What does inventory software do?
At a basic level, inventory software tracks your orders and sales to work out what your stock is. This is also known as a perpetual inventory system.
When well run, these systems can:
- show your stock levels at any time
- reorder stock for you
- show you how much each product is making for your business.
How does inventory software work?
Inventory software works by recording your stock for you when it comes in – either through manual data entry or through a system such as:
- barcode scanning
- SKU numbers (stock keeping unit)
- serial numbers
- RFID (radio frequency identification) tags
- QR (quick response) codes
- NFC (near field communication) tags
When an item is shipped or sold, your invoicing or point-of-sale (POS) software identifies the item and adjusts the stock records automatically. Think about the scanner at the supermarket checkout – that’s part of an inventory management system.
Once it knows what stock you do or don’t have, the software is able to do a number of other things, depending on its features.
Scan new items as they arrive into the warehouse and the software will automatically add them to your stock.
Items are removed from stock as they’re processed through your point of sale system.
What to look for in inventory management software
You might be able to use your accounting software for inventory management as many packages come with inventory management capability built in. So before you go spending money on a bells and whistles piece of inventory management software, check what you actually need and if your accounting software can do the following:
- provide you with real-time data
- streamline reordering with low stock alerts
- integrate and automate all the tasks from quoting to ordering to billing to shipping
- manage multiple locations from anywhere
- integrate with POS software
- scan barcodes, QR codes or read RFIDs
- forecast seasonal demand
- manage batch and expiry dates and lot tracking
- handle returns and exchanges
- attach documents such as photos and supplier contracts
- integrate with ecommerce software
- scale-up as your business grows
- stocktaking functionality
Disclaimer: Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.
Guide to inventory
Inventory management is more than just knowing what’s been sold and what you’ve ordered. Find out what else is involved.
- What is inventory?
Your inventory is one of the most important purchases you’ll make. It’s the reason you’re in business.
- Types of inventory
Inventory comes in many forms. Understanding the types will help you identify it for valuation and management.
- Inventory management
A complete overview of your stock will help your business run smoothly and profitably, so where do you start?
- Inventory accounting
Inventory can be a big expense, and a big earner, so it pays to stay on top of the numbers.
- Inventory management systems
You know inventory is vital to a healthy business. So let’s look at some systems for efficient stock management.
- Inventory management software
Inventory management software may give you the extra time you need, or the ability to take things to the next level.
- Tools and guides for your business
Now that you’re in business, you want to stay there. Xero’s got resources and solutions to help.
Download the guide to inventory
Learn the strategies and techniques behind successful inventory management. Fill out the form to receive our inventory guide as a PDF.