Inventory Items

To create new inventory item, click New Inventory Item button.

Qty owned is a default column under Inventory Items tab.

This column tracks the net quantity of an inventory item. It is the balance derived from all the sales and purchase transactions. If you have purchased 10 items and sold 5, the Qty owned would show 5.

Qty on hand is an optional column that you can enable using Edit columns button.

The column represents the actual physical count of inventory items. Unlike Qty owned, which includes all invoices, this column accounts for the actual movement of items based on delivery notes and goods receipts.

Invoices, be it Sales Invoices or Purchase Invoices, represent financial transactions rather than the physical movement of goods. There can be a time gap between when an invoice is issued and when the goods are actually delivered or received. For example:

• A supplier might issue an invoice before shipping the items.
• A customer might receive an invoice before the items are physically delivered.

If Qty on hand were to consider all invoices, it might not accurately reflect the physical count of items, especially during these gaps.

Delivery Notes and Goods Receipts are designed specifically to track the actual movement of goods. They confirm that goods have left a seller's premises or have been received at a buyer's location. By considering these instead of invoices for the Qty on hand column, the software ensures that the displayed quantity aligns with the physical reality of stock levels. One key aspect of this is the necessity for Delivery Notes and Goods Receipts to be linked to an actual Sales Order or Purchase Order for them to impact the Qty on hand column. This ensures each stock movement is associated with an authentic business transaction. This creates a traceable link between orders and actual stock movement, making it easier to verify and audit inventory flows.

Inventory Locations

For businesses that use the Inventory Locations feature, the Qty on hand column becomes even more insightful. Instead of a consolidated figure, users will first see the breakdown of quantities by each inventory location. This aids businesses with multiple storage sites or retail outlets to quickly understand stock distribution and availability across different locations.

When Qty on hand is not relevant

If the Qty owned (which represents the balance of all sales and purchase transactions) consistently matches the Qty on hand (the physical count), then having both columns might seem redundant. In situations where:

• There's minimal delay between invoicing and actual delivery.
• The business doesn’t experience discrepancies between the recorded stock and physical stock.
• The operations are streamlined to a point where billing and stock movement are almost simultaneous.

Having both columns showing the same figure can be repetitive. In such cases, businesses might opt to use just one of the columns for a cleaner and more straightforward view.

Qty to deliver is an optional column that you can enable using Edit columns button.

The column represents the total quantity from all open Sales Orders that need to be delivered.

Let's say your business entered three Sales Orders in a week for a specific product.

• Sales Order #001 - Qty 10
• Sales Order #002 - Qty 5
• Sales Order #003 - Qty 15

If you have already delivered the quantities for Sales Order #001 and Sales Order #002, but Sales Order #003 is still pending, then the Qty to deliver will be 15 (from Sales Order #003). If none of the orders were delivered yet, then the total Qty to deliver would be the sum of all three - 30.

To clear or reduce the Qty to deliver column, you are required to enter New Delivery Note corresponding to the Sales Order. Once a delivery note is entered for an order, the quantity specified in the Delivery Note will be deducted from the Qty to deliver for that specific item.

For businesses that experience a delay or gap between when an order is placed and when the goods are actually delivered, it's vital to have a systematic approach to track and manage these stages. Here is the workflow:

1. New Sales Order When a customer places an order, the business should first enter a New Sales Order under Sales Orders tab. Once the new sales order is entered, the Qty to deliver total will increase by the quantity specified in the sales order.
2. New Delivery Note Once the inventory items are ready for delivery or have been delivered, a New Delivery Note should be created. This reflects the physical movement of the stock and reduces the Qty on hand and Qty to deliver. It doesn't affect Qty owned.
3. New Sales Invoice You will need to also enter New Sales Invoice for the goods ordered and delivered. Sales invoice linked to an order will have no impact on Qty on hand or Qty to deliver because this has been handled by Delivery Note. Instead, Sales Invoice will decrease balance of Qty owned.

When Qty to deliver is not relevant

For businesses where there is no waiting period or gap between the order and the actual delivery of goods, there's often no need to separately track Qty to deliver. Here's how they can manage their transactions:

• Selling on Credit If the business is selling on credit, they can use the Sales Invoices tab. Once a product is sold on credit terms, they can generate a sales invoice without entering separate Sales Order. The inventory will be immediately reduced by the quantity sold once the invoice is issued.
• Cash Sales or Immediate Payment For businesses that receive immediate payment upon selling the inventory item, they don't need to generate a separate sales invoice. Instead, they can directly record the sale using the New Receipt transaction under Receipts tab. This approach is swift and efficient for cash sales, instantly reflecting the reduction in inventory and the increase in cash or bank balance.

Qty available is an optional column that you can enable using Edit columns button.

Qty available indicates the stock that is physically available for new sales or use. It's calculated by subtracting Qty to deliver from Qty on hand.

Essentially, it shows the inventory on hand minus the quantity that is already committed to open Sales Orders.

The real value of Qty available column becomes evident when a business has regular sales orders and there's a time gap between order placement and delivery. It helps in understanding how much of the stock on hand is already committed and how much is free for fresh sales or uses.

When Qty available is not relevant

If you're not using Sales Orders, then you are not tracking Qty to deliver and therefore Qty available and Qty on hand will be always the same. Sticking with Qty on hand alone will be simpler and clearer.

Qty to receive is an optional column that you can enable using Edit columns button.

The column represents the total quantity from all open Purchase Orders that are to be received.

Let's say your business entered three Purchase Orders in a week for a specific product.

• Purchase Order #001 - Qty 10
• Purchase Order #002 - Qty 5
• Purchase Order #003 - Qty 15

If you have already received the quantities for Purchase Order #001 and Purchase Order #002, but Purchase Order #003 is still pending, then the Qty to receive will be 15 (from Purchase Order #003). If none of the orders were received yet, then the total Qty to receive would be the sum of all three - 30.

