Non-inventory product
1. Introduction
A non-inventory product is a type of product that is procured, sold, consumed in production but we do not keep inventories for it. its current quantity does not matter to us.
Usually, these are low-value goods whose accurate monitoring would not significantly affect business results.
The most common examples are nuts and bolts, packaging, cardboard boxes, oils, lubricants, etc.
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2. Setup
These items are open as a special item type in the Products and services list.
The setting, in particular, does not deviate from the setting of the regular product.
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3. Non-inventory product behavior
The behavior of this type is exactly the same as the classic product. You can receive, pack, load material, transfer, etc.
Options that cannot be done are tied directly to stock tracking.
Some of them are:
- Stock Adjustment
- Stocktaking
- Fulfillment (backorder)
- Stock/inventory card
- Serial / Lot number
- Output item (work order)
- On hand, Reserved, Below minimum, Committed, Awaiting quantity
NOTE:
When checking the quantity status for a Sales order (or work order), for non-inventory items it’s assumed that the required quantity is available.
For example. if we only have non-inventory items in the Sales order, then the status will be “available quantity”, ie ready for packaging.
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4. Bill of Materials and Kitting
The non-inventory item may be part of the Kit item or Bill of materials.
Setup in KIT:
Sales Order Behavior:
Bill of materials look:
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5. Cost / revenue – internal ERPAG accounting
If you are using internal ERPAG accounting we need to explain how costs are formed.
Since the non-inventory product has no inventory tracking, therefore it doesn’t have a stock card. Cost of goods sold (COGS) cannot be formed by either the Weighted Average or the FIFO method (https://blog.erpag.com/2019/01/fifo-vs-weighted-average-inventory.html) at the sales point.
In the case of non-inventory products, COGS is filled at the time of purchase, while in sales we only have revenue.
Procurement – Purchase order:
And the related journal voucher:
Sales – Sales order
And the related journal voucher:
As we have mentioned, items of this type are usually of low value, so the business result will not be affected. If all that is acquired during the year is also sold (or spent) there will be no deviation.
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6. Integration with QuickBooks Online
And for this kind of item integration with QuickBooks Online is fully supported.
An appropriate account must be specified in ERPAG.
More information about integration can be found at the following link: https://blog.erpag.com/2018/09/quickbooks-online-erpag-manufacturing.html
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7. Integration with XERO
XERO as accounting software also supports non-inventory products.
In Xero, it’s enough to disable “I track item”.
In ERPAG you need to set up adequate accounts.
More information on XERO integration can be found on our blog: https://blog.erpag.com/2019/08/xero.html
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2019. ERPAG Inc
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