Managing inventory is a crucial part of running any product-based business. With QuickBooks Desktop 2024, small businesses have a versatile tool to track inventory, set reorder points, and stay on top of supply levels. In this article, we provide 10 tips to help you make the most of QuickBooks Desktop for inventory management.
1. Set up inventory items correctly
The foundation of good inventory management in QuickBooks is setting up your inventory items properly. When creating each item, enter details like description, cost, sales price, income account, asset account, reorder point, preferred vendor, and serial number or lot tracking if applicable. Entering complete details for items makes managing inventory easier down the road.
2. Use inventory centers
If your business stores inventory in multiple locations, use QuickBooks' inventory centers feature. You can create an inventory center for each location and assign inventory parts to specific centers. This enables you to track inventory quantities by location, know when to reorder, and transfer stock between locations.
3/ Use purchase orders for replenishments
Instead of manually entering bills to record inventory purchases, use purchase orders in QuickBooks to automatically convert orders into item receipts and bills. This best practice reduces data entry and improves accuracy. Set reminders for purchase orders to avoid stock-outs.
4. Enter bills when you receive inventory
Don't wait until you pay a bill to enter it into QuickBooks. When you receive inventory, go ahead and enter the bill into the system. This updates inventory item quantities and keeps your reporting up to date.
5. Track serial numbers & lot numbers
If you sell higher-value inventory items, use serial numbers and lot tracking. Entering this info as you receive inventory enables item-specific reporting and tracking. You can see which specific units you have in stock, when they were purchased, and to whom they were sold.
6/ Enable inventory alerts
QuickBooks provides alerts when inventory quantities drop below preset reorder points. Go to Preferences > Inventory & Vendors and check the box for "Warn about low inventory quantities". This prompts you to reorder when stock for an item is running low.
7. Monitor inventory value
Run an Inventory Valuation Summary report to view the current value of your inventory by item and location. This ensures the dollar value of stock on hand reflected in QuickBooks matches your actual inventory value. Monitor this regularly.
8. Track inventory shrinkage
Inventory shrinkage from shoplifting, damage, or warehouse errors is a fact of life. Make adjusting entries in QuickBooks to write off missing inventory so your accounting records match reality. Record lost inventory value as an expense to avoid inflating income.
9. Perform cycle counts
Conduct regular cycle counts to verify inventory quantities on hand. Cycle counting improves accuracy by identifying variance early. Create a schedule to count different item groups each week so you spread out the work. Update quantities in QuickBooks based on count results.
10. Analyze inventory reports
QuickBooks offers great reporting to provide inventory insights. Review the Inventory Stock Status report to see slow-moving and out-of-stock items. The Inventory Valuation Summary shows profitability by item. Analyze these and other reports to fine-tune your inventory management.
With its strong inventory management features, QuickBooks Desktop provides small businesses with control over their inventory tracking and supply levels. Following these best practices will help you get the most out of the software and make informed decisions. Be sure to take advantage of purchase orders, inventory alerts, valuation tracking, and detailed reporting to stay on top of your inventory. With discipline and organization, QuickBooks can help you effectively manage this critical business function.
