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How do I track inventory that is being bought in bulk, and sent to a job site as needed?

We are a flooring company and we often times buy bulk materials such as carpet adhesives when they are on sale. Later, when a job that requires those items starts--we send those adhesives as needed. Currently, we do not track these items in inventory. We have been buying materials and logging the cost under "Shop" on the purchase order which would imply that the materials are for our warehouse--which they are not. To rectify this, we often times go back into the purchase order and change the customer to whatever job most of that material probably went to. This is not effective or accurate. As a result, our job costing has been out of whack because the most expensive items--the glues--are not being properly applied to the job. What is the best way to track our inventory and properly apply the cost (per unit) to a specific job? (We are using QB: Premier Contractor Edition 2018)

Best answer 01-16-2019 02:57 PM

Accepted Solutions
Established Community Backer ***

Re: How do I track inventory that is being bought in bulk, and sent to a job site as needed?

Let's review:

 

"We simply create a Purchase Order under the vendor's name, then create a bill from that PO, and then pay the bill. "

 

If you already paid for it by credit card, you never needed those other Three Steps. You go directly to Enter Credit Card Charge. If you picked up materials while out and about, there is no need for a PO; you didn't need to Track that you ordered these materials. There is no Bill to pay later. You already paid.

 

Example:

I place an order for Roofing = I make the PO. I gave them the credit card and the Charge it when I tell them it arrived = there is no Bill to pay. I enter Credit Card Charge for that vendor name, QB pops up that there is an Open PO I was using to track the order, and I select that Yes, this is fulfillment of that PO. No Bill required; they already Ran my card.

 

"The COGS shows up in the Job P&L from the "customer" section assigned in the bill."

 

Yes, this is for Direct purchases or custom orders. Inventory is never Job Tracked when you buy it. It is Allocated when you sell or use it.

 

Here's the difference:

Noniventory, Service and Other Charge items (such as Building Permit) is Two Account Links. The Purchase side is the left and the Income side is the right.

Inventory has Three Account Links. It is On Hand as Asset. When you sell it, two things happen: The Sale transaction results in that Income flow and the program removes the on hand value to COGS for you. That's why the Purchase of Inventory is never Job Tracked. The Sale or the Use is Job tracked = sell it or Relieve it using the Adjustment screen which has a Job Tracking Field, top left.

 

"When we buy the glue--it is no longer logged under a job name it's logged under "shop" or nothing at all because we have started buying in bulk, instead of buying for each specific job."

 

Make Inventory Items, then, such as Sanded Exterior Tan and Interior Clear, etc, but by sizes, too. List the details on the Purchase transactions = this is the Cost that goes into Inventory Asset. Quantity here, as well. Not Job Tracked.

 

"How do we accurately track the amounts of glue we are sending out"

 

List it as part of the details on the Charges to the customer, if you Sell it. If you included it in the Bid, then you use the Adjust Inventory screen and Job Track the adjustment, top left, and assign this to COGS, as well, top left.

 

"and how do we assign the prices of each amount of glue to a specific job?"

 

Buy Selling it or using Adjust. And the Job Profit and Job Cost reports need you to Filter them; change the Account filter. It typically shows as Income.Expense only. Remove that filter, to see COGS is included, because you used Adjust Inventory.

 

Please see my attachment.

5 Comments
QuickBooks Team

Re: How do I track inventory that is being bought in bulk, and sent to a job site as needed?

Thanks for joining the forum today, alyvictoria,

 

I can share some information about Inventory Management in QuickBooks Desktop Premier.

 

You can enable the inventory feature to make sure you account or track your items correctly in QUickBooks. Let me guide you through the steps:

 

1. Go to the Edit tab.

2. Select Preferences.

3. Choose Items & Inventory from the left pane.

4. Go to the Company Preferences tab.

5. Check the Inventory and Purchase Orders are Active box.

6. Click OK.

 

Once turned on, you can now set up your inventory items. Here's how:

 

1. Go to the Lists menu.

2. Choose Item List.

3. Right-click anywhere and select New.

4. Select Inventory Part for the Type.

5. Enter the Item Name/Number.

6. In the Unit of Measure, click Add new and select which type applies to your items.

7. Click Finish.

8. Fill out all necessary information and click OK.

 

Now you can use this item when creating your transactions. You might find these articles helpful to properly record and work with QuickBooks inventory items:

That should do it, alyvictoria. Please feel free to reach out to me again if you need further assistance with your inventory. I'll be glad to work with you again so you can get back to business. Have a good one!

