How to use Xero to track your inventory
If you're a business owner who uses Xero and wants to start tracking your inventory, you're in luck!
Xero has a really good built-in inventory tracking system that's easy to use and can help you stay on top of your stock levels.
Here's a quick guide on how to get started:
Set up your inventory accounts. In Xero, you'll need to create two accounts to track your inventory: an inventory asset account and a cost of goods sold account. Whilst you may want to do this yourself, we strongly advise asking your Bookkeeper or Accountant to make changes to your Chart of Accounts.
Add your inventory items. Once you have your inventory accounts set up, you can start adding your inventory items. To do this, go to the Products and services menu and click New item. Enter the item's code, name, and other relevant information. Be sure to select the Track inventory item checkbox.
Set your inventory opening balances. If you're already tracking your inventory outside of Xero, you can import your opening balances into Xero. To do this, go to the Products and services menu and click Import. Select Opening balances and then click **Download existing opening balances to generate a file containing all your tracked inventory items.
Track your inventory transactions. Once your inventory items are added to Xero, you can start tracking your inventory transactions. When you purchase inventory, create a purchase order or bill and select your inventory items from the list. When you sell inventory, create an invoice or sales receipt and select your inventory items from the list.
Run inventory reports. Xero offers a variety of inventory reports that can help you stay on top of your stock levels. To run an inventory report, go to the Reports menu and select Inventory.
Here are some additional tips for using Xero to track your inventory:
Use inventory item groups to organize your inventory items. This can make it easier to find and track your items.
Use inventory adjustments to make manual adjustments to your inventory levels. This can be useful if you need to correct a mistake or account for stock that has been lost or damaged.
Use inventory alerts to notify you when your inventory levels fall below a certain point. This can help you avoid stockouts.
If you have a large number of inventory items, you may want to consider using a dedicated inventory management app that integrates with Xero.
How to use Xero to track inventory for small businesses
Xero is also a great option for small business as it's easy to use and affordable.
Here are some tips for using Xero to track inventory for small businesses:
Start by tracking your most popular inventory items. This will help you get a good understanding of how much stock you need to keep on hand.
Use inventory alerts to notify you when your inventory levels fall below a certain point. This will help you avoid stockouts.
Run inventory reports regularly to track your stock levels and sales trends. This information can help you make better decisions about your inventory management.
If you need help getting started with Xero inventory tracking, then please do message our team. We are experienced and specialise in Retail and Ecommerce Bookkeeping.