QuickBooks Online inventory limitations for a year-end count

QuickBooks Online does not track inventory by location within a warehouse. It keeps one quantity on hand per item, and its inventory adjustment form takes one number per item. Tracking inventory by site, and by location within a site, is a QuickBooks Desktop Enterprise feature.

Your count sheets are organized by location. Before one number goes into QuickBooks, someone has to add each item up across every location it was found in and prove that no location was skipped. That adding-up across locations is the limitation, and it is where year-end counts go wrong.

One quantity per item, several locations per item

The same item sits in more than one place in most warehouses. A fastener lives in a forward picking location and in bulk storage at the back, and a pallet of it may be in receiving on count day. QuickBooks sees one item with one quantity.

Two jobs come out of that gap, and both must happen before anything is entered. The first is proof of coverage: every location on the plan was counted once, and the pallet in receiving was either counted or deliberately left out.

The second is the sum: each item is added up across its locations, and the location detail stays behind. The total is what gets entered, but the detail is what gets asked about when there is a discrepancy.

Example: three locations become one QuickBooks quantity

Tarponwick, our demo company, keeps item BRK-1P-20 in its Fast Movers zone, in its Bulk zone and on a pallet in Receiving. The count sheets record three numbers. QuickBooks has room for one.

QuickBooks gets one line for BRK-1P-20: a new quantity of 50, or a change of minus 6. The three counts stay on the count sheets. When the controller asks why 56 became 50, the answer is in the sheet, not the adjustment.

Reconciling a location-based count by hand

You do not need new software to make a location-based count defensible. You need an order of work and to keep the count sheets as support, so that every adjustment line traces back to the sheet it came from.

1. Collect the count sheets for every location on the plan, and check that no location is missing a sheet.
2. Add up each item across its locations.
3. Compare each total with the quantity in QuickBooks and write the variance beside it.
4. Send someone to recount the large variances without showing them the QuickBooks number first.
5. Enter one adjustment line per item, as a new quantity or a change in quantity, whichever matches how you wrote the variance.
6. Keep the count sheets and the variance list with the adjustment, and give your accountant both before you save.

Keep the recount sheets too. A variance that changed after a recount is the one your accountant will ask about, and the two sheets together are the answer.

What the adjustment does to the books

Intuit's adjustment article says that when you save the adjustment, QuickBooks posts entries to the Inventory Asset account and to Cost of Goods Sold, under the inventory adjustment account you select on the form. Settle the adjustment date and the account with your accountant before you save, and treat a saved adjustment as a record you will have to explain. An item that does not appear on any count sheet may be zero, but it could be that a location was missed, so look before you enter a zero.

Inventory Counts in QuickBooks

If your company shows an "Inventory counts" option under Products and services, Intuit's instructions have you pick all products or a subset and enter a New Quantity for each; finalizing creates an Inventory Quantity Adjustment. Those instructions have no step for recording a location or assigning a counter, and none for a recount or an approval. The sum by item and the proof of coverage happen before that screen, the same as they happen before the adjustment form.

When entering the adjustment directly is enough

Entering the adjustment directly is enough when one person can produce one dependable total per item and nobody needs proof that every location was covered. A single stockroom counted by its owner in an afternoon is that case. The adjustment form takes the number, and the count sheet in a folder is the support.

Where InventoryWare Count fits

If adding each item up across its locations, and knowing which locations were counted, is the work you want off your desk, this is where InventoryWare Count fits. Count records every counted quantity against a location, and it sums an item's counted total across the plan's locations. Count connects to QuickBooks Online and compares each counted total with the quantity on hand it imported. The QuickBooks quantity comes in when you sync, and every sync refreshes the items already in Count, so sync right before the count.

An item nobody counted is never adjusted automatically. An item that QuickBooks shows in stock and nobody counted is listed as a possible missing item, and it is sent as zero only after a manager approves it as zero.

Nothing posts to QuickBooks until the count plan is complete, and then only the lines a manager has approved post. One approved line is enough to send.

An unapproved line is never sent. Only a count manager or the company owner can approve a discrepancy. A recount that changes an approved quantity voids the approval, and the line does not send until it is approved again.

A manager can reopen a location for recount from the plan audit screen, and the plan returns to in progress until it is complete again. Count is built for one complete physical inventory count; posting adjustments to QuickBooks from a partial count is not available. Variance and count reports can be exported to Excel and PDF.

For a plain statement of the book quantity, see quantity on hand in QuickBooks. If part of your warehouse is counted on a rolling schedule, cycle counting versus a physical inventory count explains how that job differs from this one.