 

Established Community Backer ***

Re: How do I track inventory that is being bought in bulk, and sent to a job site as needed?

Let's separate out your Two Concepts, here:

 

"We are a flooring company and we often times buy bulk materials such as carpet adhesives when they are on sale."

 

Listing a Two Sided Noninventory item, so that the left side is COGS and the right is Sales, if you Charge that to customers. Or, you list the Inventory item, if this is always the very same caulk, size and color. If not always the Exact same, and you still need to track it in Inventory, then you use specific Item Names as inventory items, on the Purchase Details.

 

"Later, when a job that requires those items starts--we send those adhesives as needed."

 

That means you don't Sell it, so you either Relive it from inventory and this screen includes Job Tracking, top left. Or, you treated it as supplies as Noninventory, so the purchase resulted in it already being in COGS, and this is fine for supplies with quick turnover and not much value when on hand. Example: Cabinets are Inventory, but 50 tubes of Caulking is Noninventory.

 

"We have been buying materials and logging the cost under "Shop" on the purchase order"

 

Let's stop here. You use PO because you Placed on Order with someone for goods and/or services and need to Track it. If you already Bought it, there is no PO needed. It is Shop Supplies as Noninventory Part Type, as I noted, unless you want to go back to the Actual Purchase Transaction to job track it there, now that you know the breakdown. And Inventory is Never Job Tracked at the point of Purchase. Tracking inventory by definition = purchased to have on hand, not job specific, and only Sold or Relieved job specific. But I need to have it On Hand in anticipation of Sales or Use on a job. The purchase of Inventory is "to keep it in stock and ready." Not job tracked. Never Edit an inventory item purchase to job track it.

 

"which would imply that the materials are for our warehouse--which they are not."

 

Or they are, and later, you show how you Used it. Inventory can be Sold or Relieved and then, Relieving it can be job tracked or not. I can mange expensive saw blades as inventory, as a Tool Crib, and Relieve them from stock as they get taken to the shop floor; and that is Not customer-related tracking = Not job tracked. It's just really expensive stuff that I need to manage and count and reorder to keep in stock timely.

 

"To rectify this, we often times go back into the purchase order and change the customer to whatever job most of that material probably went to."

 

Purchase Order is Non-posting and not the financial event. That is Moot, now. The Actual Purchase creates Cost: write check, enter credit card charge, or enter Bill to pay later. That is where Job Tracking would be applied after the fact, if it wasn't already part of that entry or part of a Direct PO for services or noninventory items or other charge items.

 

"This is not effective or accurate. As a result, our job costing has been out of whack because the most expensive items--the glues--are not being properly applied to the job."

 

Because a PO is not a Costing event. Non-Posting = not Financial, but your order tracking function.

 

"What is the best way to track our inventory and properly apply the cost (per unit) to a specific job? (We are using QB: Premier Contractor Edition 2018)"

 

I hope that helps you realize that you decide Separately if this is Inventory or not. Updating the PO is meaningless for expecting that to have Job Costing data. Go to the Actual Purchases.

 

All of these are different Concepts and you use the tools to meet your needs.

Experienced Member

Re: How do I track inventory that is being bought in bulk, and sent to a job site as needed?

Hi Jen,

Thanks for your response. The problem I'm having here is not HOW to create an inventory item--but how to make sure my inventory is being properly allocated to each job. Right now the items that we buy to have on hand for future projects are not being tracked as inventory. We simply create a Purchase Order under the vendor's name, then create a bill from that PO, and then pay the bill. The COGS shows up in the Job P&L from the "customer" section assigned in the bill.

