Understanding Inventory in QuickBooks Online

Supply and demand is a simple concept but a game-changer for business owners. While sales are always welcome, if they exceed more than your inventory, it can be a disaster. No one wants to refund thousands of dollars to their unhappy customers, but what’s a business owner to do? I want to introduce you to inventory tracking in QuickBooks Online.

Inventory tracking helps you keep tabs on what goods you have on hand and lets you know when it’s time to restock. 

Without further ado, let’s start with turning this setting on in your account:

1. Go to the Gear Icon and select Account and Settings.
2. Select the Sales tab.
3. Click on the Edit Pencil in the Products and services section.
4. Turn on Show Product/Service column on sales forms. You can also turn on price rules. This allows you to provide certain customers with discounts for a certain amount of time. 
5. Turn on both Track quantity and price/rate and Track inventory quantity on hand.
6. Select Save and then Done.

This setting is only available in QuickBooks Online Plus and Advanced. If you’re not using one of those plans, take a look at what they have to offer here.

Note: QuickBooks uses FIFO (first in, first out) as its inventory costing method. Turning this on will affect your books. If you’re unsure, we recommend you talk to a tax expert.

OK, you turned the setting on and now you get to add your products and services! You have the option to add each one manually or upload a document.

To add products individually:

1. Hover your mouse over Invoicing on the left menu.
2. Choose Products and Services. 
3. Click on New and choose between: Inventory, Non-inventory, Service, and Bundle. 

Since Inventory is the focus of this article, let me show you some of the information included when adding inventory.

1. After selecting New, click on Inventory.
2. Add a Name, SKU, or category for what you're tracking. Quick Tip: Categories let you group your products and services together so they’re easier to find.
3. Select the unit from the Unit drop-down.
4. Choose the category from the Category drop-down.

What else can you add? QuickBooks Online is very thorough and has a wealth of fields available to you:

• Sales price/rate
• Income account
• Sales tax category
• Purchase Information
• Cost
• Expense Account

Now let me show you how to upload a list of products/services into QuickBooks Online. 

1. Go to the Gear Icon.
2. Under Tools go to Import Data.
3. Choose Products and Services.
4. Next, download the sample file and open it. 

Formatting tips:

• Product/Service Name: 100 character limit. Avoid special characters. 
• Income Account: You can't use sub-accounts.
• Quantity as-of Date: Format is: MM/DD/YYYY or DD/MM/YYYY
• Income and Expense account: You can't use sub-accounts.

Once you save your file, click on Browse to find the file, and then upload. 

Your items are in and ready to be tracked! There are two ways to track what you sell:

• Create an invoice if you’ll get paid later.
• Add a sales receipt if your customer paid on the spot.

QuickBooks then decreases what’s on hand by the amount on the invoice or sales receipt.

Wait… there’s more! We also have helpful reports to run so you can keep tabs on where you’re at with your products and how your sales are doing.

What are your best sellers?

Look above at the reports in red. In your account, go to Reporting on the left menu and scroll to the “Sales and customers” group of reports. Then run them to see your sales by products and services:

• Sales by Product/Service Summary: Your total sales for each product and service.
• Sales by Product/Service Detail: Your sale transactions by product or service.

What do you have in stock?
Look at the reports in green. Run these reports to know what’s on hand, so you always have what your customers want:

• Inventory Valuation Summary: The quantity on hand, value, and the average cost for each product.
• Inventory Valuation Detail: Your transactions for each inventory item, and how they affect quantity on hand, value, and cost.
• Physical Inventory Worksheet: Your inventory items with space to enter your physical count, so you can compare to the quantity on hand in QuickBooks.

We understand that every business is different, and the ability to edit is important to us. As always, you can customize your reports exactly how you need them. 

Doesn’t get much better than setting yourself up for success in QuickBooks Online. Now go forth and track away!