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Set up Advanced Inventory in QuickBooks Desktop

SOLVED•by QuickBooks•Updated 1 week ago

When you turn on Advanced Inventory, you can track inventory stored at different sites or locations. For example, you might store inventory at different warehouses, in multiple trucks, in different areas within a warehouse, at consignment locations or outside manufacturers. To make sure your quantity on hand by site is accurate, you need to set up Advanced Inventory correctly.

In this article, you'll learn how to:

Note:

You MUST turn on Advanced Inventory before proceeding. Follow the steps in Turn on Advanced Inventory to do so.



Step 1: Set up inventory sites

The first step to track multiple inventory sites is to tell QuickBooks Desktop where you track inventory. These locations are called sites. Sites can be actual warehouses with different addresses, trucks, piles, staging areas, or any other location—large or small—where you want to track inventory quantities.

To do this task:

  1. From the Lists menu, select Inventory Site List.
  2. Select Inventory Site, then New.
  3. Enter the appropriate information.
  4. Repeat Steps 1 to 3 until all your sites are set up.

When you have completed this step, you can proceed to Step 2 if you are switching from a different method of tracking multiple inventory sites or Step 3 if you need to set reorder points for each site. Otherwise, proceed to Step 4.



Step 2: Convert from your previous method of tracking inventory sites

You may currently use a different method (with QuickBooks Desktop or another software) to track multiple inventory sites. Before you use multiple inventory sites, you need to ensure that your inventory numbers are correct so you can easily transition to using Advanced Inventory.

Depending on your current method, you may need to take additional steps to switch to Advanced Inventory. For detailed instructions, find your current method from the list. If not listed, look at the option "You use another method."

With this method, you use different software to track how much inventory you have at each site.

To switch to the Advanced Inventory method:

  1. Using your other software, run a report to identify the quantity on hand at each site.
  2. If you don't have your inventory items set up in QuickBooks, you need to set them up.

With this method, you use a naming method or structure to distinguish between items at different sites. For example, if you have 3 warehouses, you use 3 items to represent the same item located at each warehouse.

If you use this method, follow these steps to switch to the Advanced Inventory method:

Reminder

These steps are complicated and require a good working knowledge of QuickBooks. Consider getting help from a QuickBooks ProAdvisor or your accounting professional.
  1. Calculate the quantity on hand (QOH) for each item at each site. You should also know the global QOH (the total quantity across all sites). Write these numbers down or print a report from QuickBooks.
  2. "Clean up" your item list. The goal is to have only one item on the list for each item you sell.
    1. Decide which items to use in the future. Remember that you only need one item in QuickBooks Desktop. In the example above, suppose you choose WH1 Widget 1.
    2. Adjust the quantities to zero for the redundant items you won't use. Then make the corresponding increase for the item that you will use. In the example:
      • Decrease the QOH for WH2 Widget 1 from 20 to 0.
      • Decrease the QOH for WH3 Widget 1 from 40 to 0.
      • Increase the QOH for WH1 Widget 1 from 100 to 160.

        After making all adjustments, the net effect on the adjustment account should be zero. However, if each item that represents the same item at different locations has different average costs, the net effect won't be zero. There are 2 ways to handle this problem.

        If the value differences are small

        Talk to your accounting professional. If the value differences are small create a special inventory adjustment account for this transaction, and make your adjustment. Then have your accounting professional write off this amount.

        If the value differences are significant

      • Adjust the quantity for the redundant items (WH2 Widget1 and WH3 Widget1 in the example above) to 0. Note the value of these adjustments for the next step.
      • Adjust the quantity of the item you are keeping. Increase the value of the adjustment by the amount you noted in the step above.
        1. From the Inventory menu, select Adjust Quantity/Value On Hand.
        2. From the Adjustment Type dropdown, select Quantity and Total Value.
        3. From the Adjustment Account dropdown, select the account you normally use.
        4. From the Inventory Site dropdown, select the inventory site you set as your default when you turned on Advanced Inventory.
        5. Select Find & Select Items.., then choose the items that represent the same item across multiple sites.
        6. In the rows that contain the redundant items (the ones you're NOT keeping), enter 0 in the New Quantity column.
        7. Calculate the sum of the Qty Differences for all these redundant items.
        8. In the row that contains the item you are keeping, add the quantity from step 7 in the Qty Difference column (as a positive number).
        9. In the New Value or New Global Value column, set all values to 0.
        10. Note the Total Value of Adjustment amount in the bottom right of the window.
        11. In the row that contains the item you are keeping, enter the amount you noted in step 10 in the New Global Value or New Value column. The Total Value of Adjustment should now be zero.
        12. Select Save & New and repeat these steps for the next set of items.
      • Hide (make inactive) the redundant items you won't use (in this example, WH2 Widget 2 and WH3 Widget 3)
        Note: You can also merge redundant items. However, if you merge items, you lose any historical information about sites/locations.