 

This method worked for a while when we had a small number of jobs and we bought materials as we went (and we knew which materials were for what job). Now, however, we have a lot of jobs, and we have started to buy bulk amounts of expensive glues to have on hand. These glues then get sent to a job--but our old method is no longer adequate because we don't know how much glue will be used for each job until it is sent.

 

When we buy the glue--it is no longer logged under a job name it's logged under "shop" or nothing at all because we have started buying in bulk, instead of buying for each specific job. How do we accurately track the amounts of glue we are sending out and how do we assign the prices of each amount of glue to a specific job?

Experienced Member

Re: How do I track inventory that is being bought in bulk, and sent to a job site as needed?

Hi qbtechmt,

Thanks for your response. I am still a little confused about how to deal with my new problem. Here is what we currently do to track how much money we spend on materials for a job:

We Create a Purchase order for one of our vendors, then we enter in the item "Materials": which is a non-inventory item in our "Contract Sales" account (this creates a debit in our Job Costing P&L), and assign a job to that PO. Then we enter bill from PO and pay the bill. The expense is assigned to the job because the bill is marked billable with the job assigned to the cost. Tracking items as non-inventory and relying upon an estimate of how many glues we were going to need was fine when the jobs were small and we ordered as-needed.

 

However, the problem I am running into now is that we have so many jobs that require so much glue--we have started buying the glue in bulk when it is on sale (i.e. we now have inventory). Our delivery driver then keeps a list of how many glues are sent to each job every day. However, since we do not have an inventory item in QB, I don't know how to financially track how much glue is being used on each job. I know we need to start an inventory item list. But how is inventory fiscally assigned to each job? Is there another way to do this?

Established Community Backer ***

Re: How do I track inventory that is being bought in bulk, and sent to a job site as needed?

Let's review:

 

"We simply create a Purchase Order under the vendor's name, then create a bill from that PO, and then pay the bill. "

 

If you already paid for it by credit card, you never needed those other Three Steps. You go directly to Enter Credit Card Charge. If you picked up materials while out and about, there is no need for a PO; you didn't need to Track that you ordered these materials. There is no Bill to pay later. You already paid.

 

Example:

I place an order for Roofing = I make the PO. I gave them the credit card and the Charge it when I tell them it arrived = there is no Bill to pay. I enter Credit Card Charge for that vendor name, QB pops up that there is an Open PO I was using to track the order, and I select that Yes, this is fulfillment of that PO. No Bill required; they already Ran my card.

 

"The COGS shows up in the Job P&L from the "customer" section assigned in the bill."

 

Yes, this is for Direct purchases or custom orders. Inventory is never Job Tracked when you buy it. It is Allocated when you sell or use it.

 

Here's the difference:

Noniventory, Service and Other Charge items (such as Building Permit) is Two Account Links. The Purchase side is the left and the Income side is the right.

Inventory has Three Account Links. It is On Hand as Asset. When you sell it, two things happen: The Sale transaction results in that Income flow and the program removes the on hand value to COGS for you. That's why the Purchase of Inventory is never Job Tracked. The Sale or the Use is Job tracked = sell it or Relieve it using the Adjustment screen which has a Job Tracking Field, top left.

 

"When we buy the glue--it is no longer logged under a job name it's logged under "shop" or nothing at all because we have started buying in bulk, instead of buying for each specific job."

 

Make Inventory Items, then, such as Sanded Exterior Tan and Interior Clear, etc, but by sizes, too. List the details on the Purchase transactions = this is the Cost that goes into Inventory Asset. Quantity here, as well. Not Job Tracked.

 

"How do we accurately track the amounts of glue we are sending out"

 

List it as part of the details on the Charges to the customer, if you Sell it. If you included it in the Bid, then you use the Adjust Inventory screen and Job Track the adjustment, top left, and assign this to COGS, as well, top left.

 

"and how do we assign the prices of each amount of glue to a specific job?"

 

Buy Selling it or using Adjust. And the Job Profit and Job Cost reports need you to Filter them; change the Account filter. It typically shows as Income.Expense only. Remove that filter, to see COGS is included, because you used Adjust Inventory.

 

Please see my attachment.