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Deciding not to track inventory in QuickBooks

QuickBooks includes several features to assist you in tracking inventory. You will generally not choose to track inventory in QuickBooks if:

  • Your company does not carry inventory.

  • Your company uses a third-party solution (another piece of software) to track inventory.

Using integrated third-party inventory software

There are several inventory management software systems available. Some of them are designed to integrate with QuickBooks so that you manage inventory within the third-party system, but are able to view inventory information within QuickBooks.

Many third-party software applications have the ability to export journal entries into a format that can be used by QuickBooks. If you use third-party inventory software, work with the software vendor or a professional advisor to help you export data from the inventory software and import it as journal entries into QuickBooks.

It is important to set up and map the fields from the inventory software to the fields in QuickBooks. Before doing any imports, back up all of your QuickBooks data correctly. After you import information, review your chart of accounts, your items list, and your financial reports to ensure the entries imported correctly.

Using other third-party inventory applications

If your third-party inventory application does not integrate with QuickBooks, you may still be able to use some data in QuickBooks. Some examples of this include:

  • A company that purchases raw goods that aren't easily converted into the finished product—prune juice. The company buys prunes by the truckload. After the prunes have been pitted and cleaned, the total weight changes. When they are ground and combined with water, they are measured by volume rather than weight. Their juice-industry specific software manages all the costs to determine the cost of goods sold for each case of juice.

    In QuickBooks, the company tracks the raw goods as an asset, but they do not add items to inventory until the third-party inventory system determines the cost of goods sold for each unit.

  • Another company purchases the raw goods to make pizza (flour, tomato sauce, cheese, etc.) with QuickBooks. They "sell" the goods to another inventory system that manages the ingredients used to create a pizza. QuickBooks then "buys" the pizza as an inventory item from the third-party inventory system and sells it as it would any other inventory item.

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