Tracking Inventory in QuickBooks
If you run a business with inventory, keeping track is pretty important. Below, you’ll gain insight on tracking inventory in QuickBooks via textual tips, a video from Intuit, and a podcast clip from an expert bookkeeper.
Low Inventory Means Missed Opportunities
If you run out of items that your customers want to buy, then they will most likely go somewhere else to make the purchase.
- By tracking your inventory carefully, you can re-order stock before items go out of stock to avoid these missed revenue opportunities.
Too Much Inventory Is Bad
While running out of inventory can mean lost sales opportunities, keeping too much inventory on hand has downsides also.
Tying up financial resources – If you keep inventory on hand, you have to purchase that inventory while waiting for sales revenue from purchases of the inventory.
- If you keep large amounts of inventory in stock that don’t sell for quite awhile, this is an inefficient use of your financial resources.
- An inventory tracking system can help you identify the optimal quantity of items to keep in stock based on past sales data.
Wasted inventory – If you keep large amounts of inventory in stock that don’t sell for a long period of time, this inventory can eventually go bad. For example;
- The inventory may become obsolete if new products in the market place replace it.
- Also, inventory may simply get old or expire, which means you will not be able to sell it.
- Again, by having an effective Expenses>Inventory Management system, you can identify the optimal inventory quantities to keep on hand to avoid these losses.
Overview of An Expenses>Inventory Management System
Your specific Expenses>Inventory Management requirements may differ depending on the business you are in but below is an overview of Expenses>Inventory Management best practices.
Decide what to track – Although you may sell a large amount of items, you may not want to track specific inventory count on all of them. For example;
- If there are certain parts that you use in your manufacturing process that are bought in large quantities for low prices and used over a long period of time, then it may not make sense to track these precise inventory counts in your system.
Initial inventory count and valuation – Once you know what items you are going to track in your Expenses>Inventory Management system, you need to get an initial count of these items.
- Count how many of each item you currently have on hand and the average cost of each item.
- Log these in the Expenses>Inventory Management system.
Track sales of inventory items – As you sell items, be sure that your Expenses>Inventory Management system is updated.
- By ensuring that every purchase of an item is logged against inventory of the item, your Expenses>Inventory Management system can be kept up-to-date with accurate inventory counts.
Track new inventory received – Similar to tracking the sales of inventory within your Expenses>Inventory Management system;
- It’s important to track additions to your inventory system when more items are received.
- This can sometimes be complicated depending on how you receive items from your suppliers.
Bernard shares how to use QuickBooks purchase orders to streamline this process below.
Streamlining Expenses>Inventory Management With QuickBooks
QuickBooks has a number of features that make Expenses>Inventory Management easier.
Use purchase orders (POs) in QuickBooks – Using purchase orders with your suppliers makes inventory tracking easier.
- QuickBooks tracks open purchase orders so that you know which inventory items will be in stock soon.
- When you receive new shipments from suppliers, you can log them against purchase orders.
- This will update your Expenses>Inventory Management system using the data from the purchase orders.
Using purchase orders in QuickBooks streamlines the Expenses>Inventory Management process by using data from the purchase order to update the Expenses>Inventory Management system.
Invoices and sales orders automatically update inventory – You can also configure QuickBooks to automatically deduct inventory from the Expenses>Inventory Management system when items are sold. This makes inventory tracking easier as you can automatically keep the system up-to-date as sales occur.
Track inventory levels – There are a number of reports within QuickBooks that you can use to monitor inventory. You can track current counts and valuations of inventory and also see trends of how inventory is sold over time.
If you run a business and need support with QuickBooks, contact Bernard and team today for bookkeeping solutions.