I know. It’s so painful. Is it inventory? Isn’t it? Is product flowing through from my PSA into QB Online? Why aren’t costs and revenue matching? It’s really challenging and we hear it all the time. This small pearl of a post is designed to give you a little guide on how to turn on your inventory module in QuickBooks Online if you are tracking inventory between your PSA (i.e. ConnectWise) and QBO. Here goes. Big special shoutout to Michelle Zix on our team who drafted this content. Thanks Michelle.
Inventory
Inventory should be turned on in QBO in order to ensure hardware-software resale revenue and COGS are booked in the same month on the P&L. This also gives assurance that all products purchased have been invoiced to a customer.
To turn on inventory in QBO navigate here:
- Go to the Gear in the upper right
- Account and Settings
- Sales
- Products and services
- Track inventory quantity on hand
Should look like this:
For Hardware/Software Resale Items Using Manufacturer’s Part Numbers
- ConnectWise – Item in Product Catalog should be “Type: Inventory”. Class can be inventory or non- inventory depending if you want to track inventory in CW or not.
- QBO – Item in Product list should be “Type: Inventory”
Example 1:
If client is invoiced and invoice transferred to QBO before hardware/software is purchased or vendor bill entered:
- Revenue is booked as of date of customer invoice
- COGS is booked as of date of customer invoice based on cost from CW and/or QBO average cost
- Inventory shows as negative quantities/value (items sold, but not yet purchased)
Once the item receipt is pushed from ConnectWise to QBO -OR- vendor bill is manually entered using the manufacturer’s part numbers, inventory quantities/value will go to zero, AP liability is reflected.
Example 2:
If hardware/software is purchased or item receipt from ConnectWise is entered in QBO before client is invoiced or before customer invoice is transferred to QBO:
- No revenue booked
- No COGS is booked
- Inventory shows as positive quantities/value (items purchased but not yet sold) AP liability is reflected
Once customer is invoiced and invoice is pushed to QBO, revenue and COGS are booked, inventory quantities/value will go to zero.
If you have any further questions, email us at hello@stride.services and we’ll get back to you promptly. You can also learn more about Stride’s work for MSP’s at www.stride.services/msp
