Intuit has updated QuickBooks Online this month, and there are some significant changes to the inventory tracking feature.
Let’s take a look at what is new in the QuickBooks Online inventory February update.
Note that Intuit releases new features to users incrementally. That is, first it is rolled out to a small number of users to see if there is a negative impact on performance. Later, usually in another week, the release goes out to everyone else, assuming a problem isn’t uncovered. So many of you might not see these updates right away.
Intuit updates QuickBooks Online just about every month, so operational details can change quickly. Look at the tag #QuickBooksOnlineInventory to see the latest information about the inventory control features of this program.
The Trouble with Initial Quantities
It is very important to get the Initial Quantity on Hand and As Of Date values correct when creating a new inventory item.
- You cannot enter any transaction that changes the quantity on hand that is dated before the As Of Date, and that date cannot be edited.
- You cannot change the quantity of that initial transaction directly.
- You cannot change the value of that initial inventory adjustment if you entered an incorrect Cost value.
It is too easy to make a mistake on that initial starting transaction, and it was almost impossible to make a correction. If you would try to edit the transaction you would get one of several different errors, depending on circumstances.
QuickBooks Online Inventory February Update
With this release of QuickBooks Online we now are able to edit the Inventory Starting Value transaction, which solves some of the problems I’ve outlined before. Now you can go back and change the As Of Date, Initial Quantity On Hand, Cost, Memo and even the account that the inventory adjustment posts to.
Here’s the starting transaction for an item that was added with an As of date of February 1st.
A number of things have been cleaned up here in this release:
- You won’t get an odd error message if you try to edit this transaction.
- You cannot type new values into any of the fields in this view, you need to click the Edit button to make changes.
- The transaction won’t be listed twice in this register, as sometimes happened in the prior release.
- You no longer have the option to delete the transaction.
If you click the Edit button you get a new window that lets you edit this transaction. Every field can be edited, even the inventory adjustment account.
This is a major improvement over the prior release. You now have the ability to correct many mistakes that are so easy to make when you add a new inventory item. You can correct the quantity and value. You can correct the As Of date, which will resolve many of the complaints I run into with this program.
The ability to change the inventory adjustment account is interesting. When you create a new item and give it a value, that value is always posted to the Opening Balance Equity account. Now you can go back and change this without having to make an additional journal entry.
Take note of the Audit History button at the bottom of the transaction. This is a helpful tool if you are looking at what has been going on with a transaction. Although the account registers will show just the most recent representation of a transaction that has been edited, the Audit History will let you see exactly what has been changed. The pale yellow highlights are added by the program to make the changes stand out.
Inventory Starting Value vs. Inventory Quantity Adjustment
Another change in this release relates to the type of transaction that is created when you add a new inventory item.
Prior to this, two different types of transactions could be created if you entered a quantity in the Initial Quantity On Hand field:
If you entered a value in the Cost field, you would get an Inventory Starting Value transaction.
If you did not enter a value in the Cost field you would get an Inventory Quantity Adjustment transaction.
This wasn’t a major issue but it could have created some confusion when auditing things later. The Inventory Starting Value transaction would post to the Opening Balance Equity account, and the Inventory Quantity Adjustment would use the Inventory Shrinkage account. So if you were searching for things, you would find them in different places. A relatively minor issue, since the zero-valued transaction wouldn’t affect your financial statements. The main effect I found was that if you tried to edit the transactions you would get a different error message depending on which type it was.
In this release Intuit has fixed this issue. Now if you enter a quantity in that initial setup of the item it will always create an Inventory Starting Value transaction as it should. That is cleaner, and it makes things easier to work with.
One “gotcha” to point out, although this could be changed at some point: If you do not enter an Initial Quantity On Hand, then no transaction is created. That makes sense, no value to post anywhere. However, that means that there is no way to change the As Of Date in this case. No quantity, no transaction. No transaction, you can’t edit that date.
I Like These Improvements
These improvements are a great step forward. Lots of the issues I run into with clients, as well as questions in the community forums, revolve around the inability to make changes to the initial transactions that are created when you add an item. These changes also apply if you are changing an item type from non-inventory to inventory item, which is good.
There is still room for improvement, and I look forward to more improvements in QuickBooks Online inventory in the future.