling price entered in the wrong fields. Rare, but it produces spectacular nonsense — usually an enormous margin on one product. Worth a glance if a single line looks impossibly good.

Stopping It From Coming Back

Fixing the history is a one-off. Keeping the figure trustworthy is a habit, and it is a short one:

• Receive every delivery through the system, at the point of delivery. Not that evening, not at the weekend. This single discipline prevents almost the entire problem. If a supplier arrives during a rush, record the purchase before the goods reach the shelf.
• Never let stock reach the shelf without a purchase record. Cash purchases from the market are the usual culprit precisely because there is no invoice to chase you.
• Restrict who can adjust stock, and review the log. Adjustments are where unexplained differences get quietly absorbed.
• Run the reconciliation list monthly — weekly if you receive stock often. The sooner you catch a gap, the more likely someone still remembers the delivery.
• Count a section of the shop each week rather than everything once a year. See our guide to managing inventory in a small business.

What a Trustworthy Profit Figure Requires

None of this is specific to one system. Any POS or inventory tool will produce an inflated profit figure if it is fed sales without costs — that is arithmetic, not a software flaw. What differs between systems is whether they show you the gap or let it accumulate silently.

What you need, whatever you use:

• Cost price captured on every product, kept current as prices move
• Purchases recorded against the products they replenish
• A way to compare quantity sold against quantity purchased, per product
• Expenses recorded by category, so profit means profit and not just margin
• Stock adjustments that carry a reason and a name

SellarPro puts the comparison on one screen — Quick Data → Stock Reconciliation — and records purchases, expenses and adjustments against the same data your reports are built from, so closing the gap fixes the figure everywhere at once. For the wider picture see profit and loss tracking for small businesses and inventory management.

The test of a profit figure is not whether it looks good. It is whether you would make a decision on it. Until the reconciliation list is empty, you should not.

Frequently Asked Questions

Part of our Reporting & Analytics resources — see the full guide and related tools.