Running out of products? Stocking too many? How QuickBooks Online can help solve both problems
Maintaining a healthy inventory of products to sell is always a delicate balancing act, but when your business is young, this process also comes with a lot of trial and error.
If your business model involves buying items in bulk or wholesale, your first few ordering estimates may be wildly off base. At the end of the day, the most important thing is that you have enough products in stock that you don’t have to turn away sales, without tying up cash in excess inventory that isn't moving.
As a business manager, you'll learn where that sweet spot is for every item you stock. It can take months (or even years) to amass this knowledge. While it's up to you to make your business's buying decisions, QuickBooks Online can help you stay informed about when you’re running low on inventory and when you have too much on hand.
Here are five ways to improve that delicate balance.
Tip 1: Turn on all inventory tracking options in QuickBooks Online
Click the gear icon in the upper right and scroll down to Sales on the Account and Settings page. In the Product and services section, make sure all of the options are set to On (we’ll get to price rules later). Be sure to click Done when you’re finished.
Tip 2: Make sure your inventory product records are highly detailed
We strongly urge you to complete all fields in inventory item records.
We’ve described the process of creating inventory item records before. You click the gear icon in the upper right corner and select Lists | Products and services. Click New in the upper right and Inventory in the panel that slides out from the right. Set up Categories and SKUs to more specifically group and define your products. QuickBooks Online will subtract items when you sell them and keep your inventory level current.
In the above image, the Reorder point field can be very helpful and is often underutilized. When the inventory level for that product drops to the number you specify, QuickBooks Online will let you know. In fact, when your cursor is on the QTY (quantity) field in an invoice, the three numbers pictured above will appear in a pop-out window (Quantity on PO automatically appears in the record based on your current purchase orders). Be sure you pay attention to this information when you’re selling products.
Tip 3: Use the BETA Price rules feature in QBO to establish flexible pricing for your inventory
There may be times when you want to temporarily lower the price of a product or products because they’re just not selling, or you're planning to bring in new inventory for the next season. You can use QuickBooks Online’s Price rules. This tool allows you to discount certain products for a specified period of time. Here's how to use it.
Let’s say you’re overstocked on fountain pumps, and you want to discount them for a month to see if you can reduce your inventory level. Click the gear icon in the upper right again and select Lists | All lists | Price Rules. Click Create a rule and give it a Rule name. Price rules apply to all products and all customers by default. So you’d leave Customer | All customers as is. Scroll down under Products and services and click Select individually. Under Price adjustment method, select Fixed amount. Choose Decrease by and 12, and in the next two fields, then No rounding. Enter the Start date and End date (optional).
You can create Price rules to decrease (or increase) prices temporarily for some or all customers.
Click +Add product or service, then click the down arrow in the field under Products in the lower half of the screen. Scroll down to Fountain Pump and select it. Your Adjusted Price should appear in that column. Click Apply rule and then save it. This price will appear automatically when you create an invoice, though you can override it, or delete it on the Price Rules page.
If you find you have a difficult time locating the Price rules feature, reach out to us.
Tip 4: Review the inventory reports offered by QuickBooks Online
As you may already be aware, QuickBooks Online offers excellent inventory report templates that you can and should be running on a regular basis. We discussed how QuickBooks alerts you to low stock levels when you’re creating invoices, but there are three reports that can also help you see the big picture more clearly: should also review the big picture on occasion. These reports are:
Inventory Valuation Summary. Transactions for each inventory item, and how they affect quantity on hand, value, and cost
Inventory Valuation Detail. The quantity on hand, value, and average cost for each inventory item
Physical Inventory Worksheet. Your inventory items, with space to enter your physical count so you can compare to the quantity on hand in QuickBooks Online. QuickBooks Online allows you to adjust inventory levels, but this should be done with great care. We can advise you on this.
You can also visit the Products & Services page, which displays a detailed profile of each item. If you’re low on stock or completely out, you’ll see that information at the top of the page.
We can’t advise you on the inventory levels you should be maintaining. Over time, this will become easier to gauge. But we’re here if you have questions about the mechanics of inventory management or any other element of QuickBooks Online.
While inventory in QuickBooks Online is adequate for some small businesses, it may not have all of the functionalities you need as a wholesale or retail business. However, there are powerful app integrations available for inventory management, and we specialize in implementing them. These include Cin7 CORE for manufacturers, Shopify for eCommerce, and Lightspeed for Point of Sale. Reach out to us if we can help you optimize your inventory processes and accounting solutions.
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