Inventory Invoicing Software

With so many cloud-based inventory applications, how do you choose the best one? Are all inventory applications have similar functionalities? Can the same inventory application support manufacturing, trading, wholesale, field service, and other use cases? Answers may surprise you!

Understand Your Use Case

I have worked with hundreds of clients to set their inventory and order management systems. I have noticed a common theme among all those engagements — “you think you know what you want”. In reality, yes you know what you want. But you don’t know things which are unknown to you. The best approach to understand the “unknowns” is to have a discovery of your current use cases and find the industry best practices to execute those use cases. “Discovery of use cases” often helps you to achieve the digital transformation which can optimize your operations and increase profitability.

Define the Current Requirements

When you define requirements, make sure to list all the requirements and categorized them as must-have and nice to have. This will help you to select the right inventory invoice software. While defining your current requirements, make sure to add software integration needs. For example, you may be running Quickbooks Desktop for accounting. So, integration of invoices and bills with Quickbooks Desktop could be one of the requirements. One may define some of the basic requirements as:

• Receive purchases
• Pick, pack and ship sales
• Quoting and invoicing
• Returns management
• Reordering
• Serial number tracking
• Lot ID tracking
• 3rd party integrations
• Kitting/bundles
• Manufacturing — Bill of Materials (BOM)
• Label printing
• Customized data fields

Define Future Requirements

Even if you currently have limited requirements for inventory or purchase order functionalities, you should always look for a two to three years horizon. This is because your business may grow as planned or at least 80% as planned. You may venture your business into other areas — for example, you do not do drop ship now, but you may start doing it because you find a few good dropship clients. So, be open and ask yourself “what if” questions.

Inventory Invoicing Software for Small Business

Here are some of the inventory invoice software features you should consider while discovering your requirements. I have listed these features from DATAMOTO.COM. You should be able to find some of these features from other providers too.

Inventory Management Software Features

An advanced inventory management system can handle a large number of items (SKU). Basically, an inventory management system gives you the item information, purchase and selling price, current and available quantity. Some of the common characteristics of an inventory system are described below:

Inventory Item Definition: A product or item is what exists in the inventory system. Usually, item code, description, selling cost, purchase price, discount, quantity, unit of measure, barcode and specification are the basic definition of an item that all inventory control system provides. Beyond the above, some inventory system also provides other columns to define items: model, color, country of origin, other costs, weight, length, height, width, category, asset account, and so on. If an inventory system allows you to edit these labels and add/remove columns then you can get better flexibility to define your inventory system.

Unit of Measure: The unit of measure for items depends on the type of inventory is kept. It is necessary the system should allow adding, removing, and editing units of measure according to the need.

Active and Archive Items: Sometimes, you may stop maintaining some of the items. For such items, you should able to archive them so that they will be kept aside from the view while you can still run the report on them. The system should provide the ability to view archived items and make them active if needed.

Inventory Configurations: Depending on the vendors, an inventory system may provide different types of configurations. Here are some of the basic configurations you may find in most of the system:

• You can define the rule for the item code and let the system generate the item code by auto-incrementing it.
• Enable or disable lot tracking. When you enable lot tracking, it expects to follow a certain user interaction flow.
• Show the only description or also specification in quote/invoice.
• Show country of origin in the quote/invoice.
• Hide some of the inventory item columns such as Weight, Length, Height, Width, Specification, Country of Origin, and Other Cost.
• Change the data input form labels for items.

Warehouse Locations: Businesses’ operations often need to handle multiple warehouse locations. This means the inventory management software must able to look up items across all warehouse locations, able to receive delivery or pickup from any locations, transfer stocks between locations. All the purchases and invoices must be able to track the inventory items.

Inventory Stock Alert: It is important for businesses to get alerted when stock runs low for items. The stock threshold could be set up at a global level — that is one stock threshold for all items or individual item level. When the stock level goes below the threshold then alerts are generated where you can covert an alert to purchase order. This helps uninterrupted inventory operations.

