Keep track of every product you buy and sell

Keep track of every product you buy and sell

Available in QuickBooks Online Plus and QuickBooks Online Advanced

Available in QuickBooks Online Plus and QuickBooks Online Advanced

Track inventory in real time

Quantities are updated automatically as you work. Always know what’s on-hand and prevent stock shortages.
Track Inventory in real time with QuickBooks

Get instant notifications

Stay ahead of back orders. We’ll alert you when it’s time to reorder inventory with low stock alerts. Once inventory arrives, QuickBooks converts the purchase order (PO) into a bill to make sure you pay your vendor on schedule.
Recieve instant notifications about your inventory status

Inventory insights on demand

Access reports to instantly see your best sellers, total sales, and total taxes. Know exactly what products you have stocked with the Inventory Summary report. QuickBooks Online Plus and Advanced comes with a variety of reports to make inventory tracking easy.
Review Inventory reports on demand

Stay in sync with online sales

Stay in sync with online sales

QuickBooks works with popular apps to boost your business.

QuickBooks works with popular apps to boost your business.

Connect your QuickBooks account with Amazon

Amazon

Create a master inventory list and sync product across channels.

Connect your QuickBooks account with Etsy

Etsy

Integrate sales data to QuickBooks Self-Employed for instant insights.

Connect your QuickBooks account with Shopify

Shopify

Enable automatic import of all Shopify orders and refunds in one click.

Customers run their business more easily with QuickBooks
Customers run their business more easily with QuickBooks
Customers run their business more easily with QuickBooks

Flexible QuickBooks Online plans to track

and manage your inventory

Flexible QuickBooks Online plans to track and manage your inventory

Simple Start
2055100
10 27 50
/mo
Save 50% for 3 months
  • Track income & expenses
  • Capture & organize receipts
  • Maximize tax deductions
  • Invoice & accept payments
  • Run basic reports
  • Send estimates
  • Track sales & sales tax
  • Manage 1099 contractors
  • Manage bills
  • Track time
  • Track project profitabilityNEW
  • Track inventory
  • Multiple users (up to 5)

  • Enhanced Payroll

    Add $35 $ 18 /month
    + $4/employee/month

  • Full Service Payroll

    Add $ 80 $ 40 /month
    + $4/employee/month

Simple Start
2055100
10 27 50
/mo
Save 50% for 3 months
  • Track income & expenses
  • Capture & organize receipts
  • Maximize tax deductions
  • Invoice & accept payments
  • Run basic reports
  • Send estimates
  • Track sales & sales tax
  • Manage 1099 contractors
  • Manage & pay Bills
  • Track time
  • Track project profitabilityNEW
  • Track inventory
  • Multiple users (up to 25)
  • Smart reporting powered by FathomTM1
  • Accelerated Invoicing2
  • Custom user permissions
  • Premium care with Priority Circle3

  • Enhanced Payroll

    Add $35 $ 18 /month
    + $4/employee/month

  • Full Service Payroll

    Add $ 80 $ 40 /month
    + $4/employee/month

Important offers, pricing details & disclaimers

Inventory management

By Erin Osterhaus
Tracking inventory can be tedious work, but it’s vital to running a business. Inventory management systems are designed to handle most of the administrative work, making it easy to put an important part of your business on autopilot.
So what exactly is an inventory management system?
It’s a software application that automatically updates your inventory levels as sales are made and items are shipped. It monitors your supply in real-time and helps you plan purchases from wholesalers and manufacturers. Perhaps most importantly, it’s a tool that helps you keep a finger on the pulse of your cash flow.
When you think about growing a business, you might first think about offering new products or finding new marketing channels. Improving your inventory management might not be at the top of your list, but there’s compelling evidence that it should be.
A good inventory management system can help your business in three key ways:
  1. Save time: Instead of spending hours auditing and tracking inventory on a periodic basis, you have a dynamic look at your inventory levels. You’ll know when you’re running low on a product, so you’ll never keep customers waiting on their orders.
  2. Cut costs: According to the 2016 National Retail Security Survey, 16.5% of inventory “shrinkage”—i.e. lost inventory—results from administrative and paperwork errors. This results in costly audits and lost time. The most efficient way to manage inventory is to automate it.
  3. Budget and forecast: Real-time data helps you make decisions about purchasing and sales. You’ll know what products your customers love and which suppliers are slow to deliver.

The essentials of inventory management

Choosing the right inventory management system depends on your business. Real estate investors carrying property as inventory are very different than a tech company selling smartphones in 10 countries. And that is very different from a bakery selling perishable goods or a distributor selling sheet metal.
In each case, a clear look at the products coming in and going out helps the people in charge make strategic decisions. While most businesses start by managing inventory in an Excel spreadsheet (or in the CEO’s head), software usually takes its place as the supply chain grows in complexity.
Improve costs by managing invenotryImprove costs by managing invenotry

What’s the difference between inventory management and supply chain management?

Inventory management is a key component of supply chain management. A company’s supply chain encompasses all of the steps needed to turn a raw material into a product available for consumers. The iPhone, for example, has an immensely complex supply chain. Apple sources parts and materials from California, Korea, Japan and China before the phone is assembled in China. Inventory management is the part of supply chain that deals with finished products. So in the iPhone’s example, Apple’s inventory management system deals with shipping the phones from factories in China to warehouses and finally to Apple stores and homes across the world.
Very few businesses have complete control of or visibility into their supply chain. In fact, most start by outsourcing manufacturing or sourcing to third parties. However, one way to improve costs is to analyze your supply chain. From choosing manufacturers to managing inventory, there are always areas for improvement.

