Internal 0010: True "Inventory" vs. "Stock" used by Customers on Jobs
This article summarizes the difference between how accounting software (and ServiceBox) views "Inventory" and what a customer sometimes calls "inventory" but is, in fact, bought, expensed, and managed as "Stock-On-Hand".
Accounting software makes a hard distinction between Non-Inventory and Inventory Items when it comes to materials used for a job. The software treats them very differently because of this distinction.
A "Non-Inventory" type of item is one that does not allow a record of how many items may be kept on hand until used, hence the term "non-inventory". Non-inventory items are usually not bought for a job until needed for that job, or just before it is being undertaken immediately. Once bought, they are expensed immediately.
An "Inventory" item is treated as a company asset when purchased in the accounting software until it is put on an invoice. Only then does its' use on the invoice become accounted for as "Cost of Goods Sold" and an invoice revenue, to reflect a profit for the item on the job used. Also, an inventory item is tracked as to its' quantity on hand in a location (usually only one) when it is purchased and then is drawn down on as it appears on the accounting software's invoice.
In ServiceBox, our Inventory module and items tracked there are separate and distinct from all other items. In our Quote Items tab, the categories are linked via the Accounting Connector to specific Revenue Accounts or Sub-Revenue Accounts and are USUALLY, though not always, representative of a single Item type. The items are usually Non-Inventory or Service Items, but may be others too.
A unique feature of ServiceBox is that you can track items as "Inventory" in ServiceBox even if you do not treat them that way in the accounting software. Some companies that have "Stock-On-Hand" would like to know how many units of an item they have available for a job and where those units are. ServiceBox allows for this in our software. When an inventory item on a ServiceBox invoice is transferred to the accounting software, the item does not enter the software as an inventory item but as a non-inventory item.
Another difference between ServiceBox and most Accounting Software setups is that Accounting Software typically has only one (1) location for recording Inventory items (usually the warehouse/shop/office). ServiceBox is built to be flexible, allowing you to create as many inventory locations as you want/need to manage (warehouse, 10 vans, secondary warehouse location, etc.).