As a small to medium-sized business, how should you manage your inventory? What are your options, and is QuickBooks Online really your best bet?

Cards on the table: we are definitely members of the QuickBooks Online Fan Club. In our humble opinion, QuickBooks Online is one of the best accounting systems for small businesses out there. Business owners love it and it’s a household name amongst accountants and bookkeepers because it's easy to use, affordable, and cloud-based so that you can access your data anytime from anywhere. And who doesn’t love their quirky Danny Devito ads? People who use QuickBooks Online to handle the accounting side of their business often  choose it to manage their inventory too. But is it really the right tool for the job?

What is inventory management?

As the name suggests, inventory management is about putting systems in place to track what products are in stock, where they are stored and what quantities are available to fulfill orders. Knowing this information is essential when you need to reorder products in order to prevent dreaded stockouts and avoid incorrect profit and loss statements due to mishandled management of inventory.

Inventory management with QuickBooks Online

Though many small businesses that already use QuickBooks will naturally try to continue managing their inventory operations with this same tool, they will soon run into limitations. It should be remembered that QuickBooks is, first and foremost, an accounting software.

Keeping this in mind, listed below are the main features included with QuickBooks Online’s inventory module:

- Track inventory across online sales channels

- Curate product lists with available quantities

- Receive alerts when it’s time to restock

- See insights on what you buy and sell

- Create purchase orders that automatically update available stock quantities

- Enter non-inventory products and services so you can quickly add them to your sales forms

You might find that these features meet some but not all of your needs, especially if your business is on a growth trajectory. But remember, if QuickBooks doesn’t fully meet your inventory needs, that’s because it's not meant to. 

It’s inevitable that as your business grows, you’ll need a more robust tool. Ideally, you need a tool that synchronizes with the accounting you do in QuickBooks while also providing you with advanced inventory and order management. 

But what are the real drawbacks of managing my inventory inside QuickBooks?

There are a few areas where QuickBooks falls short when it comes to solid inventory management, the main ones being:

1. Inability to manage multiple warehouse locations

As your business grows, it’s likely that you’ll need more than one warehouse to manage your inventory. However, QuickBooks Online only supports a single warehouse location and doesn’t offer the functionality to track inventory quantities across multiple warehouses. This is not a viable solution as your business grows as you’ll need more inventory across multiple locations to fulfill purchases.

2. Unsynchronized stock levels across e-commerce platforms

Although QuickBooks allows you to update stock quantities across products, it doesn’t synchronize stock across multiple selling channels. Instead, you are manually required to update product volumes across e-commerce platforms like Shopify and Amazon. This lack of synchronized stock levels makes it difficult to 1, know what stock is actually available, and 2, causes troublesome accounting issues.

3. Can’t handle advanced order management

QuickBooks has your basic order management needs covered, but when it comes down to it, there is no functionality for fulfilling orders, meaning you still need to log into your various sales channels to manage orders. You also don’t have an efficient way to track open-unshipped orders. Though many sellers turn to spreadsheets to keep track of this, it’s needless to say that that can get messy really quickly.

4. Spreadsheets, manual work, and human error

Tracking your inventory is also necessary in order for you to stay ahead of demand and control your costs - after all, inventory is your biggest expense. Unfortunately though, because QuickBooks isn’t built for managing inventory, many sellers find themselves using multiple spreadsheets to stay on top of everything. This way of doing things greatly improves the chances for human error, such as someone manually entering data from QuickBooks into a spreadsheet, and that data not being updated inside an e-commerce system. You risk getting stuck in a cycle of trying to keep all of your data points updated and correct. 

5. Limited reporting capabilities

QuickBooks Online is an accounting tool that provides accounting reporting. It cannot, however, offer its users deep insight into their business, especially for decentralized businesses using multiple outside sources of data to keep track of their business. QuickBooks won’t have the necessary information to curate comprehensive reports, which in turn makes it difficult for you to assess the state of your business, look at profitability reports, and decide which products to re-order or discontinue, for example. 

If I’m not using QuickBooks for inventory management, what are the alternatives?

QuickBooks Online manages your accounting needs best when paired with a specific inventory management solution. Automating tasks like receiving, storing, labeling, tracking, reporting and shipping inventory can help you run your business more efficiently whilst reducing your costs. 

How? Well, when you don’t spend hours of your day upkeeping spreadsheets and chasing the correct figures across platforms, you have more time to run and invest in your business. And needless to say, when everything is centralized in one place, errors due to mishandled inventory management are significantly reduced. 

Consider complementing your QuickBooks Online experience with a robust toolset that can handle advanced inventory and order management. Let ParagonSMB manage your operational transactions with the same ease that QuickBooks Online manages your accounting transactions.

ParagonSMB offers cloud-based inventory and order management, with integrations to Shopify, QuickBooks Online, and Amazon (coming January 2021). Centralize your data in one place so you can perform all your business operations with quotes, orders, inventory, pick/pack/ship logistics, and more.

If you use QuickBooks Online and want to give ParagonSMB a go, try it out for free for 14 days.