The key for success in a retail environment is inventory management. QuickBooks Point-of-Sale (QB POS) is a tool that provides guidance throughout the complete process from Purchase Orders to Sales Receipts. Inventory is a large investment and the key is wise management to ensure profitability.
Managing inventory starts with proper tracking of what you have on order from your vendors. The purchase order features within QB POS allows you to track what you have ordered that is still outstanding. Once you receive the inventory, you use the receiving process within QB POS to accurately account for those items moving into inventory. If you do not receive inventory into QB POS and track your sales, then your inventory and cost of goods sold figures are inaccurate. This means both your Balance Sheet and Profit/Loss Statement are unreliable. Without good financials, it is difficult to make good business decisions.
When you have a large amount of inventory items, it can be a large task to get the data into your QB POS system. There are three ways that you can get inventory into QB POS. If you’ve been using QuickBooks Financial System (QBFS) and your inventory information is accurate and complete, then the easiest is to select to import that data directly into QB POS. This is part of the setup interview process within QB POS.
If you have not been using QBFS and you have the data in Excel or a comma-delimited file, then you can import the data. This option is found under File/Utilities/Import in QB POS. If you don’t currently have your data in one of those formats, you can use the Default template provided through this same path in QB POS. You can import your customer, inventory or vendor data into QB POS. The key is making sure that you follow the guidelines outlined in each of the importing options because even the slightest difference in the mappings can cause errors. You can import your original inventory data or updates at a later time. This is a very useful feature to keep your item information up to date as your vendor’s pricing changes.
The third option for data input into QB POS is to input the inventory manually into your QB POS system. This is the most time consuming; however, if you don’t have your inventory in QBFS or Excel, then it’s your only option. The biggest error I see clients make is that they start using the system to make sales prior to getting the entire inventory into QB POS. They always think they will keep things straight, but often times it creates a huge mess because they don’t know which items they’ve done and which they haven’t. My recommendation is to always get your full beginning inventory data into QB POS prior to going live.
Once you get the data into QB POS, the key is ensuring that all your items are received into QB POS when you receive your inventory physically and that all sales are recorded. One of the easiest ways to get your inventory out of control is being inconsistent about your processes of receiving and selling items.
A physical inventory should be completed on a routine basis. Depending on the size of the retail inventory, the timing can vary. Some businesses do cycle counts monthly on different product lines vs. doing an overall store inventory because of the sheer size of their inventory line. Others will do a complete store physical inventory count once or twice a year. Analyzing variances between actual and QB POS inventory counts will alert you to potential problems. These problems could include theft, damage, inaccurate processes, etc. Theft can be from employees or customers. Damage happens through the normal day-to-day operations and care should be taken to minimize this effect. Carelessness and incomplete processes are the fastest ways to reduce your profit margins. Inventory is money and when you don’t take care to ensure you know where it is coming from and going to, you are just asking for errors and losses.
Three key things I look at when dealing with inventory are:
- Are your profit margins trending consistently overall and on key items?
- Do you have a large number of unexplained “missing” items?
- Do you have processes established for order, receiving, and selling of items? If so, are they being followed consistently by all?
These three questions are where I start to analyze inventory aspects. Using the reports within QB POS can help you with these areas.
There are various reports available within QB POS to help you monitor your sales, profit and overall inventory management. One report that can help you is the General Sales – Best or Worst Sellers that can alert you to the top selling items and those that are the worst selling items. The General Sales – Item Sold will show you the margins on the items you have sold. There key to improving your overall profitability is to sell more items at higher profit margins. These are just two of the reports that will help you with your decision making. Many more reports can be found within your QB POS.
QB POS is a good resource tool for small and mid-size retailers. It can be used by a variety of retail types; however, I do not recommend it for restaurants. There are many restaurant industry specific types of software that are better suited. I have clients who sell everything from liquor, specialty decorations, dental products, tile and stone, computers, barbecue products, and more that have been very pleased with QB POS. The key is to find what is available for your specialty type of retailing business and analyze how it compares to QB POS. Through the cost/benefit analysis you will then be able to decide if QB POS is the best option for you.
Pam Newman, President of RPPC, Inc., Author of Out of the Red, Host of Unlocking the Secrets of Your Small Business Radio Show, Certified Sleeter Group Consultant, QuickBooks Financial and Point-of-Sale ProAdvisor provides Accounting and QuickBooks Consulting for businesses to help them keep money from slipping through their fingers. For more information: www.rppc.net or 816.304.4398.