Tracking inventory is hard enough, but how do you manage the people who are tasked to manage it? If you’re the QuickBooks Administrator, you can take back control. Here are eight procedures you can implement to keep your employees from wrecking your QuickBooks inventory.
1. Prevent Employees from Creating “Negative Inventory”
Performing, or failing to perform, transactions in QuickBooks that results in a negative carrying balance of inventory is the number one reason for data corruption in the data file.
Workers neglect to enter Item Receipts. Customer service enters invoices without sufficient quantity on hand. Inaccurate inventory adjustments are made. Whatever the reason, QuickBooks cannot calculate an average cost-of-goods-sold (COGS) of the item when it’s sold, if the item has a negative quantity.
In QuickBooks Premier, set the warning “if not enough goods to sell” to the “Quantity Available,” not the “Quantity on Hand.” The quantity available is the result of your quantity on hand less all of the other outstanding orders needing that item. You may have enough quantity to fulfill this order, but not all of the others. By using this setting, the user gets a warning that the order they are entering will put the balance of items into negative territory.
You can find this setting by going to Edit => Preferences => Items & Inventory => Company Preferences and clicking the radio button.
Create an internal policy that when the user gets this warning, they need to either alert or tell the warehouse or purchasing personnel that this has occurred and ask how to resolve it, before completing the order.
QuickBooks Enterprise is even more constringent. It has an option for “Don’t allow negative quantities.” This completely prevents the user from completing a sales document that would force quantities to go negative.
While this setting is preferable, it’s not feasible in every business. If a business is drop shipping items that it also stocks, or needs to invoice before the items actually ship, use of this setting could cause further process problems. In that case, revert back to using the “Quantities Available” option at a minimum. Preventing the negative inventory in the first place will also prevent data corruption later on.
2. Withhold Permissions
This is a surprisingly easy way to prevent employees from making mistakes, but a lot of businesses don’t take the time to set it up. In fact, a lot of businesses give almost everyone “Full Access” to the file because people play many roles. This is a mistake, as it opens people’s access to areas they probably don’t need access to, and thus to making mistakes.
In QuickBooks Premier, you can set the users to general roles, such as Accounts Receivable, Accounts Payable, or Payroll, and restrict their access to sensitive financial information and reporting.
In QuickBooks Enterprise, you set up the users’ permissions under Company => Set Up Users and Passwords => Set Up Users…. Most admins are familiar with the User List tab. The other tab, “Role List,” is where you get down to the nitty gritty of setting up specific tasks that users can perform. QuickBooks gives you 15 pre-defined roles based on general business roles. This is as far as most businesses go: they assume the roles are set up to fit every circumstance, and they pigeonhole their employees into the preset roles.
Instead, edit one of the existing roles to see what it covers, then click “Duplicate” to create your own.
Say you have a warehouse manager who frequently receives back returned customer orders for defective or out-of-date stock, and you want that person to be allowed to enter credit memos for the items. That is not normally an allowable task under the Inventory role. So, you simply duplicate the role, add that task to the permissions, and then assign the new “Warehouse Mgr” role to that person.