Inventory

Learn more about managing inventory for your items and generating inventory reports in your Zoho Books account.

FIFO Inventory Valuation Method

FIFO: First In First Out is a method of inventory management where the items purchased first are sold first. FIFO method is widely accepted as the most practical way of inventory management. International Financial Reporting Standards do not provide any restrictions on the usage of FIFO system in reporting financial results.

Advantages of FIFO Method

Industries using Inventory

Small and medium businesses dealing with products can use the inventory module for their business. Some examples of the businesses are:

Enabling Inventory Tracking

Inventory tracking can be ​enabled for your Zoho Books account by navigating to Settings > More Settings > Preferences > Items and under the inventory section selecting the Would you like to enable inventory? option.

Enable Inventory

Inventory account keeps track of the total current asset value of the stocks in your inventory.

Select the Do you want to notify if the item quantity drops below re-order point? to enable re-order point option while creating a new item. If the option is unchecked, re-order point will be disabled and the email address tab will disappear.

Email Address can be of the person who is responsible for purchase/inventory in your organization. The notification about the drop in quantity below re-order point is sent to the email address entered.

Workflow

Inventory Workflow

Creating a New Item with Inventory Tracking

Items are an integral part of your business. Learn more about Creating Items.

Now you can track inventory for the items you create in your Zoho Books account.

Select Track Inventory for this item option to ​add the item for inventory tracking. ​If you do not wish to track the inventory for a particular item, keep the Track Inventory for this item unchecked.

New item with Inventory

If you wish to track some of your items in a different inventory account, an additional inventory account can be added before creating an item. Learn about Adding Inventory Account.

Reorder Point can be entered at the time of creating an item. Learn about Reorder Point

Selecting a Preferred Vendor will help you in tracking the items which are below re-order point and to order the items instantly. Learn about Preferred Vendor.

Note: Existing items with transactions recorded in your Zoho Books account ​can not be added into your inventory.

Stock on Hand

​ After creating an item with inventory tracking, navigate to the Items tab and select All Items. From the list of items available, you will be able to view the Rate of the item, Purchase Rate of the item and the Stock on Hand.

For a newly created item the stock on hand will be 0.

Nil Stock in Inventory

Note: If you have stock on hand while creating an item and wish to update the same, you can do it by adjusting the inventory.

Filling up Items in your inventory

Once you create a bill for the items you received, the item quantity will get updated in your inventory. You can also convert the purchase order you have sent to your vendor as a bill, Learn more about Converting Purchase Order to Bill.

Creating a Bill

Filling up Inventory

Inventory Drops

Once the sale is made and the invoice is sent to ​your customer or if the invoice is marked as sent, the quantity available for the particular item drops in your inventory.

Inventory drops

Reorder Point

​The stock level at which you would like to replenish the stock is called the ReOrder Point. Reorder point can be entered at the time of creating the item.

Inventory Re-order point

When the quantity of an item drops in the inventory below the reorder point, a ​notification mail will be sent to the user notifying the drop in quantity.

Inventory Re-order point

Inventory Re-order point mail

Now you can again purchase items from your vendors to fill the inventory.

Preferred Vendor

A contact which is created as a vendor can be selected as a preferred vendor while creating an item with inventory tracking.

When the quantity of an item drops below the reorder point, you can order the items from your preferred vendors. Navigate to the Contacts tab and filter your contact list with Vendors - Reorder Items option.

Preferred Vendor in Inventory

You will be able to view the filtered vendors who are associated with the items that are below the re-order point. Now select the vendor you wish to order your items from, and click on Order Now.

Preferred Vendor in Inventory

Fill in the required quantity you wish to purchase from your vendor and select Add.

Preferred Vendor in Inventory

A purchase order will be automatically created and you can send them to your vendor.

Inventory Adjustment

Make an Adjustment

You can now make adjustments to your stocks. Add or remove stocks from the quantity available and record as an adjustment. To make an adjustment navigate to Items > Inventory Adjustments and simply select the Make an Adjustment option.