Manual Update of Stock: If you are managing a warehouse then you are familiar with that manual update of stock level is inevitable. Sometimes, items are misplaced, and other times it is hard to reconcile the actual count (or cycle count) and the count in the system. So, a manual update that can be audited is a required feature to run a warehouse smartly.

Update Inventory from Sales Order Fulfilment: The ability to split an order to deliver items in multiple batches as well as merge multiple orders to one shipment is a very important feature for order fulfillment. This feature optimizes the complex fulfillment process. It allows you to combine all the orders from the same customer if shipping addresses are matched. You can fulfill items from specific warehouses or specific lots and split the order if needed. You can also save the fulfillment and complete the pending fulfillment later. It generates invoices automatically and adjusts stock levels in the inventory. You can print the packing list and delivery note.

Update Inventory from Purchase Order Goods Receive: A good receive functionality allows you to record every good receive for POs and similarly, these received goods are automatically added to the inventory and recorded to a specific warehouse location.

• Received goods are automatically updated in the inventory and can be easily tracked
• Receive delivery multiple times on the same PO and generate a single bill
• Track the good receive transactions
• Generate printable good receive notes

Inventory Tracking: Inventory tracking is a large area that may include finding out the location of an item in the warehouse. But, here scope is limited and we are discussing tracking how your inventory items’ stock level affecting. Who is adding items in the inventory, who is picking up the items from the inventory? Having an audit trail of every addition or subcontract of an item’s stock level is a must for an advanced inventory system. It should tell you which purchase order delivery added the stock and who was the item receiver. Similarly, it should tell you whether there was a return of items from customers, or some scrap items are found. It should also tell you if you have manually updated the stock level after the cycle count. Inventory item tracking log should tell you who, when, why, and how much stock level is going up or down. Moreover, it should also tell you the quantities that are currently booked in purchase orders and sales orders but not received or fulfilled.

Lot Tracking: Every use case does not require inventory tracking using lot numbers. But some business use case especially for pharma or cosmetic — it may be required. In such cases, you should make sure you have the ability to add inventory stock according to the batch number. A number of items can have the same batch number. So, you can receive (from vendor) or fulfill (to customer) using batch number. This way, you can track the items by batches in your inventory.

Stock Transfer Between Warehouses: If you are a trader, distributor, wholesaler, or seller who maintains multiple warehouses then you may want to transfer inventory items from one warehouse to another. If you maintain batch or lot number then you may like to transfer items by lot and track the transfer. Transferring stocks between two warehouses is done through two separate transactions. First, an inventory management system allows you to create a transfer document where you can outline all the items, lots, and warehouses. Once you save the transfer document, it will deduct the items from the “from” warehouse but it will not yet add items to the destination warehouse. Once the transfer document is received by the destination warehouse, then the quantity for the destination warehouse will be automatically added.

Bundle/Kitting: Inventory Item Bundling or Kitting is a process in which individually separate but related items are grouped, packaged, and sold together as one unit. For example, in ordering a PC online, a customer may select memory, drives, peripherals, and software from several alternatives. The supplier then creates a customized kit that is assembled and shipped as one unit.

Imagine you are selling a deep water cleaning system and you forgot to include an O-ring in the package. The frustration drives at installation time are certainly going to affect your relationship with the customer. Similarly, for example, if you only want to sell items in dozen but you want to maintain your inventory in a “piece” unit then it becomes time-consuming to create an extra business process to handle it. Both of these use cases you can easily handle and save time by using Bundle/Kitting.

Bill of Materials: A bill of materials or product structure (sometimes bill of material, BOM, or associated list) is a list of the raw materials, sub-assemblies, intermediate assemblies, sub-components, parts, and quantities of each needed to manufacture an end product. An inventory management software with a bill of materials allows creating BoM for a product by adding items or raw materials and instruction notes. When products are produced these are added to the stock at hand whereas the stock levels of the items in the BoM are deducted.

An inventory invoicing system is usually integrated with other modules to drive the business use cases. Below I have discussed few other features that DATAMOTO provides which are already integrated with DATAMOTO’s inventory management system.

