Receiving Inventory in QuickBooks

When receiving inventory in QuickBooks, it is critical to understand the proper process.This post explains the process QuickBooks uses.

The first step is to create a purchase order. Once the supplier receives the purchase order, they should send your order. When you receive the order, you tell QuickBooks what has been received. In some cases you may have only received part of a purchase order. QuickBooks will keep track of any items not received on an open purchase order and mark the items as backordered.

Once the items are received, QuickBooks increases both your inventory count and total inventory asset value, and also records an amount payable to your supplier. When you record the billing information from your supplier, you can easily pay the bill.

Often you will receive a bill from the supplier when the merchandise is delivered. Many times however, you will not receive a bill until several days later. QuickBooks allows for both situations. Here is an outline of each scenario.

Receiving Inventory in QuickBooks with a Bill

  1. Create a  Purchase Order for the inventory items needed
  2. When the inventory arrives, select the “Receive Inventory” icon. Click the arrow to the right of the icon and select the option “Receive Inventory with a Bill”. It is very important to match the packing slip with your purchase order. You may have received a partial shipment on some items, or even some items you did not order at all.
  3. When you are ready to pay the bill, select the “Pay Bills” option. You should see the check ready to be paid.

[quote]QuickBooks allows you to receive inventory even before the supplier has sent you a bill[/quote]

Receiving Inventory in QuickBooks without a Bill

  1. Create a  Purchase Order for the inventory items needed
  2. When the inventory arrives, select the “Receive Inventory” icon. Click the arrow to the right of the icon and select the option “Receive Inventory without a Bill”. It is very important to match the packing slip with your purchase order. You may have received a partial shipment on some items, or even some items you did not order at all.
  3. Once you receive the bill, you must select the icon “Enter Bills Against Inventory”. Enter the billing information.
  4. When you are ready to pay the bill, select the “Pay Bills” option. You should see the check ready to be paid.

Understanding the Process

Let’s stop and understand what has happened. QuickBooks will increase the Inventory Asset account for the items received and Accounts Payable will also be increased by the same amount. However, if you receive inventory without a bill you will not see a bill in the Pay Bills window.  How can this be?

Since we received the inventory without a bill, QuickBooks has no billing information from the supplier. In order to pay the bill, you need to enter this information into QuickBooks using the “Enter Bills Against Inventory” option. Once you enter the billing information, you should see the bill ready to be paid in the “Pay Bills” window.