Latest / Unofficial QuickBooks Accountants Podcast / PSA: Item Receipts in QBO Inventory
Transcript
- There may be errors in spelling, grammar, and accuracy in this machine-generated transcript. Alicia Katz Pollock: In this episode of the unofficial QuickBooks Accountants Podcast, Dan DeLong and I are going to talk about the new item receipts in QuickBooks online. I'm your host, Alicia Pollock from Royal Xyz.com, and I've got with me Dan DeLong of School of Bookkeeping. How's it going, Dan? Dan DeLong: Very good. How are you? Alicia. Alicia Katz Pollock: I'm doing great. Alicia Katz Pollock: I'm really, really glad that you suggested this [00:00:30] topic because I have seen the item receipts showing up in different places, and I've seen it a button that says, do you want to turn on item receipts? This is not reversible, which of course did not make me want to click the shiny. Dan DeLong: Warm fuzzies with that one. Alicia Katz Pollock: No. And so I have been really, really drop dead curious to know what is going on with the new inventory enhancement tools. And so I would love to have you tell us the skinny, what are item receipts [00:01:00] and what is going on with inventory? Dan DeLong: Yeah. Yeah. So, um, thanks for having me. And this is one of those, um, explanations and stories that I, when I, my time at Intuit, I had to explain this over and over and over again. So I'm glad that I'm here to talk about this so that we can just say it once and then share the share the episode. Alicia Katz Pollock: Share this episode, please. Dan DeLong: Um, but we have to, we have to kind of take a step back [00:01:30] into desktop to really understand the definition of what an item receipt is because QuickBooks online just added it. So there is no history to that. So let's, let's go into desktop history. Our lesson here. So the, the simplest way that I would explain what an item receipt is to in QuickBooks desktop is. It's an item receipt is a bill that you cannot pay, right? I mean, that's, that's [00:02:00] the QuickBooks functionality definition of what an item receipt is. It affects the same accounts that a bill does. Um, even accounts payable. So if you create an item receipt and an item receipt represents. I've received merchandise to sell, but I haven't received the bill for it yet. Right. So that's, that's the, that's what an item receipt is and what they would call it, uh, or the function [00:02:30] inside of QuickBooks would be receive items without bill. Alicia Katz Pollock: Okay. So can, can I restate that in a different way? So I want to make sure that I've got this right. So basically in desktop, when you put in a Po and you order products in particular, we're talking about inventory products, right? And the products arrived in the warehouse. Sometimes you had a bill and were ready to pay it, but sometimes you were not responsible for the bill yet. So desktop had an option for either or either. Yes, [00:03:00] it goes to AP or yes, you're just receiving it and will turn it to AP later on, right? And then in online, that middle step was not there. If you were going, if you had a Po and the items come in, you immediately would recognize the inventory items into inventory assets and you would get the AP at the same time. So you had an open bill even if you hadn't received the bill yet. Right? Right. So this is giving [00:03:30] you the option of which workflow you need. Dan DeLong: Exactly. Now under normal circumstances inside of QuickBooks desktop, that scenario, when the bill finally showed up, posed a definite question or concern to to the business owner because there was just a checkbox on an item receipt that said bill received, which essentially turned that item receipt into the bill. Now, when does it do that? [00:04:00] It does that when you just when you tell it to do that, right. So here's the challenge. You've received items and merchandise in December, but you don't get the bill until January right of the following year. What date do you receive your merchandise? You receive your merchandise in December, right? But when you get the bill, when do you account for the bill? Because the item receipt again, the fundamental part, you [00:04:30] know, the simplest definition of an item receipt is a bill you cannot pay. It still affects accounts payable in December. Right. So there was a challenge, right? Because you then had to choose one of those dates as the date of truth. If you chose January. Now you've received all your merchandise in January, not in December. So those events weren't separate. Got it. Transactions. So to enter that, enter enhanced inventory [00:05:00] receiving into the mix here. This is now a desktop feature that gets added into. I believe it was, um, Enterprise platinum Edition, right? Or it could have been silver. I'm not sure if I don't know what precious metal, uh, of enterprise had this function, but it was, uh, it was a feature that basically allowed you to separate those two events into the dates that they happen. Dan DeLong: Right? [00:05:30] So your items receipt was created in December and it stayed in December. And the bill for