Rename the remaining items to remove any reference to the site (in the example, remove "WH1" so the item is now called Widget1.

With this method, you use classes to represent each site or location. Then you classify inventory purchase and sales transactions.

Switching from this method is easy. Simply stop using this method, and follow these steps:

  1. Calculate the quantity on hand (QOH) at each site.
  2. "Clean up" your item list:
    • You should have one inventory part or assembly part item set up in QuickBooks to match each inventory part you buy or sell.
    • This inventory part should accurately reflect the global (across all sites) QOH for that item.
Reminder

Advanced Inventory doesn't classify income and expenses. It only tracks inventory. You should still use class tracking to classify "non inventory related" income and expenses at different locations.

If you used a different method to track multiple inventory sites, be sure to:

  • Figure out the quantity on hand (QOH) at each site.
  • (Optional) If your current method uses an item list, you must first clean up your item list:
    • You should have one inventory part or assembly part item set up in QuickBooks Desktop to match each inventory part you buy or sell.
    • This inventory part should accurately reflect the global (across all sites) QOH for that item.


Step 3: (Optional) Set reorder points for each site

With Advanced Inventory, you can track site-specific reorder points for each item. This means you can have a different reorder point for each site, and QuickBooks Desktop can warn you when you're running low at a specific site.

Reminder that site reorder points do not "roll up" (add up) to calculate a global reorder point. You must set the global reorder point for each item.

  1. From the Lists menu, select Inventory Site List.
  2. From the Activities dropdown, select Set Reorder Points.
  3. Select the Set reorder point for site dropdown arrow and select the site you want to set a reorder point for.
  4. In the Site Reorder Pt column, enter the reorder point for each item.
  5. To set reorder points for other sites, select the Set reorder point for site dropdown arrow and select another site. Repeat the process until reorder points are set for all sites.
  6. Select OK.


Step 4: Transfer opening quantities of items to each site

When you turn on Advanced Inventory, QuickBooks Desktop prompts you to begin with a single, temporary starting site. Consequently, QuickBooks Desktop shows that your entire inventory is stored at one location.

Now you may be ready to transfer your inventory from the starting site to their actual sites. To do this step, you need current inventory counts for each site.

To enter a new transfer for each site:

  1. From the Inventory menu, select Transfer Inventory.
  2. In the Date field, enter the date of the transfer. This can be the date you begin tracking multiple sites.
  3. In the Reference No. field, enter the appropriate transfer number. We recommend "setup1," "setup2," and so on for these transfers.
  4. From the Transfer from dropdown, select your temporary inventory site.
  5. Select the To dropdown and select the actual inventory site.
  6. Select the inventory items to transfer to the site:
    1. To select individual items:
      1. Go to the Item column.
      2. Select the dropdown and choose an inventory item.
    2. To select multiple items:
      1. Select Find & Select Items.
      2. Check the items you want to transfer then select Add Selected Items.
  1. In the Qty to Transfer column, enter the number to transfer for each item.
  2. (Optional) In the Memo field, enter the reason for this transfer such as "Transfer opening quantity to site."
  3. (Optional) Select Print if you need a printed copy of the transfer.
  4. Select Save & New.
  5. Repeat these steps for each inventory site.
  6. When finished, select Save & Close.

Tips and tricks

If you want to transfer the same items to multiple sites, you can save time by duplicating the inventory transfer:

  1. From the Inventory menu, select Transfer Inventory.
  2. Select Previous until you find the transfer you want to duplicate.
  3. Select Edit then Duplicate Inventory Transfer.
  4. Change the details of the transfer as necessary.
  5. Select Save & New and if necessary, repeat these steps for each inventory site.
  6. When finished, Save & Close.


Step 5: (Optional) Add a site column to your printed sales and purchase forms

A site column appears on all forms (invoices, purchase orders, and so on) you see onscreen. However, this column doesn't appear when you print the form.

This could be a problem if:

  • You need to print the site on internal documents such as picker lists or work orders.
  • Your customers need to know the site.

To work around this, you can customize your form template so you can add or remove columns:

  1. Open the sales or purchase form.
  2. Go to Formatting, then Customize Data Layout.
  3. In the Additional Customization window, select the Columns tab.
  4. Under the Print column, put a check mark on the box for Inventory Site.
  5. Select OK.


Step 6: Add a site column to memorized transactions that include inventory

This final step is only necessary if you have memorized transactions that include inventory part items. If so, you should edit the memorized transactions to enter the site information.

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