QuickBooks Non-Inventory Items

If you are a user of QuickBooks you are most likely familiar with the importance of items to use the software correctly. You probably also know that there are several types of items, such as Inventory Item, Fixed Asset Item, Sales Tax Item, Sales Tax Group Item, Sub-total item and others. Let’s take a look at one in particular; QuickBooks Non-Inventory Items.

How are Non-Inventory Items Used?

QuickBooks non-inventory items (non-inventory parts) are used to purchase things that you do not want to track as inventory. The three principle ways this is used are to purchase something that is for a particular customer and job, to purchase items for in-house use by the business (such as office supplies), and to purchase an item for resale that you do not carry as an inventory item. For example, say a customer places an order for something that you normally carry and for a special order of something you do not regularly sell. The first item is most likely an inventory item. However, to avoid creating items for infrequent or one-time use that will use some of the limits for items, it makes more sense to use a non-inventory item for the second thing they ordered.

A Special Case

Imagine your business is one that provides services to basically the same customers on a repeat basis. Perhaps you charge for services but also charge for parts that are specifically purchased for that customer. Let’s say that your business is an auto repair service. A customer may have one or more vehicles that you service. It makes sense to set up a Customer:Job for each vehicle. Then, if customer one needs to you work on vehicle A, you create an estimate for that particular Customer:Job. All work done on that customer’s vehicle A will be handled under the same Customer:Job. For that customer’s second vehicle setup a Customer:Job for that particular vehicle.

How Does this Work in Practice?

Imagine the customer above brings in vehicle one for a brake job. While you may have a standard service item with multiple rates, it is likely that you do not want to use an inventory item to purchase the brake pads for this repair. Instead, use a non-inventory item called “Break Pads” and record the purchase using this item and identifying it with that particular Customer:Job (that is vehicle one). If you want you can create an estimate that you can use to create an invoice when the work is done. When you create the invoice you can select the estimate you want to use and makes changes as needed.

Now let’s say the same customer wants spark plugs changed in the same vehicle. Again, use a generic non-inventory part called “Spark Plugs” and identify the purchase with this particular Customer:Job. Again, if you want you can create an estimate for this work. It is important to note that the same Customer:Job is being used to track work on the same vehicle at multiple times. It is also important to note that these same generic non-inventory parts (Brake Pads and Spark Plugs can be used of multiple customers. All that is required is to identify a particular purchase with that customer and job. It is also a good idea to add additional description when you record the purchase of the parts and when you invoice. Imagine if you tried to use unique inventory or non-inventory items for each type of brake pad or spark plug. You could quickly use up the available items. But, the use of generic non-inventory items avoids this problem by allowing you to use the same non-inventory items for multiple parts and identifying them with specific Customer:Jobs.

Another Benefits

If you have a Customer:Job for each vehicle you have a quick way to review what you have done for that particular customer on that particular vehicle.

How do you use QuickBooks Non-Inventory Items? Are you pushing the limits on the maximum number of items available? If you use the process above you can likely avoid this problem while at the same time providing revenue, cost and profit information for each service you provide a customer for each unique vehicle they own. Think about whether this would work for your business. It does not have to be an auto service business, but merely one that operates similar to the way above.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.


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