Vendor Catalog

A Vendor Catalog provides the list of all goods available from various vendors. You can manage multiple vendors to supply the same item. A vendor catalog is mapped using SKU with inventory and using vendor ID with vendor database. Usually, a vendor catalog keeps track of vendor item code, vendor item description, vendor cost, and currency. When you create a purchase order, you can choose a vendor from the vendor catalog. The purchase order system then populates PO with the vendor item code, description, and cost along with your own item code. This way, the supplier or manufacturer can supply you with the right part, and also you can keep track of your inventory using your own item code.

Quote to Invoice

Managing customers, creating quotes, converting to PDF, and emailing to customers is an important part of the sales team’s job. A quote should be integrated with the inventory system so that item code, description, price, and quantity can be quickly checked and imported to the quote. Sometimes, you may want to create an invoice directly or convert a quote to an invoice or convert a quote to a sales order.

The invoicing system should also allow you to configure your quote and invoice by using templates. If you are charging your customers in subscription (say, monthly, quarterly, yearly invoicing) then you will need a recurring invoicing feature. In recurring invoicing, you can create a recurring invoice profile and set the starting date and recurring intervals. Rest the invoice system will take care of sending invoices to customers on the right day. If you are also looking for receiving payment then the invoicing system should provide payment processing functionality.

Sales Order to Inventory

A sales order (also known as SO) document is an order issued by a business to a customer. It is an internal document for the business. Normally a sales order is created once the buyer’s purchase order is received. It reflects the buyer’s purchase order and helps to fulfill the order.

Typically sales order management consists of quote (or estimate) creation (i.e., customer has asked for a quote), converting a quote into a sales order (i.e., the customer approves your quote and sends you a purchase order), booking a sales order, fulfilling a sales order (i.e., you have the items in the inventory and you are going to ship the items or you have completed the services), generating invoice & packing list, and receiving payment.

A sales order is integrated with inventory — that is when you fulfill items, it deducts the quantity from the inventory and from the right warehouse location. You can split the order and fulfill it multiple times as products become available. You should also able to process a return and issue credit and adjust inventory.

Purchase Order to Inventory

A purchase order tracking system is a powerful tool. It keeps track of all purchases in one place by avoiding duplicates, tracking the arrival of deliveries, processing invoices and payments, and keeping inventory up to date. A purchase order software must provide purchase order creation and integrated with an invoice, quote, sales order processing, and inventory modules. A purchase order should also provide:

• Sales to purchase and purchase to sales order tracking
• Purchase order aggregation if they are for the same vendor
• Bill aggregation if they are for the same vendor and not yet paid
• Dropship purchase and sale
• Multi locations warehouse good receive from a Purchase Order
• Inventory alert to purchase order creation

Field Service — Work Order to Inventory

A field service — work order application helps you manage your field sales and service operations with speed and efficiency. A cloud and mobile-based field service work order application for effortless and proactive field and manufacturing plant management provide the following features:

• Schedule and dispatch the right person at the right time for on-demand or planned work orders
• Track every job performed by technicians
• Track customer assets, materials used in a job, and activities performed in a job
• Use vendor catalog to search materials, locate items/parts across inventory locations — from trucks to warehouse
• Take pictures for the record and make them part of the work order
• A digital signed PDF report for the work order
• Auto generates estimate, invoice, purchase, and sales order
• Equipment recall for the healthcare industry
• Pricing tool to help recalculate prices for the items

Integration with Quickbooks or any other Accounting System

Purchase orders and Sales orders generate bills and invoices when goods or services are received or fulfilled. The invoices and bills are mainly used by the accounting system — and often accounting system of a company is separate from the sales and purchase order system. In such a scenario, it is necessary that the bills and invoices generated in a sales and purchase order management system must be integrated with the accounting system. For example, if you are using Quickbooks for accounting, then your purchase order system must synchronize its’ bills into the Quickbooks accounting system.

While reading this article, you may not find one or more features that you are really interested to see in the inventory management software. For example, you are looking for a barcode reader feature to search items in inventory. It is possible that a barcode reader is such a small feature for an inventory management system, I forgot to mention it. So, it is always prudent to ask these questions while you are discovering your use cases and solution. You may be pleasantly surprised that your “must-have” feature is already available!