When inventory management starts to get complex

Perishable goods – Grocery and other stores that offer perishable goods face unique challenges when it comes to inventory management. Milk and produce, for example, have short shelf lives. They become harder to sell the longer they sit on the shelf. Unlike stores that sell non-perishable items, grocery stores must be proactive about removing so-called “dead” goods once they near their expiration date.
Lots of products and categories – Some businesses hold inventory that is hard to categorize or differentiate. Auto parts distributors, for example, might carry thousands of different bearings. It’s easy to imagine a spreadsheet handling the first dozen SKUs, but getting incredibly complicated after that.
Seasonal businesses – A Planet Money podcast detailed some of the challenges that florists face before Valentine’s Day: “Sixty percent of us wait until the last minute to order our flowers, but the floral industry can’t afford to wait. About 190 million roses were pushed into production before you even cooked your Thanksgiving turkey.” Seasonality introduces a range of challenges when it comes to inventory. Manufacturing, shipping, cash flow—these parts of the business come together to make inventory a key part of serving customers when it matters most.

3 things to look for in an inventory management system

An inventory management system should take the guesswork out of your business. The right tool is the one that frees you up to do what you do best. Here are a few things to consider as you look at replacing your current system.
  1. Re-ordering: Automatic reordering is great but not always ideal. For example, Quickbooks automatically creates POs for your vendors when you’re low on certain items. This ensures you can review them before making a purchase. You can set thresholds to queue up reorders before your inventory hits critical levels.
  2. Integrations: You want a tool that works with the systems you’re already using. Integrations with your accounting and POS software will make inventory management significantly easier.
  3. Real-time dashboards: Inventory management systems should provide you with real-time data and information. You should be able to get a pulse on your business no matter where you are as long as you have access to the internet.
Operationalizing inventory management may not be exciting, but it’s sure to save you time, money and headaches.

Inventory turnover ratio

By John Shieldsmith

What is inventory turnover?

Inventory turnover is the percentage of your inventory that you sell during a specified period of time. This number is helpful not only for better managing your products and supply levels, but also for getting a general feel for how your business is performing.
If your inventory turnover is low, that usually means your sales are on the weakerside—products are sitting around for quite some time before actually being sold. Business owners who discover thattheir turnover needs some improvement might need to make some tweaks to their approach, such as lowering prices orchanging products.
If your inventory turnover is high? For the most part, that’s good news! Your goods are indemand and you’re moving product efficiently. However, there are some challenges here as well. Too high of turnoverrate, and you run the risk of running out of product. It could also indicate that your products are priced low—maybetoo low.

How is inventory turnover calculated?

Inventory turnover might sound complex, but the math behind it is really quite simple. It uses numbers you should already have in your balance sheets and financial reports. There are actually two different ways to calculate your inventory turnover:
Method one:
Sales ÷ Your Average Inventory
During the year, let’s say you do about $70,000 in sales, and your average inventory balance is around $4,000.
$70,000 ÷ $4,000 = 17.5
This means you turn over your entire amount of inventory a little over 17 times each year. To figure out how many days you have inventory on hand, you just need to divide that number by 365. In doing so, you will discover that your average product is on the shelf for less than one day.
Method two:
Cost of Goods Sold ÷ Your Average Inventory
Using this method, you would divide your cost of goods sold by your average inventory balance.
$23,000 ÷ $4,000 = 5.75
This indicates that you are turning over your inventory nearly six times each year.
“But, wait!” you’re thinking now, “That’s way different than the number the first formula gave me!” That’s true—these methods will spit out different results.
So, which one should you use? Both of these equations have their pros and cons. The first is easy to calculate and gives an overall picture, but it doesn’t account for markup or seasonal cycles. The second is more accurate, but it requires a few more details to calculate.
It’s often smart to run both of these formulas to get a clearer idea of how efficiently you’re running your business.

What is considered a “good” inventory turnover ratio?

What is considered a strong inventory turnover ratio? Is there a benchmark number that you should be aiming for?
It all depends on your individual business and the sorts of products you sell. A largebusiness that does millions of dollars in sales will naturally have a much higher number than a one-personoperation.
But, generally, a higher inventory ratio is better. It means you’re fulfilling a demand andefficiently moving your products without having them sit on the shelf for months on end.
However, if your products are turning over so fast that you feel like you can’t keep up (andare possibly even leaving orders unfulfilled), you might need to make some adjustments to decrease your turnoverratio. The best inventory ratio is the one that keeps your business as profitable as possible.
Improve inventory turnoverImprove inventory turnover

Can you improve your inventory turnover?

Here are a few things you can do to increase your inventory turnover:
  1. Lower your prices: Decreasing the price of your products (even for a limited timepromotion) could help you move more product much quicker. People love a good deal.
  2. Step up your marketing: By focusing more on marketing the products you do have, youcan increase demand for your items and thus sell more faster.
  3. Decrease your cost of production: If Lauren can score a better deal on thematerials needed to produce your products, you can reduce the amount you’re investing in your inventory.
  4. Reduce the mmount of inventory on hand: Instead of maintaining an average inventorybalance of $4,000, you can reduce that to $2,000—meaning you’d have less inventory to turnover at any giventime.
Now, let’s assume that you have the opposite problem—your inventory ratio is too high.You are moving your items so fast, you can’t keep up. You’d like to slow down your inventory turnover a littlebit.
Here are some things you can try:
  1. Raise your prices: Typically, increasing your cost leads to less goods sold—without negatively impacting the profit margin.
  2. Keep more inventory available: Having this buffer available increases the number for the second piece of the inventory turnover equation, meaning your turnover will be much lower and you won’t have to scramble to fulfill orders.

Wrapping up

Your inventory turnover ratio is one of the many indicators of a healthy and efficient business, and knowing the basics of how to properly manage your inventory is crucial for your success.

Frequently asked questions

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