Name of Feature/Request: Invoicing an item that has 0 on hand quantity or even negative on hand quantity causes a $0 cost accounting situation. Inventory dollars are not reduced. COGS and subsequently Sales Order profitability is incorrect.
What financial, time savings, or quality of life improvements will occur with this: Due to this accounting error, inventory is inflated, profitability is inflated. Correcting this issue would provide more accurate reporting.
Attempted solutions so far: We have dedicated an individual to run a report and review any item that is on a Sales Order that has a negative available quantity. This also means performing inventory adjustments daily to keep up with this. Obviously it means our on hand inventory in Striven does not match our physical inventory, but this stuff is to be expected as no business is perfect, but this shouldn’t effect things like profitability.
This should not be allowed. The Sales Order should prohibit selling something you do not have in inventory. If you do have a negative in an item, you should review item file and do an inventory adjustment for negative items. Putting in zero cost but adding revenue for the item sold will distort your financials.
What we do for presale order’s so it hits COGS correctly is using DEPOSIT and DEPOSITAPPLIED Line items that progressively billed from a quote. List all the items/services on the quote and those two deposit codes. We cut the invoice and take the money on the deposit invoice and after the item is received we cut the final invoice and subtract the deposit received. This helps eliminate having to manipulate the inventory as much.
ZERO Costing is a nightmare and we have to run two different reports to make sure things are correct. ZERO costing only triggers when the item hits a negative at ZERO but when you sell 3 of an item but only show 2 in stock it does not effectively show that item is negative until the next month or on a negative qty report. This whole process causes inventory inflation and inaccuracy and a nightmare for book keeping.
Feel free to reach out to me at ashley@crestlock.com to commiserate deeper and brainstorm together on the easiest way to tackle it. Maybe two brains who suffer this pain can come up with a better solution together.
Invoicing items not in stock is a problem for any accounting software, but with FIFO costing, it should be able to be managed internally. Basically, it would correct itself once the item was purchased.
This causes an abnormally large issue if the item that was sold was purchased differently - sold a non-inventory item, bought an inventory item; sold an inventory item, bought a non-inventory item; sold an inventory item by the foot, bought it by the case… etc… Salespeople and fulfillment people rarely understand this accounting issue, but it absolutely needs to be beaten into them. We offer a stern reminder the first offence, and cut off a finger for each additional offense. You’d have to ask Stubby if it’s an effective training method or not.
On a serious note, I’d love to be involved in a meeting @AshleyCrest about how you’ve built your reports to find these anomalies.
Feel free to reach out to me and we can put something on the schedule.
Inventory control should reduce this but as stated, no one is perfect when it comes to managing this.
The Cogs IS captured, however it is captured on the bill, not the invoice which is throwing off the Order Profitability report. Your total COGs on your P&L will be correct.
One thing to consider is if we do oversell and then you buy it after the period is closed, should we update the invoice in the closed period? Should we just pull in cogs from Invoices AND bills/expenses?
This is also one that is getting one of my votes.
My two cents might be a small part of this larger fix. In short, we sell custom glass doors for an item that I do not stock (for Striven folks that have access to my system see item numberLegacy4030 - SI | Legacy Custom up to 40x30). I would like to take a deposit via Stripe, in-store, or check for when they put a deposit down without having to actually create an Invoice for it to happen. I know Striven is tracking things quite robust behind the scenes and probably has good reasons for making us create the invoice first but it is an extra step for the sales people on the floor.
This should not be allowed. The Sales Order should prohibit selling something you do not have in inventory. If you do have a negative in an item, you should review item file and do an inventory adjustment for negative items. Putting in zero cost but adding revenue for the item sold will distort your financials.
– jfsmith