Managing inventory efficiently is crucial for any business that deals with physical products. QuickBooks Online offers powerful tools that help you track your inventory, manage stock levels, and ensure accurate financial records. This guide will walk you through the process of managing inventory in QuickBooks Online, from setting up inventory items to tracking and reporting.
Setting Up Inventory in QuickBooks Online
Before you can start managing inventory, you need to set up your inventory items in QuickBooks Online. Here’s how:
1. Enable Inventory Tracking
Go to the Settings gear icon at the top right corner of the QuickBooks Online dashboard.
Select Account and Settings.
Under the Sales tab, find the Products and services section.
Toggle on the Track inventory quantity on hand option.
2. Add Inventory Items
Go to the Sales menu on the left side of the dashboard and select Products and services.
Click on the New button and choose Inventory item.
Enter the item name, SKU, or part number.
Input the initial quantity on hand, as well as the date you’re starting to track the inventory in QuickBooks.
Set the reorder point to get alerts when stock is running low.
Enter the cost and sales price for the item.
Select the appropriate income and expense accounts.
3. Organize Your Inventory
You can categorize your inventory items by adding them to product categories. This helps in organizing your inventory and makes it easier to find items.
To create categories, go to Products and services, click on the More button, and then choose Manage categories.
Tracking Inventory in QuickBooks Online
Once your inventory is set up, QuickBooks Online will automatically track the quantity on hand as you purchase and sell items.
1. Purchase Orders and Bills
When you order new stock, create a purchase order by going to the + New button and selecting Purchase order.
After receiving the stock, convert the purchase order into a bill to update your inventory levels. Go to + New and select Bill, then link it to the purchase order.
2. Sales Transactions
When you make a sale, QuickBooks automatically adjusts the inventory levels. Create an invoice or sales receipt by selecting + New and choosing the appropriate option.
As items are sold, QuickBooks will reduce the quantity on hand and update the cost of goods sold (COGS).
3. Reordering Stock
QuickBooks allows you to set reorder points for your inventory items. When stock levels fall below these points, you’ll receive an alert.
To reorder, create a new purchase order and send it to your supplier.
Managing Inventory Adjustments
Sometimes, you might need to adjust inventory levels due to damage, theft, or errors. Here’s how to handle adjustments in QuickBooks Online:
1. Create an Inventory Adjustment
Go to + New and select Inventory Qty Adjustment.
Choose the appropriate adjustment account (such as an expense account for damaged goods).
Enter the items that need adjustment and specify the new quantity on hand.
Save the adjustment to update your inventory records.
2. Audit Inventory Levels
Regularly audit your inventory to ensure that the quantities in QuickBooks match your physical stock.
You can generate inventory reports by going to the Reports section and searching for inventory-related reports like Inventory Valuation Summary or Physical Inventory Worksheet.
Inventory Reports in QuickBooks Online
QuickBooks Online provides several reports to help you monitor and manage your inventory:
1. Inventory Valuation Summary
This report shows the value of your inventory based on the quantity on hand and the average cost.
It helps you understand the total worth of your inventory and its impact on your financial statements.
2. Sales by Product/Service Summary
This report provides an overview of sales revenue generated by each inventory item.
It’s useful for identifying top-selling products and making informed purchasing decisions.
3. Inventory Stock Status by Item
This report shows the current stock levels for each inventory item, along with the reorder point and backorder status.
It helps you stay on top of inventory levels and avoid stockouts.
FAQs
Can I track inventory in QuickBooks Online Simple Start?
No, inventory tracking is only available in QuickBooks Online Plus and Advanced versions.
How do I handle inventory returns?
You can record a refund for the returned item and adjust the inventory quantity accordingly.
What happens if I sell an item that’s out of stock?
QuickBooks Online will allow you to sell out-of-stock items, but it will create a negative inventory balance, which you should resolve by restocking.
Can I track non-inventory items in QuickBooks Online?
Yes, QuickBooks Online allows you to track non-inventory items like services or products that you don’t track in stock.
How can I automate reordering in QuickBooks Online?
QuickBooks Online doesn’t offer automatic reordering, but you can set reorder points to get alerts when stock is low.
Conclusion
Managing inventory in QuickBooks Online is a straightforward process once you have everything set up. By taking advantage of the features available, you can keep your inventory organized, avoid stockouts, and maintain accurate financial records. Regularly reviewing inventory reports and making necessary adjustments will help you stay on top of your inventory management and ensure smooth business operations.