said item receipt was created in January and it stayed in January. Great. But it was one of those features that was in desktop was a feature that you could, once you turned on, you could not turn it back off, right? It's like multi-currency when you, when you enable those features, you enable it and it, it does not, [00:06:00] uh, there's no go back machine unless you make a backup and go back to that. Right. So what happens when you do that is that your item receipts are are recording the receipt of the merchandise and instead of it going to accounts payable being a bill, you cannot pay item receipts. In this case, go to inventory offset, which is another asset account [00:06:30] that all of your inventory parts are going to be posting to that or the, the, the source of the item receipt is going to be posting to, to that. And then when you create the bill in January, even though you're putting in the same items, it is going to be going to inventory offset and never to the actual items, right? So that's how you're able to separate those two events into those two events. Alicia Katz Pollock: Okay, [00:07:00] so it's basically a holding tank for inventory that has not been paid for yet. Dan DeLong: Correct. Alicia Katz Pollock: Okay. Dan DeLong: And that works splendidly as long as that's the workflow that you're using. And that's the challenge with enhanced inventory receiving, is that when you turn it on because you cannot turn it off, all of your inventory movements coming in have to go through item receipts, right? So [00:07:30] that's what they've done in QuickBooks online is they've adopted this enhanced inventory receiving workflow for item receipts and bills inside of QuickBooks online. So there is a setting, a preference in preferences to tell how, when do you, when do you track money or when do you track inventory coming in? And you can leave it at bills because that's what it's there by default. But then there's an option to change it to item [00:08:00] receipts. And when you change it to item receipts, you get a nasty warning that says, hey, this is something that that you're that you're going to do and it's going to be, it's irreversible. And, um, that's a little bit of a challenge, right? Because, and I'm wondering if your, your backup class that you, that you just did, does it back up the settings when you, when you, when you, when you restore. Alicia Katz Pollock: I, I know I use rewind [00:08:30] as my main backup and I am not confident that it would. I mean, I know that rewind does settings, but it sounds to me like there would be some back end programing repercussions that are not part of rewind backup system, right? So I will not be confident in rewind as a backup. Dan DeLong: That was the, that was the only option when somebody said, well, I don't want to, I don't want to have this feature anymore. I want to go back to the way things were was to restore a backup prior to [00:09:00] that. Now that's a desktop backup, not a QuickBooks online backup. Alicia Katz Pollock: What would potentially work better would be the backup inside Qbo advanced, because that is a whole snapshot, I believe, of the whole file, except that at least the last time I checked, there was no on demand backup. Like you had to wait for it to do its own cadence. And so that wouldn't work in this situation either. Dan DeLong: Yeah. So, I mean, that was the solution, which is not a, it's not a great solution [00:09:30] anyway, because this could be probably months of doing it this way. You know, you don't want to go back two months and then, you know, have to reenter all that, all that data anyway. So probably what they're going to say is start a new subscription, which, which has its other right. So, so. Alicia Katz Pollock: This is one of those instances where if you think that this might be a viable solution for you, what you really should do is spin up your own trial [00:10:00] and upload a couple customers and a couple vendors and a couple products and actually try it out and see what the results are that you get. I mean, nobody wants to take that time and spend the money, but it's you can do that kind of testing in a few hours for, you know, a few hundred bucks and it's worth it. Dan DeLong: And when, when you need it, it's, it's great. It's just you need to understand that every time that you are going to be accounting for the receipt of merchandise, you got to enter [00:10:30] in an item receipt first. So even if you create a bill with items on it without an item receipt, guess where that goes. It goes to inventory offset. It doesn't go to it doesn't recognize the receipt of the items. It doesn't recognize. So, you know, people think it's broken when they enter in a bill with items on it. And they've got this feature turned on, right? So it's actually because the item receipt needs to be entered to account for [00:11:00] the receipt of the merchandise, even though those items are on the bill. Alicia Katz Pollock: All right. I need to ask you a bunch of questions. Okay. So the first one is if you make the item receipt, it's putting it in the the inventory holding. And before