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.
User here. Why is the item going negative?
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.