Inventory Management – Improve Cash Flow By Managing Your Biggest Asset
I read a great article today in HVCR Business Magazine titled “3 Reasons to Organize Your Service Vehicles”, by Greg McAfee, and I just finished assisting a client with Inventory Management. The project included implementing Advanced Inventory for QuickBooks Enterprise as well as setting up a perpetual Inventory Management system. So I thought I would write an article on this very important topic because if you do not manage your inventory, which for many businesses it is their biggest asset, it can certainly put you out of business or cause you to lose customers. The article mentioned above is geared toward the Field Service industry; however it is true in every industry that carries inventory.
Why is Inventory Management so important?
Inventory Management can help you improve your cash flow. If you do not know how much inventory you have and need, your money could be sitting on the shelf instead of helping you grow your business. Too little inventory, and you do not have enough on hand to fulfill your customers’ orders and your customers will start to look elsewhere for the product that they can get more readily.
How do I implement an Inventory Management system?
You should, in the very least be performing a physical count at least once a year at year-end to find out your ending inventory for the year, however this is not enough. You should implement a perpetual inventory system where you are physically counting a chosen few items every day to every week. Some items that you use more frequently and higher priced items should be counted more frequently than others. If you are doing this right, you should be able to get to the point that you are able to eliminate your year-end inventory. Performing an inventory count once a year for many businesses, causes a work stoppage, sometimes for multiple days to physically count the entire stock of inventory. A written perpetual Inventory Management procedure should be implemented and any variances in the physical counts need to be investigated to find out the cause. Once a cause of the variance has been established, procedures need to be put in place to keep this from happening in the future.
Tools to help you manage your Inventory:
QuickBooks Advanced Inventory –
- Track stock in multiple locations such as a warehouse, showroom, or salesperson’s vehicle.
- Track items to specific shelves and bins within a warehouse.
- Scan barcodes to enter data quickly.
- Easily set up FIFO inventory costing.
- Manage items be serial or lot numbers.
- Get inventory value across multiple locations.
- Transfer items between inventory sites.
Field Service Management by Intuit –
Field Service Management (FSM) can be used with QuickBooks Pro, Premier or Enterprise Solutions (ES). FSM assists with things like scheduling, dispatching, getting paid out in the field, and eliminating double data entry. However when used with QuickBooks ES with Advanced Inventory, items used out in the field they are automatically deducted from that trucks stock. Then when you sync up with your QuickBooks file your truck stock is up to date.
Do you have Inventory Management issues?
Dailey Bookkeeping Services would love to help you get your inventory under control. The owner, Jacqueline Dailey is a Certified Public Bookkeeper, a Certified QuickBooks and QuickBooks Online ProAdvisor and a Xero Certified Advisor. We work remotely so we can work with any company located in the U.S. If we cannot help you, we will refer you to someone who can!