You need to keep a track of inventory which is really hard.But you also have to manage the people who are responsible for managing the inventory. You can take back control if you are the QuickBooks Administrator.
Here are some steps you can follow in order to keep your employees from sabotaging the QuickBooks inventory.
Put a stop to Creating Negative Inventory by Employees
Number one reason for data corruption in the data file is when failing to perform or performing transactions in QuickBooks that causes an inventory to carry a negative balance.
If adjustments are inaccurately made, or when customer service enters the invoices without taking in account of whether they have enough quantity on hand. Staff neglection in entering Item Receipts. Whatever may be the reason, if the items have a negative quantity, QuickBooks will not calculate an average (COGS) cost-of-goods-sold
The warning can be set ‘If not enough goods to sell’ to the ‘Quantity Available’ in QuickBooks Premier. Don’t set the warning to ‘Quantity on Hand’. It is because the quantity that is available is the outcome of the quantity on hand less all of the other pending orders that need that item. Not all of the other orders can be fulfilled even if this quantity fulfil this order. So, this setting will help by giving a warning to the users if they are putting the item’s balance into negative category by entering that order.
Steps to follow:
- Start by going to Edit> Preferences> Items and inventory> Company Preferences.
- Check the option: When the quantity I want to sell exceeds Quantity/ Available.
- There should be a policy about when user gets this warning, they must either alert the purchasing personnel or warehouse and tell them about this warning and ask for some guidance how to solve this issue before the order is completed.
- Don’t allow negative quantities is another option in QuickBooks Enterprise. If yous elect this option it will totally prevent the user from finishing a sales document if it has tendencies to impact quantities to become negative.
You should first check if this setting is preferable by your type of business. For example, if your business is to drop shipping items and also stocks or before the items actually ship you need to invoice, this setting may cause some problems. So, you should make sure before going with this option.
With hold Permissions from Employees:
If you take your time to set this up, it is amazingly easy method to stop employees from making some mistakes. Biggest mistake a lot of business make is they give almost Full Access to the file to everyone because people may play various roles. It gives access to people to the areas which they don’t need to and that’s why they can make mistakes.
General roles to the users can be set by you, such as Payroll, Account Receivable, or Account Payable in QuickBooks Premier and their access can be restricted to reporting and sensitive financial information.
Steps to follow:
- In QuickBooks Enterprise set up user’s permission by going to Company.
- Then Set Up Users.
- Role List is the other tab where you can set up specific task to each user.
- There are more than 10 pre-defined roles based on general business roles comes with QuickBooks.
- To see what they cover go and edit anyone of the roles to see and then click DUPLICATE option to make your own according to your liking.
If you want to allow any task according to your business need, you can easily duplicate that role, allow permissions to that task, and then appoint new title/role to your employee.
Setting the DATE LOCK
You Can set restrictions to prevent employees from entering transactions that they forgot to enter before month end and also posting of Receipts and invoices which are pre-dated.
Steps to follow:
- Set the restriction by the ADMIN, under Edit> Preferences > Accounting > Company Preference > Set Date/Password
Once this is done and a closing date is entered and a password is applied staff cannot alter or post any transaction prior to that date they can only view. You can exclude non-posting transactions like purchase orders, sales orders and estimates from this restriction because they don’t affect inventory level.
Frequently Reviewing the Inventory Stock Status Report
You should review the inventory stock status report quite frequently to identify mistakes, to spot any shortages and have an idea how much inventory you have.
You can go to Reports> Inventory> Inventory stock status by item
You can get a snapshot of all of your inventory levels and each’s status by the operation report.
This report will help you to
- Look at the sales of items in last seven days.
- Look at on hand, on sales order, any available, build or purchased order quantities.
- Suggestion of which items need reordering and assigning reorder level.
Triple Checking when receiving inventory:
There should be a perfect method to check to make sure by comparing the invoices with inventory that you are paying for the right quantities at right price.
Make someone to match the bill of shipped items with the purchase order and the invoice from the supplier before paying the bill. Admin can do this or someone outside of these departments can also do double check the items quantities and item prices before paying. This will help in avoiding paying the wrong prices for what you ordered and putting wrong items into inventory.
Use only items on sale and purchasing documents
In QuickBooks there are two tabs in the body, one is for Expenses and other one is for Items
The Inventory Valuation Summary report is one critical inventory report. This report represents the actual value of your inventory detailed by the items. On Balance Sheet this total value, should match the value listed under inventory Asset accounts.
By making sure that transactions always include items on the Items tab for the parts so the inventory Asset account and Inventory Valuation Summary will have same amount posted against them at the same time and two will be in agreement.
So, the common mistake users make is instead of using items they post ab item purchase directly to GL account.
To prevent users from using Expenses tab instead of the Items tab is not easy without internal policy. Nevertheless, you can run Custom Report to check weather the employees are making this mistake.
- Open Reports> Custom Reports> Transaction Detail.
- Put the date range to ALL
- Select the Inventory Asset account by filtering the report for Account.
- Here by viewing the report you can check if transactions lacking items which will be showed at the top. You can check how much I/A account is understated or overstated as a result of the in accurate postings.
By running the Report “Unpaid Bills Detail”
Sometimes you might not see all of the transactions the software is reporting on inventory.
So, when the inventory is firstly received by the employees on the dock, they use the Item Receipt transaction and it becomes a liability but not yet payable. But when accounting department gets the bill, they might not realize an Item Receipt was performed. They can mistakenly enter the completely new bill with items and replicating the Item Receipt.
By running the Unpaid Bills Detail, you can simply spot these errors.
Open Reports > Vendors and Payables.
Now correct any error by viewing the report by filtering for only Item Receipts and clearing any old transaction which should have been closed by turning them into bills.
Frequently Conduct Cycle Counts
Instead of depending upon the year end physical Inventory count to check inventory levels and to track the issues which may won’t trackthe root cause try performing Cycle Counts.
Let’s call A items the most valuable items in your business supply chain which can take up to 20%
Let’s call B items which are less valuable but still important they may take up to 30%
Let’s call C items those items which are mostly of insignificant value this can be the remaining 50%
So, you certainly don’t want to run out for A or even B, so you should count A items every month, B items every quarter and C items every six months.
So simply do ABC Classification that means identify A, B and, C items based on their value and seta schedule and notify your work staff.
These Tips wouldn’t completely stop your work staff from making mistakes in QuickBooks inventory but they can help in limiting the damage caused by errors and alert you when errors are happening.
Take these steps as a precaution.