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Setting Up Inventory & Advanced Inventory with QuickBooks Enterprise

Why keep track of inventory?

Inventory tracking is an important part of your business if you purchase items to resell to others. This can be on a wholesale or retail basis. Knowing what is in stock at the time your customer wants a product can make or break a sale.

Inventory can be tracked as an "each" item or as an assembled unit that deducts the component units from inventory when the assembly is built. Assemblies are only available with QuickBooks Premier or Enterprise editions.

Advanced Inventory Tracking is an "add-on" option that can track inventory at multiple sites and is available with QuickBooks Enterprise only, (additional fees may apply for this add-on).

Some of the benefits of tracking what you have in inventory with QuickBooks:

  • When using Purchase Orders for your company, inventory tracking makes available a more accurate way to keep track of what has been received from the vendor and what has not been received
  • Know what the cost of your inventory items are
  • Know the income received from reselling your inventory items
  • Know what your current quantities on hand are
  • Know the current value of the inventory you have in stock

Setting up QuickBooks for Inventory

  • QuickBooks Administrator turns on the preferences for inventory
    • Edit > Preferences > Items & Inventory > Company Preferences
    • Select Inventory and purchase orders are active check box
    • Click OK
  • Add inventory tracking accounts to the Chart of Accounts
    • Inventory Asset is an Other Current Asset account type
      • Tracks the current value of your inventory
      • Is created automatically by QuickBooks when the first inventory item is created
    • Sales Income is an income account type
      • Tracks the income from the resale of inventory items
      • Can be named something other than Sales if desired
    • Cost of Goods Sold (COGS) has the account type of Cost of Goods Sold
      • Tracks the cost of the items sold
      • Reports on the Profit & Loss Report
      • QuickBooks subtracts the total cost of goods sold from the total income
      • Provides the gross profit before expenses
      • Account is created by QuickBooks when the first inventory item is created
  • Setup Inventory Items
    • Click Home (if using the Home screen)
    • Company section > Items & Services
    • This opens the Item List
    • At the bottom of the box, click on Item > New
    • From the drop down in the New Item box, select the Inventory type item
    • Fill in the information on the inventory item, including the On Hand Quantity

Note: What is entered for the item is what will show when creating forms where the item is used. The name or number of the item should be something that will distinguish the item from all others on the list.

Creating Sub-items allows for items to be setup in a hierarchy of similar items under a "parent" item. With sub-items you can group information for reports and graphs. Sub-items are for your own convenience and not mandatory in the setup. They look the same as other items on sales forms and purchase orders.

  • Setup Inventory Sub-items
    • With the New Item window open, (after creating the "parent" item), enter the name for the sub-item
    • Put a check mark in the box labeled "Subitem of"
    • Select the "parent" item
    • Include a rate for the sub-item

Note: When creating the "parent" item, if you will not be using the "parent" on forms, leave the rate as zero. An account must be selected for the "parent" as well as a the same type of item when creating the sub-items.

Note: Additional options are available when setting up items. These are entering the manufacturer number for the item and entering the Unit of Measure amounts. These are not always needed when setting up your items.

Advanced Inventory Tracking:

Advanced Inventory tracking is for those that have multiple sites or locations were inventory tracking is needed. These locations may be trucks, warehouses, store locations, or any other multiple locations where your products are located.

  • Turn on Advanced Inventory Tracking
    • Edit > Preferences
    • Items & Inventory
    • Company Preferences tab
    • Put a check mark for Advanced Inventory is enabled

QuickBooks Enterprise, QuickBooks Enterprise inventory

These steps need to be completed to accurately setup Advanced Inventory Tracking

QuickBooks Enterprise, QuickBooks Enterprise inventory

With Advanced Inventory Tracking you can:

  • Track the dollar value of items stored at each location
  • Track the number of units at each location
  • Set specific reorder points for each location
  • Move items from one location to another
  • Sell from different locations
  • Purchase for only certain locations
  • Use parts from different locations to build your assemblies
  • Run reports for each sites

Let's go over these points one at a time:

  • Track the dollar value of items stored at each location
    • Three reports that will help with tracking the inventory for each location
      • Reports > Inventory
        • Quantity on Hand by Site
        • Inventory Valuation Summary by Site
        • Inventory Stock Status by Site
  • Track the number of units at each location
    • Use the same reports as above
  • Set specific reorder points for each location
    • Lists > Inventory Site list
    • Activities > Set Reorder Points
    • Select the Set reorder point for site > choose the location
    • Under Site Reorder Point column, enter the reorder point for each item
    • Repeat the process for each location
    • Click OK

Important: When setting a reorder point, the reorder points do not add up to calculate for a global reorder point. A global reorder point must be set for each item separately.