Make an adjustment Make an adjustment

Field name Description
Items Item added in the inventory to be selected from the drop down.
Date Date on which the adjustment is to be made.
Account Account in which the item was recorded during purchase.
Quantity Available ​Quantity available on a selected date for the selected item in the inventory.
New Quantity on hand The actual quantity available in the inventory on a selected date.
Quantity Adjusted The difference between Quantity available and Quantity on hand. This field automatically updates with the adjusted quantity.
Reason Reason for adjustment made on the inventory.
Inventory Reason for Adjustment
Description Notes that you can add over the adjustment you have done.
Adjustments:
Adjustment Type Description
Increase in inventory on adjustment Increase in Inventory
Decrease in inventory on adjustment Decrease in Inventory

You can also type in your own reason for adjustments you made.

Custom reason in Inventory

Reports

The reports section in your Zoho Books account has a dedicated report module for the inventory tracking feature. Navigate to the left panel and select Reports, and select the Inventory option.

Inventory Summary

Generate a report showing a quick summary of your stock details and the orders raised for purchase and sales of your items for a selected date range.

Inventory Summary Report

Field name Description
Item Name Name of the item under inventory.
Quantity Ordered Quantity raised for purchase in the purchase order.
Quantity in Demand Quantity raised for sales in the sales order.
Quantity In * Quantity successfully purchased from the vendor.
* If items are recorded as credit notes.
* For any manual adjustments to increase item quantity.
Quantity Out * Quantity successfully sold to the customer.
* For any manual adjustments to decrease item quantity.
Quantity Available Remaining quantity available in stock after sales & adjustments.

Inventory Valuation Summary

Generate a report to show the quantity of items available and to know the asset value of your inventory for a selected date range.

Inventory Valuation Summary

Field name Description
Quantity Available Item quantity currently available in stock.
Inventory Asset Value Total value of the items in stock.

If you wish to generate a valuation summary report for each item in your inventory for a selected date range, click on the item from the inventory valuation table and you will be able to view the complete valuation summary of the item.

Inventory Valuation Summary

Field name Description
Date Date on which the item was purchased, sold or adjusted.
Transaction Details This column shows the transactions that directly affects the item quantity in your inventory.
Quantity Quantity purchased, sold or adjusted from your inventory.
Unit Cost Cost of the item per unit.
Stock on Hand Stock on hand after the transaction is made.
Inventory Asset Value Asset value of the inventory with the available stock.

FIFO Cost Lot Tracking

Generate a brief report ​ on the complete transaction details of each item for a selected date range.

Inventory FIFO Cost Lot Tracking

Product In

Field name Description
Date Date on which the item was purchased
Transactions The transaction column shows the bills created to purchase the items from your vendor.
Received From Vendor from whom you have purchased the items
Item Name Name of the item purchased
Quantity The number of items you purchased from your vendor through the given transaction.
Total Amount you have spent on purchasing the item.

Product Out

Field name Description
Date Date on which the item was sold to your customer.
Transactions The transaction column shows the invoice used to sell the item to your customer.
Disbursed To The customer to whom you have sold the item.
Qty disbursed The number of items you have sold to your customer.
Print, Export and View in Zoho Sheet

Inventory Report Actions

Use the action panel at the top of the report window to print, export as PDF, CSV and XLS and view the report in Zoho Sheet.

Accounts Related to Inventory

Adding Another Inventory Account

You can always add another inventory to manage your stocks in your Zoho Books account. Navigate to the Accountant tab and select Chart of Accounts.

On top of the accounts window, you will be able to find a New Account button. Click on the button to add another account.

Another Inventory Account

Another Inventory Account

Another Inventory Account

Adding a Purchase Account

To add a purchase account, click on the Account drop down from the Purchase section and select New Account.

Adding a Purchase Account

Adding a Purchase Account

In the next window, type in the​ desired name for your purchase account and click on Save and Select.