Manufacturing - How do I enter Production of a Finished Goods to relieve Raw Materials

Hi there, @Anonymous. 

Glad to have here in the Community. Allow me to provide some information on how to enter production of a finished product in QuickBooks Online.  

If you don't need to transfer and track the finished product before it is sold, you can use Bundles. This is a group of items that you can sell and track in QuickBooks. However, if you do need to, you can use zero expense-type transactions, or subscribe to an inventory app that tracks assemblies.

We have a desktop product that offers inventory assembly items. If you wish to know more about this product and how it works, please refer to these articles: 

• All about QuickBooks Premier.
• Create, build, and work with inventory assembly items.

Since the option to enter the production of a finished goods item is unavailable in QuickBooks Online, I'd encourage you sending us feedback. This will be sent to the Product Development Team for review when determining features to be added in updates. You can do this from within QuickBooks Online by selecting the Gear icon and clicking Feedback or by going to the following link: QuickBooks Online Feature Requests.

Feel free to reach back out to me if there's anything else you need. I'll be around to help. Have a great day, @Anonymous.

Hi, David!

Our system, ERPAG, integrates with QB Online. We send loading material documents as 'sales orders' and they deduct from your inventory, while the 'deliver finished goods' document is sent as 'bill', in order to increase your inventory.

Maria

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@ERPAG wrote:

Hi, David!

 

Our system, ERPAG, integrates with QB Online. We send loading material documents as 'sales orders' and they deduct from your inventory, while the 'deliver finished goods' document is sent as 'bill', in order to increase your inventory.

 

Maria

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Sounds interesting except a sales order is non posting in desktop and does not exist in QBO

I think you mean sales receipt

If that is the case, what sales price are you sending for the items being used?  If that sales price is zero, or retail that is wrong, it has to be item cost.  And since QBO uses FIFO how do you get item cost?

Yes, I did miss your question. Sorry about that. You are right, the document that is sent to QBO is not a Sales Order, it's an Invoice. We only send completed documents, the ones that have a financial side to it. The item cost that we send depends on the warehouse costing, are you running your stock prices as average or FIFO. ERPAG supports both.

As mentioned if you don't need to track your goods before they are sold then you can use bundles. But assuming you are a manufacturer that is constantly exhausting raw materials then it's probably best to get an app like Katana.

It will manage your materials and finished goods so that they are automatically updated in real-time. You don't have to make manual adjustments, and your bills/invoices are pushed directly to QBO.

Currently, there is no special functionality in place, so in QBO, this can only be done using manual journals.

Keep in mind that in any case you should have at least following asset accounts configured:

1. Raw materials (Current asset) - this is the inventory of your raw materials
2. Finished goods (Current asset) - this the inventory of your finished goods.

Ideally, you should also have an account 'Work in Progress' (Current asset), which is the current value of the production runs that are in progress.

Then, the accounting entries (which can only be done using manual journals in QBO) are the following:

1. If you don't have the Work in Progress account:
   D Finished Goods
   C Raw materials
   
   
2. If you have the Work in Progress account, then it is in two steps:
   Step 1. Consumption of materials:
   D Work in Progress
   C Raw materials.
   
   Step 2. The finish of production:
   D Finished Goods
   C Work in Progress

Other approaches:

1. Rustler has provided a smart workaround using a "Bank account" type of WIP account: https://quickbooks.intuit.com/learn-support/en-us/reports-and-accounting/re-inventory-manufacturing-...
   
   
2. You could try using Bundles, but this does not allow tracking Finished Goods, it just helps to relieve Raw materials at the time of sale.
   
   
3. You could use manufacturing apps in the QuickBooks app store.
   For micro-producers or companies that do very light-assembly, there are inventory apps like SOS, Unleashed, ERPAG etc.
   For somewhat bigger manufacturers (10-200 employees) with complex production operations, shop floor, and machinery, there is MRPeasy, which syncs with QBO and tracks RM, WIP, FG, COGS, etc. automatically on FIFO basis.