  • Move items from one location to another
    • Vendors > Inventory Activities > Transfer Inventory
    • Enter the date of the transfer in the Date field
    • Enter a Reference No.
    • If using Class tracking, enter a class from the drop down
    • Enter the location that the items are transferred from in the Transfer from drop down
    • Enter the location that the items are transferred to in the To drop down
    • Choose the inventory items to transfer
      • Selecting individual items
        • Click the Item column
        • Click the drop down to select the item
      • To select multiple items to transfer
        • Click the Add multiple items button
        • Click the left column to select or deselect inventory items
    • Click Add Selected Items button
    • Enter the number to transfer in the Qty to Transfer column
    • (Optional) Enter a note in the memo field
    • (Optional) Click Print if you would like to print a copy of the transfer(s)
    • Click Save & Close button
  • Sell from a location
    • After turning on Advanced Inventory Tracking
      • Site column is added to forms
      • Sales Orders
      • Invoices
      • Sales Receipts
      • Statement Charges

Note: More than one site can be used on forms.

  • Purchase of specific location
    • After turning on Advanced Inventory Tracking
      • List shows on Purchase Orders
      • Locations are added to Ship to Addresses
    • Site column is added to the Items tab and shows on
      • Bills
      • Checks
      • Credit Card charges

Note: Purchase Orders can only be created for one location at a time. Purchasing items on these forms will allow multiple sites to be entered on the form.

  • Use parts from different locations to build your assemblies
    • Once Advanced Inventory Tracking is turned on:
      • QuickBooks Enterprise will allow inventory site information for each assembly
        • The window will want to:
          • Enter the Quantity on Hand (QOH)
          • Build points by site
            • Adds site field to the Build Assembly widow
            • Field is used the specify location for finished assembly
          • Add site column to components used to build assembly
            • Enter different sites to the different components that build assemblies
        • Edit inventory site information
          • Add/Edit inventory part or inventory assembly
          • Use the site information window to set inventory site reorder point or to build point for each item
        • To set the inventory site reorder point for an item
          • Reorder Point > Build Point column
          • Enter the Reorder/Build Point for each item
          • Click OK
        • To open the Site Information window
          • Lists > Item List
          • Double click the inventory part or assembly item
          • Click the Inventory Site Info button

Advanced Inventory Tracking provides six new reports in QuickBooks Enterprise

  • Reports > Inventory
    • Quantity on Hand by Site
    • Inventory Valuation by Site
    • Inventory Stock Status by Site
    • Pending Builds by Site
  • Reports > Sales
    • Inventory Sales by Site
  • Report > Lists
    • Inventory Site Listing

Common Questions:

  • Will the average cost of items be calculated separately by site?
    • QuickBooks will not separate the average costs by site. The average cost is calculated across all sites for each item.
  • Can inventory be adjusted by each site?
    • Inventory quantities can be adjusted by each site. The value of that inventory cannot be adjusted by site. With the average cost maintained across all sites, value adjustments would have to be made on the total value of the inventory, no matter what site. When adjusting the quantity under Adjust Quantity/Value on Hand window a column will show for site after Advanced Inventory it turned on in Preferences.
  • Do sites track overhead and other expenses for each site?
    • No, the sites that have inventory do not replace Class tracking. When Classes are used to track the site, then non-inventory related transactions should continue to use Classes.
  • Does QuickBooks Enterprise use drop shipment locations?
    • QuickBooks Enterprise will put the drop to shipment address behind the scenes when you are using a Purchase Order and select a customer as the ship to address.
    • QuickBooks Enterprise will automatically assign a Drop Ship inventory site when you sell inventory that is shipped directly from your supplier.
    • If you receive a bill that is put against a Purchase Order QuickBooks Enterprise automatically assigns the Drop Site. When a Purchase Order is not created before the purchase is made, you must assign the drop ship to the transactions. This is also true for sales transactions.
    • Enter the drop ship column information when you sell items that are to be drop shipped.

 

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