Inventory Valuation in Odoo – FIFO, LIFO, and AVCO Explained (2026 Guide)

Inventory valuation directly impacts financial reporting, compliance, and decision-making. In Odoo 19, businesses can choose between FIFO, LIFO, and AVCO methods. This guide explains each method and its role for Australian SMEs in 2026.

What is Inventory Valuation?

• Process of assigning value to stock items
• Impacts profit margins, COGS, and taxation
• ATO compliance requires consistent and accurate valuation methods

FIFO (First In, First Out)

• Oldest stock sold first
• Best for perishable goods (food, pharma)
• Provides accurate reflection of current stock value

LIFO (Last In, First Out)

• Newest stock sold first
• Helps during inflation to reduce taxable profit
• Not always accepted under Australian standards

AVCO (Average Cost)

• Calculates moving average cost of items
• Easiest to maintain in Odoo
• Works best for SMEs with bulk and mixed items

How Odoo Handles These Methods

• FIFO: automated tracking with real-time cost updates
• LIFO: requires configuration, not default in all jurisdictions
• AVCO: smooth system support with simple automation

Choosing the Right Method in 2026

• Retail SMEs → FIFO for transparency
• Wholesale & Manufacturing → AVCO for simplicity
• Niche industries → LIFO (only if legally accepted)

Internal & External Links

• Landing: Odoo Inventory Management Services
• Related Blogs:
  • [Odoo 18 vs 19 – Which One Should You Choose?] ← روز ۴
  • [Multi-Warehouse Management in Odoo 19] ← روز ۱۲
• External Authority: ATO Inventory Valuation Guidelines

FAQ

Q: Which valuation method is most used in Australia?

• FIFO and AVCO are the most common for SMEs.

Q: Can I switch methods in Odoo mid-year?

• No, consistency is required for compliance.

Q: Does Odoo automate valuation reports?

• Yes, Odoo 19 generates real-time valuation and accounting entries.