Understanding Sales Codes
In this session, you’ll learn how to use sales codes in Studio Designer to gain clearer financial insights, improve margin tracking, and make more informed business decisions.
Sales codes may seem like a small detail, but they are one of the most powerful drivers behind your financial data. Every item requires one, and each code determines how revenue, cost of sales, and taxes are recorded—directly shaping your income statement.
Julia, founder of New Age Financial Consulting, breaks down how to turn this often-overlooked feature into a strategic advantage for interior design firms and showrooms.
Why Sales Codes Matter
Sales codes control how your financial data flows. Because Studio operates on an accrual basis, revenue only appears once items are invoiced—making proper setup essential for accurate reporting.
While the platform includes default codes, customizing them to reflect your actual revenue streams gives you far better visibility into performance.
Customizing for Clarity
Your sales codes should mirror how your business operates. Whether you’re tracking product categories or service lines, creating tailored codes—like a dedicated one for custom retail items—allows you to isolate revenue and costs and understand true profitability.
Setting Them Up Correctly
A strong setup goes beyond naming a code. You’ll need to define:
How markup is applied
Deposit structures for clients and vendors
Tax settings based on product type
Equally important is mapping each sales code to the right accounts:
Income account (revenue)
Cost of sales account (expenses)
Optional markup account
Using consistent account numbering makes it much easier to analyze margins and keep reporting clean and GAAP-aligned.
From Workflow to Financial Reports
Once items are invoiced, your setup comes to life. Revenue and costs flow into their respective accounts, giving you a clear view of profitability by category.
Julia also walks through real workflows—covering item creation, deposits, vendor payments, and invoicing—showing how sales codes impact every step of the process.
Watch Out for Cost Adjustments
Studio allows post-invoice cost changes, but this can create timing mismatches in your reports. Costs updated later may distort margins across months, so it’s best to confirm pricing before invoicing whenever possible.
Sales Codes vs. Other Costs
Not everything belongs in a sales code. Additional expenses like freight, installation, or miscellaneous charges should be tracked under “Other Costs,” which are mapped separately.
Using these categories correctly ensures more accurate reporting and a clearer picture of total client spend.
Time Billing and Service Revenue
For service-based work like drafting or architecture, time billing should be tied to dedicated sales codes mapped to income time billing accounts.
This separation allows you to track service revenue independently from product sales—without overcomplicating your system.
Key Takeaways
Sales codes are the backbone of your financial structure in Studio Designer. When set up correctly, they allow you to:
Track revenue and costs with precision
Maintain clean, GAAP-compliant reports
Understand margins across products and services
Customize reporting to match your business
With the right structure in place, sales codes become more than a requirement—they become a powerful tool for running a more profitable, data-driven design business.
-
Introduction and Webinar Overview
The session opens with a warm welcome and an introduction to the topic: understanding sales codes in Studio Designer. They’re described as one of the most underrated yet essential features in the platform—something many users overlook, but that has a major impact on financial clarity.
Julia is introduced as the expert leading the session. As the founder of New Age Financial Consulting, she works closely with interior design firms and showrooms, providing bookkeeping, accounting, CFO-level support, and procurement guidance. Her experience gives her a deep understanding of how financial systems need to function in real design businesses.
Attendees are encouraged to participate throughout the session by submitting questions via the Zoom Q&A feature.
What Are Sales Codes?
Julia explains that sales codes are required for every item entered into Studio and act as the primary driver behind that item’s financial data. They determine how revenue, cost of sales, and other financial figures are recorded and displayed.
She emphasizes that sales codes directly impact the income statement, which operates on an accrual basis. This means revenue doesn’t appear until an item is invoiced, making proper setup critical for accurate reporting.
Studio includes a set of default sales codes, typically around eight to ten, which are well-structured out of the box. However, Julia notes that these should often be customized to better reflect each business’s specific needs.
Customising Sales Codes for Business Needs
Julia shares that many firms adjust their sales codes to better track meaningful revenue streams or product categories. The goal is to align the system with how the business actually operates.
She gives the example of a showroom that expanded from interior design into retail. By creating a dedicated sales code for custom pillows, they were able to clearly track both revenue and cost of sales for that specific product line.
At the same time, she cautions that creating new sales codes has accounting implications, so it’s important to understand how they affect financial reporting or seek guidance when needed.
Sales Code Setup and Markup Considerations
When setting up a sales code, Julia walks through the key decisions involved. This includes defining the code and description for internal clarity, as well as determining how markup will be applied—whether by client, vendor, or directly through the sales code.