To clear or reduce the Qty to receive column, you are required to enter New Goods Receipt corresponding to the Purchase Order. Once a goods receipt is entered for an order, the quantity specified in the Goods Receipt will be deducted from the Qty to receive for that specific item.

For suppliers where there is no waiting period or gap between the order and the actual delivery of goods, there's often no need to separately track Qty to receive. Here's how you can record such a purchase:

• Purchasing on Credit If the business is purchasing on credit, they can use the Purchase Invoices tab. Once supplier issues an invoice, they can record this invoice under Purchase Invoices tab using New Purchase Invoice button. The inventory will be immediately increased by the quantity purchased once the invoice is created.
• Cash Purchases or Immediate Payment For businesses that pay immediately upon purchasing the inventory item, they don't need to record purchase invoice. Instead, they can directly record the purchase using the New Payment transaction under Payments tab. This approach is swift and efficient for cash purchases, instantly reflecting the increase in inventory and the decrease in cash or bank balance.

When you have suppliers where an order is placed first and the goods are received at later time, it's vital to have a systematic approach to track and manage these stages. Here's how you can handle this workflow:

1. New Purchase Order First you make an order by creating New Purchase Order under Purchase Orders tab. Once the new purchase order is entered, the Qty to receive total will increase by the quantity specified in the purchase order.
2. New Goods Receipt When inventory items are received from supplier, a New Goods Receipt under Goods Receipts tab should be created. This reflects the physical movement of the stock and increases the Qty on hand and decreases the Qty to receive. It doesn't affect Qty owned.
3. New Purchase Invoice When supplier issues an invoice, enter New Purchase Invoice under Purchase Invoices tab. Purchase invoice linked to an order will have no impact on Qty on hand or Qty to receive because this has been handled by Goods Receipt. Instead, Purchase Invoice will decrease balance of Qty owned.

Qty to receive column is an optional column that you can enable using Edit columns button.

This column gives a forward-looking perspective of stock levels. It sums up the current available quantity Qty available with the quantity expected to be received from open Purchase Orders (Qty to receive).

In essence, it predicts the amount of stock that will be available once all outstanding purchase orders are fulfilled.

When Qty to be available is not relevant

For businesses that do not utilize Purchase Orders, the Qty to receive will consistently be zero. In such cases, Qty available and Qty to be available will always mirror each other. Thus, there's no benefit in keeping the Qty to be available column enabled, as it adds no additional information.

If you want to maintain optimal stock levels and avoid stockouts. You can configure Reorder point under each Inventory Item.

When editing Inventory Item, check Reorder point checkbox.

Then fill out Qty desired field. Qty desired is a predefined stock level which triggers the need to reorder or restock an item.

It's essential to review and, if necessary, adjust the Qty desired periodically. For this reason, you can enable Qty desired column using Edit columns button so you can view all Qty desired across many inventory items at once.

Qty to order column is an optional column that you can enable using Edit columns button.

It shows the quantity that needs to be ordered (or manufactured) to maintain the desired quantity. It's calculated as: Qty desired - Qty to be available.

Let's break it down:

• Qty desired This is the reorder point or the level at which a business wants its stock level to be.
• Qty to be available This represents the total stock that will be available in the near future, considering both the current stock on hand (after deducting any pending deliveries to customers) and any outstanding Purchase Orders yet to be received.

By subtracting Qty to be available from Qty desired, a business can effectively determine the exact amount of stock it needs to order to achieve its optimal inventory level.

To clear Qty to order column, a business should create a New Purchase Order. This increases the Qty to receive, which in turn boosts the Qty to be available. As the Qty to be available approaches the Qty desired, the Qty to order value reduces or becomes zero.

But creating New Purchase Order is just one method to clear the Qty to order. In real-world scenarios, businesses might resort to various methods to acquire inventory, and each has its implications on the inventory metrics. Let's delve into these methods:

• Entering New Payment (for immediate cash purchase) Instead of creating a formal purchase order, businesses might make an immediate purchase in exchange for cash. In this case you can simply enter New Payment. When a cash purchase is made, the Qty owned, Qty on hand, Qty available and Qty to be available will increase instantly by the quantity purchased, since the items are added to inventory immediately. As Qty to be available increases, Qty to order decreases.
• Entering New Purchase Invoice (for immediate credit purchase) In some cases, businesses receive goods immediately but on credit terms. This means they get the inventory upfront but will pay for it later. In such scenarios, instead of a Purchase Order, a Purchase Invoice is directly entered. Just like the cash purchase, entering a Purchase Invoice for immediate receipt of goods will also increase Qty owned, Qty on hand, Qty available and Qty to be available right away. The Qty to order will reduce as the available quantity goes up.

While creating a New Purchase Order is a standard way to clear Qty to order, businesses have flexibility in managing their inventory. They can make cash purchases or enter purchase invoices for goods received immediately on credit. Each method has a direct impact on Qty to order.

If you are using many quantity columns under Inventory Items tab, following a specific order of column arrangement is recommended. This order is not just cosmetic but aids in logical clarity and operational consistency.

Recommended Order of Columns

This recommended sequence is not arbitrary; it's based on the underlying mathematical logic that drives inventory management in the software. Certain columns calculate values based on the preceding columns, so having them in the right order ensures you're viewing data that progresses logically.

Here's a breakdown of the main inter-column calculations:

Total from Qty available is then used in subsequent calculation to calculate Qty to be available

And total from Qty to be available is then used in subsequent calculation to calculate Qty to order

By aligning your columns in the recommended order, you can easily follow the logical flow of inventory calculations. This makes it simpler to understand, audit, and manage inventory dynamics at a glance.