What COGS is and why Found Bank asks for it

Cost of Goods Sold (COGS) is the direct cost to produce the goods your business sells — materials, labor, and manufacturing overhead, but not rent, marketing, or salaries for office staff. Found Bank asks for COGS because it affects your gross profit calculation, which lenders and accountants use to understand how efficiently your business converts revenue into profit.

Found Bank integrates with your accounting software or bank feeds to pull transaction data automatically. When you add COGS, you are telling the system which expenses belong in that category so reports and reconciliation are accurate. This matters if you are seeking a business loan, line of credit, or if you need clean financial records for tax filing.

The process differs slightly depending on whether you are entering COGS manually, syncing from accounting software like QuickBooks or Xero, or categorizing transactions that have already imported into Found Bank.

Key Takeaways

  • COGS in Found Bank includes only direct production costs — raw materials, manufacturing labor, and factory overhead — not operating expenses like rent or salaries.
  • You can add COGS by categorizing individual transactions, bulk-uploading from your accounting software, or setting up automatic categorization rules.
  • Found Bank syncs with QuickBooks Online, Xero, and other accounting platforms, so if COGS is already categorized there, you may not need to re-enter it.
  • Accurate COGS tracking affects your gross profit margin, which lenders review when you apply for credit.

Adding COGS through transaction categorization

If you are categorizing transactions one at a time in Found Bank, open the transaction you want to tag as COGS. Look for a Category or Account dropdown — the exact label depends on your Found Bank version. Select Cost of Goods Sold or COGS from the list.

Found Bank will then assign that transaction to your COGS account. Repeat this for each purchase of raw materials, manufacturing supplies, or direct labor costs. Once you have categorized several transactions, Found Bank's system may learn the pattern and suggest COGS for similar future transactions from the same vendor.

This method works best if you have a small number of COGS transactions per month. If you have dozens or hundreds, bulk import or accounting software sync is faster.

Syncing COGS from QuickBooks or Xero

If your COGS is already categorized in QuickBooks Online or Xero, you can connect that software to Found Bank and pull the data across. Go to Settings or Integrations in Found Bank, then select the accounting software you use. You will be asked to log in and grant permission for Found Bank to read your chart of accounts and transactions.

Once connected, Found Bank will map your existing COGS account from QuickBooks or Xero to its own COGS category. New transactions you categorize as COGS in your accounting software will sync to Found Bank automatically, usually within 24 hours. This keeps both systems in sync without manual re-entry.

If you have not yet set up a COGS account in your accounting software, you will need to do that first — Found Bank cannot create accounts on your behalf, only read the ones that already exist.

Bulk uploading COGS data

Found Bank allows you to upload a CSV or Excel file containing multiple transactions and their categories at once. This is useful if you have historical COGS data from a previous accounting system or a spreadsheet you have been maintaining.

The file must include at least three columns: transaction date, amount, and category. Some versions of Found Bank also ask for a description or vendor name. Download the template from Found Bank's import page, fill in your COGS transactions, and upload the file. Found Bank will validate the data and flag any rows with missing or incorrect information before importing.

After upload, review the imported transactions in your Found Bank account to confirm they landed in the correct category. Bulk import is fastest for one-time historical data, but for ongoing transactions, accounting software sync or automatic rules are more reliable.

Setting up automatic COGS categorization rules

Found Bank lets you create rules that automatically categorize transactions based on vendor name, amount, or keywords in the description. For example, you can set a rule that any transaction from your supplier "Acme Materials Inc." automatically goes to COGS.

To create a rule, go to Settings or Rules and select Add New Rule. Choose the condition — vendor name, keyword, or amount range — and then select COGS as the category. Save the rule, and from that point forward, matching transactions will be tagged automatically.

Rules save time if you buy from the same vendors repeatedly. However, they can misclassify transactions if your rule is too broad — for example, a rule based on amount alone might tag a non-COGS purchase if it happens to match the amount range. Review auto-categorized transactions regularly to catch errors.

Correcting or removing COGS entries

If you categorized a transaction as COGS by mistake, open the transaction and change the category to the correct one. Found Bank will update the transaction immediately and recalculate your COGS total and gross profit.

If you need to remove COGS from a large batch of transactions — for example, if you imported data with the wrong category — you can bulk-edit them. Select multiple transactions at once, then choose the correct category from the bulk action menu. This is faster than correcting them one by one.

Keep in mind that changing COGS retroactively will affect your financial reports for the period in which those transactions occurred. If you have already shared reports with a lender or accountant, let them know about the correction.

How Found Bank uses COGS in reports

Once you have added COGS, Found Bank calculates your gross profit by subtracting COGS from revenue. This appears in your Profit and Loss (P&L) statement and is one of the first metrics lenders look at when you apply for credit.

A healthy gross profit margin — typically 30 to 50 percent depending on your industry — signals that your business is efficient at producing goods. If your COGS is miscategorized or incomplete, your gross profit will be inaccurate, which can hurt your loan application or make your financial picture look worse than it actually is.

Found Bank also uses COGS to calculate inventory turnover and other operational metrics if you have inventory tracking enabled. Accurate COGS is the foundation for all of these calculations.

Frequently Asked Questions

What counts as COGS and what does not?

COGS includes raw materials, manufacturing labor directly tied to production, and factory overhead. It does not include office salaries, rent, utilities, marketing, insurance, or delivery to customers. If you are unsure whether an expense is COGS, ask yourself: would this cost go away if I stopped producing goods? If yes, it is likely COGS.

Can I edit COGS after I have already synced from QuickBooks?

Yes, but changes made in Found Bank will not sync back to QuickBooks. If you need to correct COGS, make the change in QuickBooks first, then re-sync to Found Bank. If you edit only in Found Bank, the two systems will be out of sync the next time you sync.

What if I do not have COGS because I sell services, not products?

Service businesses typically do not have COGS in the traditional sense. Instead, you may track Cost of Services or Cost of Revenue, which includes labor and materials directly tied to delivering the service. Found Bank may have a separate category for this, or your accountant can advise on how to categorize it.

How often does Found Bank update COGS totals?

If you are syncing from accounting software, COGS updates within 24 hours of when you categorize a transaction in that software. If you are manually categorizing in Found Bank, the total updates immediately. Bulk imports process within a few minutes.

Will adding COGS affect my tax filing?

Found Bank is a reporting tool, not a tax filing system. The COGS you enter in Found Bank should match what you report to your accountant or tax preparer. If there is a discrepancy, your accountant will catch it during tax preparation. Use Found Bank to keep your records organized, but always verify with your accountant before filing.