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Fix negative inventory issues in QuickBooks Online

SOLVEDby QuickBooks2Updated December 01, 2022

Learn how to check your inventory to always have an accurate count.

You keep a certain amount of products in your inventory to sell to customers. The amount currently in stock is called the quantity on hand. When you sell out of a product, the quantity on hand is zero. And if the quantity on hand is less than zero, you have negative inventory.

In QuickBooks Online, you can accidentally oversell products. Before ordering more products, review the quantity on hand in your inventory. Once you know the count is accurate, you can order more.

  • You simply sell more products than you actually had.
  • You didn't enter all of your purchase orders into QuickBooks.
  • You miscounted your stock take so the quantity in QuickBooks is different.
  • The quantity you got from your supplier didn't match the purchase order in QuickBooks. This can cause a miscount.
  • You didn't convert your purchase orders to bills. QuickBooks only counts items as inventory after you create a bill.

Learn more about FIFO and how it affects asset values for inventory cost accounting.

Step 1: Review your quantity on hand

Count of your entire inventory

  1. Go to Business overview and select Reports (Take me there).
  2. Search for and open an Inventory Valuation Detail report.
  3. From the Report period dropdown, select All Dates.
  4. Select Run report.

If you have negative inventory for a product, you'll see a negative amount in the QTY column. Take note of how much you potentially oversold.

See only what's out of stock

If you only want to see the products you're running out of:

  1. Go to Get paid & pay and select Products and services (Take me there).
  2. Select Out of Stock at the top of the list. Select Low Stock to see what's low.
Tip: You don't always get a warning message on invoices when you oversell an item. You can set a low stock alert so QuickBooks notifies you whenever your stock is low.

Step 2: Convert open purchase orders to bills

If you have any open purchase orders, convert them to bills. This tells QuickBooks the items are on the way. QuickBooks only counts the items as inventory after you covert the purchase order.

  1. If you haven't already, select New (➕) and then Purchase order. Fill out and save the purchase order.
  2. Go to Bookkeeping, select Transactions, then select Expenses (Take me there).
  3. Look for any open purchase orders. If you see Send in the Action column, select it to send purchase orders to your supplier.

When you know the products you ordered are on the way:

  1. Go to Bookkeeping, select Transactions, then select Expenses (Take me there).
  2. Look for the open purchase order. In the Action column, select Copy to bill to convert a purchase order to a bill.
  3. Review the bill. When you're done, select Save and close. You don't need to pay the bill yet.
  4. After you convert all of your purchase orders, run another Inventory Valuation Detail report.

This gives you an updated inventory count in QuickBooks.

If you sent a purchase order but forgot to enter or entered the wrong quantity, don't worry. Open the purchase order and change the quantity so it's accurate. Don't edit anything in your inventory directly.

Step 3: Do a stock take

Before you order more products, check what you actually have in stock. This review is called a stock take.

  1. Go to Business overview and select Reports (Take me there).
  2. Search for and print a Stocktake Worksheet.
  3. Go to your stock room. Count the products you have in stock. Record the amounts on the  Stocktake Worksheet.
  4. Compare the Stocktake Worksheet with whats on the Inventory Valuation Detail report you ran in Step 2.

If the quantities are different, adjust the quantity in QuickBooks so it's accurate. Only do this after you've converted open purchase orders to bills.

If you lost or someone misplaced inventory, reach out to your accountant. There are special ways to handle these kinds of losses. If you don't have an accountant, we can help you find a ProAdvisor.

Tip: Do physical inventories regularly.

Step 4: Order more products

If your inventory is still negative, it's time to order more products. Create and send purchase orders for what you need.

Your order won't arrive instantly. In the meantime, if a customer orders something that's out of stock, create a quote to start the transaction. When you get the order, follow the steps to convert the quote into an invoice.

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