How to Use Enhanced Inventory Receiving in QuickBooks Desktop Enterprise

Before you start

• Enhanced Inventory Receiving is only in QuickBooks Desktop Enterprise.
• Once it's on, you can't turn it off. Back up the company file first.
• Intuit suggests trying it in a sample file to see if it fits how you buy. If your main file is large, condense it before you switch.
• The Purchase Order Management Worksheet stops being available. If your warehouse uses it, plan around that first.
• Intuit warns that third-party apps might not work with inventory afterward. Check with whoever looks after yours.
• Talk to your accountant. A new Inventory Offset account changes how receipts and bills post.

What changes when it's on

Two more effects. When a bill's cost differs from the item receipt it's linked to, QuickBooks changes the receipt to match the bill. Average cost is also recalculated with every receipt. Intuit says this can reshuffle a day's inventory transactions and sometimes leave small rounding differences in average cost.

How the Inventory Offset account works

Turning the feature on adds a liability account named Inventory Offset. It sits between item receipts and bills: the receipt puts an amount in, and the matching bill takes it back out.

A bill entered with items still posts to Inventory Offset. The amount stays there until the matching item receipt is entered. For the accounts behind this, see how the inventory asset account and COGS work.

Step 1: Turn on Enhanced Inventory Receiving

1. 1Back up the company file and keep the backup somewhere safe.
2. 2Go to Edit > Preferences and select Items & Inventory.
3. 3On the Company Preferences tab, select Enable for Enhanced Inventory Receiving.
4. 4Read the warning. Intuit's steps say older versions use Continue, then OK. In Enterprise 24.0, you type Yes to confirm, then select Continue.
5. 5Complete the backup step. It can take a while on a large file.
6. 6Review the summary of changes QuickBooks shows when it's done.

What happens to your existing transactions

• Intuit says QuickBooks creates an item receipt for every bill in your company file, which adds to the number of transactions.
• Intuit warns that some common reports may look different, because QuickBooks can record transactions differently after the switch.
• Job Profitability Detail can show 0.00 in the actual cost column. The report filters out Inventory Offset, so change the filter to include it.
• The Purchase Order Management Worksheet is gone. Intuit says you can restore a backup made before you turned the feature on, but you lose every change made after that backup.

Step 2: Receive stock and enter bills

1. 1When goods arrive, record an item receipt against the purchase order. This adds the stock.
2. 2When the supplier's bill arrives, create it from the purchase order or from the item receipt. This records what you owe.
3. 3If the bill comes first, enter it, then record the item receipt when the goods arrive.
4. 4Open the purchase order to see the quantity received and the quantity billed.
5. 5Pay the bill from Pay Bills as usual.

The receiving screens are in How to receive inventory against a purchase order. Paying is covered in how to enter and pay bills.

Limits once it's on

• Item receipts and bills can't have negative lines.
• Item receipts can't carry expenses.
• Items on item receipts can't be marked Billable.
• Close a purchase order for non-inventory items with an item receipt.
• A purchase order's quantity can't drop below what's already received or billed against it. The same rule applies between linked receipts and bills.

Landed cost still works. The calculator shows every bill as a shipping and handling bill, and Intuit recommends sticking to the Enhanced Inventory Receiving workflow. See How to set up and use landed cost.

If the Inventory Offset balance looks wrong

Intuit's fix is a report of all Inventory Offset transactions, used to reconcile the account. Find a vendor whose balance doesn't end at zero. In that vendor's transactions, an item that shows up an odd number of times is missing either its item receipt or its bill.

Where QuickBooks Desktop leaves the work to you

• Every delivery needs an item receipt and every supplier invoice needs a bill. Missing either leaves a balance in Inventory Offset.
• Someone has to reconcile Inventory Offset vendor by vendor.
• When a bill's cost differs, QuickBooks updates the receipt, so someone should review those differences.
• Short or late deliveries leave purchase orders partly received until someone follows up with the supplier.
• The switch is permanent, so the testing has to happen first, in a sample file.

How Logistify helps

Logistify doesn't receive inventory, enter item receipts or enter bills. The Procurement Service follows up with suppliers on open purchase orders, including ones that are only partly received. Your team still records each item receipt and bill. For the manual version, see how to follow up on late supplier orders.