you said that when you turned it into a bill, then it would move to inventory. But if you turn on item receipts, but you don't make an item receipt, then it creates a bill that [00:11:30] doesn't do what it normally would do at the bill stage. And then you have another activity. What would that be? Paying the bill. And you wouldn't even see the inventory in inventory until the bill is paid. Dan DeLong: You would not see the inventory in like if you ran a, um, if you ran a, a inventory valuation report and a bill had items on it that you have this setting turned on where item receipts is what is what [00:12:00] accounts for the quantities it would, it would show no Inventory movement, right? So there would be no receipt of the items from that bill because you didn't enter in the item receipt. Alicia Katz Pollock: So you can't go straight to bill. You have to make an inventory item receipt and turn it into a bill to recognize your inventory. Dan DeLong: Right. So every time that you receive inventory, you have to enter in an item receipt first and then enter in a bill to pay it. Even if that happened on the same [00:12:30] day, which that was the the criticism of enhanced inventory receiving is that crap. I've now just made more work, you know, additional work for myself because I have I have to do this even if I haven't entered in. Now you can enter in an expense, right? You can enter an expense and, and put items on it. You can enter in a check and put items on it and it will receive those items because there's no, there's no accounts payable at this point. So there's [00:13:00] nothing to, to do it that way right now. Alicia Katz Pollock: Is it? Just like instead of making the bill, I would do an item receipt and then just click the convert to Bill button. Yeah. Okay. So it's not like you're doing something twice. You just have to do it. I have an extra click to convert one form to another form. Dan DeLong: It's the reality of what came of what is happening to the QuickBooks story that is being told. And so a lot of people will say, oh, I've got a bill, so I'll [00:13:30] just go enter in the bill for the for the items instead of entering in the item receipt first and then click convert. Alicia Katz Pollock: And I assume that you can't turn a bill into an item receipt. Dan DeLong: I have not checked that out, but I'm sure that's probably not the case. Alicia Katz Pollock: That's good feedback that you might want to that they might want to do that. Dan DeLong: That's a good right tool feature. Alicia Katz Pollock: Yeah, that's exactly what I was thinking. Dan DeLong: Mark and Hector. Alicia Katz Pollock: Yeah, that would be great. Dan DeLong: Copy two item receipt. Alicia Katz Pollock: Yeah. All [00:14:00] right. Now, this is also something that I want to just get on my soapbox for a minute. That we. I stress all the time that when you're using QuickBooks, you have to use the right form and workflow for the goal that you have in mind. And when I hear people complaining about, oh, the reports are all wrong, I guarantee dollars to donuts. It's because they did adjusting entries or journal entries or didn't, you know, instead of making a refund [00:14:30] receipt, they did anything else. And then some of the the built in reports are based on forms that the form is the back end programing. And if you didn't use the form, your numbers are going to be different, especially if you're going from classic to modern, that that may very well be the culprit if you're seeing that the numbers are different on the two reports, it's because the engine is different and it is looking at forms. And so you can't just the way accountants think in terms of debits and credits. And they're like, oh, you just need to [00:15:00] debit cash and credit this other, you know, credit, this other thing. You can't just debit cash and credit something in QuickBooks online. You have to make the form that does the thing in order to get it to work right. Dan DeLong: Yeah. Yeah. It's just when people skip out. Skip, skip the workflows or make the adjustments. Um, and those forms don't prescribe, right? They have the same financial [00:15:30] impact that you want them to, but they don't have the same reporting impact that you want them to. Alicia Katz Pollock: Yeah, they look great on the reports. You get the bottom line when you run, you know, a P and L or a balance sheet, you get the bottom, you get the correct grand total. But anytime you run a transaction report or an activity report, you get bad data that doesn't match because it's pulling from the activity, not the transaction. Dan DeLong: Right. Alicia Katz Pollock: Yeah. Dan DeLong: Did that cover everything? I think? I think that's the main [00:16:00] I think that's the main thing about item receipts that to make sure. Now you can leave. You can still enter in item receipts. And if you leave it on bills, then you can. That's the bill is going to be that source of truth. And there's not going to be this inventory offset shenanigans, right? So, um, it's just again, you're going to be choosing the one source of one date of truth, which is do I receive [00:16:30] the items in the wrong year or do I receive the payables in the wrong year? When, when that happens. So this will allow you to keep those two, two events separate. And when that occurs, that's, uh, you know, if you need that, that this, this is the, the way to do it. Alicia Katz Pollock: Okay. Yeah. So, so this is specifically addressing the use case for people who do have more advanced inventory management where they need that stage of receiving. Those [00:17:00] are the people that this is for is if you are doing inventory and if you have a receiving warehouse, Step in the middle. That's when you turn this on. But if you don't have that, then you shouldn't turn it on. Is that accurate? Dan DeLong: Yes. And also keep in mind that this does not turn into an advanced inventory module, right? This it does not add any more functionality into what QuickBooks will allow you to do. Other than that, keeping those two, [00:17:30] those two events separate. Okay. So if you still need, you know, traceability, serial number tracking for your items or, you know, um, landed costs, right? Those features are not available yet in QuickBooks online anyway, and this does not make them available. By doing that. So it is just setting the stage so that assuming that these features might be coming at some point in the future, that, you know, those [00:18:00] that enhanced inventory receiving, uh, workflow of I've received items and then I get a bill later. Is already there. Alicia Katz Pollock: Okay. All right. Yeah. I mean, we know that they are working on building out inventory, but I think that's a five year plan or maybe even a ten year plan until it's as robust as it is in enterprise. But Intuit knows that they have to because right now the end game is that Intuit Enterprise Suite does what [00:18:30] QuickBooks Desktop Enterprise does, but it's going to be a while to get there, and they have to program it in piece by piece and step by step. Yeah. All right. Well, good. Thank you for that explanation. I think that is going to save a whole bunch of people, a whole bunch of headache. Dan DeLong: So and I'll put a, I'll, uh, put a put a blog article together as well so that, that will, um, kind of lay that out as well. So that people, [00:19:00] not people trying to hear and, and follow along might be, uh, a little flummoxed by that, but we'll put a we'll put a blog together, uh, so that we'll have some screenshots and kind of break down this whole concept process, workflow shenanigans. Alicia Katz Pollock: Okay, excellent. Yeah. Thank you for those resources. They're incredibly, incredibly helpful. All right. Well, hey, Dan, what is going on in your world? Dan DeLong: Well, um, I am, uh, busily [00:19:30] transitioning the QuickBooks power hour, uh, from a, uh, one registration series to individual registrations and, uh, just like anything else, uh, when, when, when accountants, uh, experience change, there is a, there's a little bit of friction, but I've gotten some good feedback that, uh, people appreciate that we're going to this, uh, single registration process because it allows [00:20:00] them to be, be prescriptive on the ones that they want to attend and they can schedule them out ahead of time instead of oh, it's I missed it. Alicia Katz Pollock: Yeah. I mean, for me, there's kind of benefits and drawbacks because on the one hand, I have to now register for every single one of them. But it's true that when it was just on my calendar be like, oh, they're doing one again. I would rather want to know what I'm actually attending. Dan DeLong: How about you? What's going on in your world? Alicia Katz Pollock: Well, I'm going in [00:20:30] doing a little bit of traveling, and my daughter is going on a college tour, and then we're going to visit my parents in Santa Fe. So I still have classes going on. But the thing that I actually want to call attention to is that we have a new web designer and a new website, and I love the new website. And one of the things that he has decided to do is put the unofficial QuickBooks accountants podcast on our website. So we now have a new place where we can, you can listen to the podcast. So [00:21:00] if you go to royal.com, and I don't know at this point where the link is to get there, but you can actually listen to the podcast@royal.com. Dan DeLong: Very nice. Yeah. One stop shop. Alicia Katz Pollock: Exactly. I'm totally excited about that. All right. Well thank you Dan. This was really, really helpful. Hopefully we save a whole bunch of people, some mishegas from not clicking that shiny green button. Um, until they are ready and they know the proper workflow. Dan DeLong: Yeah. And the biggest, [00:21:30] um, the biggest thing is I don't want somebody to be creating a bill and then thinking that QuickBooks is broken because they see this offset in, in, in the, in, you know, the accounts being affected when in actuality it's working as designed. It's just not working as the way you would hope. Alicia Katz Pollock: Exactly. All right. Excellent. So thank you Dan. Um, this was great. And we will see you in. Dan DeLong: The [00:22:00] next one.