Why Should I Consider Adopting an ERP System?February 7, 2023
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In today’s fast-paced business environment, inventory management has become crucial to any company’s success. Companies with high-performing supply chains are more competitive and grow quickly due to lower inventory costs and faster order processing. So how do you stay on top of inventory? Answer: QuickBooks Desktop. It’s an efficient accounting package that allows businesses to optimize inventory and maximize profits.
QuickBooks Desktop is a powerful software that allows efficient management of various supply chain areas, ranging from inventory management to order shipping. It empowers accountants, bookkeepers, and managers to pull out detail with a click of a button. Companies can review and track their inventory movement in real time and manage storage space efficiently. Let’s learn how to use QuickBooks for business inventory optimization:
Having an accurate stock count at all times is one of the key prerequisites for optimizing inventory. A business should always know how many products you currently have in storage. Inventory counts should be done monthly, bi-monthly, or quarterly, depending on the complexity and size of business operations.
In many instances, some inventory items are missing, damaged, or stolen. Using QuickBooks, you can determine how many inventory items you should have and match it against the actual quantity at your warehouse. If there are any variances, investigate to find discrepancies that cause the difference in values.
Therefore, it’s imperative to conduct regular inventory counts for accuracy.
Many companies, especially small businesses. Face inventory problems due to the informal order fulfillment process. Before they know it, the inventory levels are very low, leading to late deliveries and dissatisfied customers. Using QuickBooks, a company can formalize its order fulfillment process and remedy this problem.
QuickBooks Desktop provides up-to-the-minute inventory updates, ensuring there are enough products to meet the sales demands. At the same time, the real-time inventory movement also prevents overstocking. Developing a formal order fulfillment process is crucial to ensure inventory management is accurate.
Smart businesses follow a first-in-first-out (FIFO) inventory management technique that involves selling old products first before the new ones. It allows them to prevent losses when the inventory expires or becomes outdated. Using QuickBooks’ advanced inventory options, you can switch from average costs to FIFO to calculate the inventory value with accuracy.
When you switch your costing method to FIFO, QuickBooks calculates inventory pricing under the assumption that products received first are the ones sold first, which means your inventory management, balance sheet, and profit and loss reports don’t require any adjustment and reflect the accurate value of your stock.
To switch from average cost to FIFO: Go to Edit -> Preferences. A menu on the left will appear; select Items & Inventory -> Company Preferences. Choose Advanced Inventory Settings -> FIFO tab. Using smart inventory settings, you can start tracking FIFO on any date, ensuring accurate recording and reporting.
Auditing plays a crucial part in ensuring your financial records’ accuracy, including your assets’ value. Conducting an internal inventory audit every month is a best practice that allows the company to identify discrepancies and inefficiencies and take corrective measures to prevent them in the future.
QuickBooks allows carrying out audit work effortlessly to identify risks and opportunities and maximize performance potential. Using the QuickBooks audit log report, you can find transactions causing discrepancies and track user activity. Go to Reports -> Accountant and Taxes -> Audit Trail to start the process.
QuickBooks Desktop gives real-time, updated details of your inventory, allowing businesses to draw useful insights to optimize the inventory management process. You can determine how many days it takes vendors to deliver goods, how many days it takes inventory to get off the shelf, and COGS for different product categories.
It will facilitate better and timely decision-making related to product mix, i.e., identify underselling products and take measures to maximize revenue. Moreover, it will allow you to take a proactive approach to streamline your procurement process and further improve your business performance.
Now that you know how to optimize your inventory using QuickBooks desktop, it’s time to find the best QuickBooks hosting service provider to ensure your operations run seamlessly. It’s crucial that you partner with a service provider that offers dedicated resources and excellent support to ensure you can manage your inventory effectively.
Contact gotomyerp to take advantage of authorized QuickBooks Hosting services. We’re a renowned commercial hosting provider that offers premium QuickBooks cloud services at affordable rates. Our reliable QuickBooks desktop hosting via fully managed, dedicated servers offer the best results.
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