In QuickBooks, Inventory feature is used to keep track of “quantity in hand” of inventory parts and assemblies. For a small business “negative quantities” in inventory can create complexity and problems.
Negative Inventory happens when you have entered a sales transaction however you haven’t received the items.
Inventory control takes time for sure. For efficient tracking module, you need to enter every transaction that affects inventory. Generating timely invoices and inventory receipts for each transaction are equally essential. In a small business setup managing all these at the same time and in a timely manner becomes challenging. Thus, sales happen before receipts are generated leading to negative inventory state.
Inefficient knowledge of QuickBooks can also lead to this problem. You need to acquire a good and clear understanding of how QuickBooks works before start recording data and manage records. For example -While recording about the sales that happen it is equally important to update the receiving items section. Inefficient recording of both the sale and receipt transactions will lead to negative inventory.
When drop shipping items to a customer, you might want to record the sale transaction before the item is ordered. This again will lead to negative inventory data.
When you receive the item before you sell it, however, the bill receipt date is later than that of the selling date, a problem might occur when you change the receipt to a bill. This is because the date change will move the receiving date to be an after-sale date. This date changes will lead to a negative quantity on hand.
Problems you might have to encounter are:
⦁ Profit Incorrect profit and loss and cost of goods sold amount.
⦁ unbalanced Cash Basis balance sheet
⦁ Incorrect balance sheet inventory amount
⦁ Errors in Vendor reports
⦁ Inventory purchase bills reflecting on income and expense reports
⦁ Repeated data damage issues
How to find if your file has Negative Inventory?
Inventory Valuation Detail (IVD) report: The Inventory Valuation Detail Report is the ONLY report that you can use to check if your data file has negative inventory. Negative inventory shows with negative numbers in the Quantity on Hand (QOH) column.
How to run the IVD?
⦁ Go to the Reports menu.
⦁ Select Inventory then click Inventory Valuation.
How to Fix Negative Inventory?
Essentially, do not sell inventory items until you have purchased them and entered the purchases into QuickBooks.
If your file has multiple instances of negative inventory, E-tech offers a service to repair the data file and remove all instances of negative QOH.
Data Repair experts such as E-tech offers a repair service to fix all instances of negative inventory in the file. The service will analyze your source data file to identify the items and dates the quantity on hand (QOH) went negative and then fix all occurrences of negative inventory. The repaired file will not have negative inventory and will verify correctly in QuickBooks.