GlossaryEN1 min readUpdated: Jun 16, 2026

Backflush Accounting

Lean manufacturing needs lean accounting.

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Last updated: 16 June 2026Published: 19 June 2025

Source: https://www.investopedia.com/terms/b/backflush-accounting.asp

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Logistics Concept

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Definition & Explanation

Lean manufacturing needs lean accounting. Backflush accounting reduces administrative overhead by skipping real-time material transaction recording: instead of posting each component withdrawal individually, the system waits until a finished product is completed, then works backward through the bill of materials to calculate raw material consumption based on actual output. This suits just-in-time environments where inventory levels are low and transaction volumes are high. The trade-off is delayed variance detection – scrap, yield losses, or substitutions only surface at order completion. Accurate bill-of-materials data and reliable scrap rates are therefore essential. Most major ERP platforms offer backflush as a configurable option for production order costing.

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Backflush Accounting

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Related Terms

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customs account charge

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