When tracking inventory in Manager, it's very important to track not only how much inventory you have but also where it is. For example, when you get invoiced for 10 widgets from a supplier, from an accounting point of view, you own these widgets however they are not seen in your physical inventory location until they are actually delivered from the supplier.
Similarly when you sell widgets to a customer, from an accounting point of view, they are no longer in your inventory but you can still see them right there until you actually ship them to the customer. This means the
Qty figure reported in Manager has never matched what you physically had in your inventory. In other words, qty from an accounting point of view is not that useful for management purposes.
The latest version tries to solve this problem by breaking down the
Qty column into three columns to help you understand what is happening to your inventory items from a management point of view.
- Qty to receive
- Qty on hand
- Qty to deliver
First of all, by default, only
Qty on hand column will be visible.
Qty to receive column will be activated if you enable
Goods receipts tab and
Qty to deliver will be activated if you enable
Delivery notes tab.
For example, if you operate a retail shop and don't deliver to customers, you wouldn't enable
Delivery notes tab. In this case you'd have only
Qty to receive column and
Qty on hand column.
If you don't purchase items from a supplier because your goods are manufactured, you wouldn't enable
Goods receipts tab and wouldn't see
Qty to receive.
This mechanism which shows only columns relevant to your business ensures that Manager will adapt to your specific needs and won't show columns which don't apply.
How these new columns work
Qty to receive shows qty that has been purchased from supplier but not yet received.
Qty on hand shows qty that is physically available in one or across multiple inventory locations.
Qty to deliver shows qty that has been sold to customers but not yet shipped.
So let's see how this workflow works.
Let's say we have purchased 10x of
Aniseed Syrup which will be delivered in a few days. We will enter
You will notice
Qty to receive now shows
Our supplier is in short supply and will send 3x
Aniseed Syrup instead. We will record
Goods Receipt to record this.
The system clearly shows how much we have physically in our inventory under
Qty on hand. Now, let's say we have 3 customers buying from us
Aniseed Syrup. Two customers will buy qty of 1 and one customer will buy 4. We will record these sales as
Sales Invoices. Which means we sold 6 in total.
Since we just sold them without shipping, the total will show under
Qty to deliver.
Every figure on
Inventory Items tab is clickable so for example if you are wondering who is expecting delivery of 6 Aniseed Syrups, just click on the figure.
In this case, now you have only 3 qty on hand so you can't ship 6 to customers. Let's say we only ship to two customers asking for 1 each. To record shipment, you enter
When you look again at inventory items tab, you will see
qty on hand and
qty to deliver were reduced.
As you can see, this new approach should provide more clarity to ensure you receive all items purchased from suppliers, you know your inventory quantities physically on hand and the quantity of items sold that need to be shipped to customers.
What about inventory write-offs and production orders?
Inventory write-off will always reduce
Qty on hand. Let's say the 1 Aniseed Syrup you actually have on hand must be disposed of due to spoilage, you enter inventory write-off to reduce the qty on hand.
Production orders work similarly. They only affect
Qty on hand column.
What if a supplier never sends me items I have purchased, how do I reduce qty to receive?
In this case supplier would issue you a credit note which you would enter under the
Debit Notes tab. This would reduce the
Qty to receive.
What if a customer cancels the sale before shipping, how do I reduce qty to deliver?
If customer cancels the sale, you can either delete the sales invoice that would make the qty to deliver disappear but the correct approach is to issue the customer a credit note which would decrease the qty to deliver.
What happened to previous columns such as Sale Price, Average Cost and Total Cost?
I think these columns don't belong to the
Inventory Items tab. If you'd like to see inventory items with sales prices, there is a new report named
Inventory Price List. I'm still considering where to include average cost and total cost but it will probably be included in another report. I want the
Inventory Items tab to be restricted to quantities because that is the most important information when dealing with inventory.