She also highlights the importance of setting deposit percentages for both selling and purchasing, as these directly affect cash flow and proposals.
Tax settings are another critical component. Depending on the product and jurisdiction, items may be taxable or non-taxable. Julia notes that many firms keep both options enabled as a guide for their design teams, even if certain categories—like retail items—are always taxable.
Mapping Sales Codes to the Chart of Accounts
A major focus of the session is how sales codes connect to the chart of accounts. Julia explains that each sales code must be mapped to an income account for revenue and a cost of sales account for expenses. In some cases, firms may also choose to map markup to a separate account.
She demonstrates this by creating a sales code for millwork, showing how important it is to select the correct accounts.
Studio’s chart of accounts follows GAAP standards and uses a structured numbering system. Typically, income accounts fall within the 4000 range, while cost of sales accounts fall within the 5000 range. Maintaining consistent numbering—such as pairing related income and cost accounts—makes it much easier to analyze margins and financial performance.
Why Separate Markup Accounts?
Julia explains that separating markup into its own income account is optional, but can be useful for firms that want more detailed reporting.
By tracking markup separately, businesses can clearly see how much of their revenue comes from markup versus product sales. However, many firms choose to combine the two for simplicity. The system supports both approaches, depending on reporting preferences.
Practical Example: Millwork Sales Code
To bring everything together, Julia walks through a practical example of creating and using a millwork sales code.
She demonstrates how an item is set up with client and vendor details, room or location information, purchase cost, and a marked-up selling price. Tax settings and deposit percentages are also applied.
She adds a product image as part of the documentation process, reflecting how items are managed in real projects.
Client Deposits and Vendor Payments
The conversation then shifts to how client deposits and vendor payments are handled.
Julia shows how client deposit funds can be applied toward purchases, making it easy to manage prepayments. On the vendor side, payments—such as wire transfers—are tracked through vendor deposit accounts.
While early invoicing is demonstrated, Julia mentions that she typically prefers invoicing at the time of installation or delivery to ensure greater accuracy.
Invoicing and Financial Impact
Once an item is invoiced, Julia explains how the financial impact appears in the general ledger.
Revenue is recorded in the assigned income account, while the cost is recorded in the corresponding cost of sales account. This separation provides a clear view of margins.
She shows how this flows through to the income statement, where both revenue and costs for categories like millwork are clearly visible.
Adjusting Costs After Invoicing
Julia highlights that Studio allows costs to be adjusted even after an item has been invoiced. While this flexibility can be helpful, it can also create challenges.
If costs are updated in a different period than the original invoice, it can lead to timing mismatches in financial reports. This can distort margin analysis across months or quarters.
Because of this, she strongly recommends confirming costs before invoicing whenever possible.
Other Costs vs. Sales Codes
The discussion then moves to “Other Costs,” which are separate from sales codes.
These include categories like freight, installation, and miscellaneous expenses. Julia explains that these should be used for additional, ancillary costs rather than product sales.
Using these categories correctly makes it easier to track total client spend and maintain clean reporting. Misclassifying items can create confusion in both financial reports and client-facing documents.
Markup on Other Costs
Julia also points out that markup can be applied to other costs, such as freight.
For example, if a firm consistently applies a 20% markup to shipping, this can be set up within the system to automate calculations. This not only improves efficiency but also ensures consistent and transparent billing.
Time Billing and Activity Mapping
For service-based work, Julia explains how time billing is handled separately from product sales.
Activities like drafting or architecture are linked to sales codes that map to income time billing accounts. This allows firms to track service revenue independently.
She emphasizes that while it’s helpful to create distinct categories for key services, it’s important not to overcomplicate the system with too many codes.
Best Practices and Final Recommendations
As the session wraps up, Julia shares a few key recommendations.
Not every activity needs its own sales code—there should be a balance between detail and simplicity. However, separating major revenue streams, such as architecture and interiors, can provide valuable financial insights.
She also stresses the importance of regularly reviewing sales codes, account mappings, and activities to ensure they continue to align with how the business operates.
Closing and Support
The session concludes with Julia sharing her contact information and reminding attendees that additional support is available.
Users can access help through an AI-supported chatbot and knowledge base, and the webinar recording, along with other learning resources, will be shared after the session.
Key Insights
Throughout the discussion, one theme remains clear: sales codes are the backbone of financial tracking in Studio Designer.
They control how revenue and costs are recorded, influence reporting accuracy, and provide the structure needed to understand profitability. When combined with proper account mapping, thoughtful customization, and consistent usage, they become a powerful tool for running a more organized and financially informed business.
