How QuickBooks Reserves/Allocates Inventory

 In Add-ons / Apps for QuickBooks, Inventory Management in QuickBooks, Post, QuickBooks Desktop, QuickBooks Enterprise, QuickBooks for Mfg + Distributors, QuickBooks Reports, QuickBooks Tips and Training

Let’s take a closer look at a common QuickBooks question:

“How does QuickBooks reserve and/or allocate inventory”?

TO RESERVE OR NOT TO RESERVE YOUR INVENTORY?

The key to a better understanding of inventory allocation in QuickBooks is the inventory stock status report.

Here is a sample report:

Reserve and hold inventory in QuickBooks

Let’s inspect some key details:

  1. On Hand – The current on-hand value for the inventory item
  2. On Sales Order – shows how many of this item you need for existing open/unfilled sales orders in QuickBooks Premier/Enterprise (sorry, Pro and Online do not have sales order capability)
    • Pro tip – if you need to see the details behind the quantity here, double click the number. Then, change the date range to “All” to see all the open sales orders calling out this item
  3. For Assemblies – shows how many of this item you need for existing open assembly orders in QuickBooks Premier/Enterprise (sorry, Pro and Online do not have assembly capability)
  4. Available – Here is the formula: On-Hand – On Sales Order – For Assemblies = Available

USING THE EASY VIEW TO SEE ITEM AVAILABILITY

When using the quote, sales order, or invoice screens in QuickBooks (Pro/Premier/Enterprise), note the little “tv graphic” (not sure what Intuit actually calls this thing!) tucked into the qty column:

reserving inventory in quickbooks

Click the icon and you go to the details behind that item – same as the inventory stock status report above.

Item allocations in QuickBooks

Now you can see the fully story about what you need for open orders as well as incoming shipments for that item.

IS QUICKBOOKS ACTUALLY DEDUCTING FROM STOCK WHEN ALLOCATING?

The answer is a definitive NO.

QuickBooks is telling you how many items you need to fill sales orders and assemblies, but it is up to your staff to actually pull the items aside and reserve them for those orders.

QuickBooks is only taking an item out of stock and reducing the on-hand value when:

  • It appears on an invoice
  • You close a build assembly transaction
  • You adjust an inventory count down

The process described above is referred to as a “soft allocation” of inventory. You see what is needed, but those items that are needed are not actually taken out of stock and reserved within the software itself.

I NEED A HARD ALLOCATION, NOT A SOFT ALLOCATION!

If you truly need items deducted/reserved from inventory upon receipt of an order, QuickBooks is not the right solution for you.

There is no preference or setting in QuickBooks to allow for this type of “hard allocation” of stock.

There may be an inventory management add-on for QuickBooks that allows for this. Keep in mind that if you go that route, there will be a big upheaval to your workflow. The add-on will then want to take over most of what you do in QuickBooks to manage inventory.

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Showing 2 comments
  • Paul
    Reply

    Can you please clarify and confirm this function needs the desktop Premier and Enterprise version
    Too many users have tried and are frustrated that Online version and Pro don’t offer this function

    • Scott Gregory
      Reply

      Hi Paul:

      The Stock Status By Item report is available in Pro/Premier/Enterprise. Online has a similar report.

      However, in Pro and Online, the report will not show anything relating to either sales order allocation or build assembly allocation, as neither of those versions have that functionality in them at this time.

      Hope this helps clarify…

      Scott

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