Inventory are things/materials that a business holds temporarily and then can be sold. For example, if you’re a computer shop, the computers that you have on hand is your inventory that will be sold to customers later on. You need to record the stuff that you have on hand because that’s of value to your business and if you didn’t have records and they stock was being stolen/lost/damage - how could you quantify the economic loss? Inventory is important and it’s important to record it.
This guide will explain how to set up inventory management in Xero.
4. Once you’ve filled in your details click “Save”. Now you have an inventory item recorded where you can add to (increase the amount), and see (decrease the amount of inventory held).
5. To add to your inventory balance, you create a purchase (go to Accounts > Purchases) and create a purchase invoice selecting your inventory item.
6. To sell an inventory item, create a sales invoice (go to Accounts > Sales) and select the inventory item you’re going to sell. When you save your invoice, your inventory balance for this item will be updated (e.g. if you have 12 units of cat food in stock and you sell 11, then your updated inventory balance will be 1).
7. Even if you’re making a quote in Xero, you can also commit your inventory (select the item) so that if the quote proceeds, you’ve reserved your inventory for that customer.
8. To manage/edit or to get an overview of the inventory that you have, go to Accounts > Inventory.
Next: Customising your invoice layout and design in Xero - Advanced