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Inventory Add-ons for Xero and QuickBooksOnline

Businesses that use entry-level cloud accounting software but also need more advanced inventory functionality frequently need to select an add-on solution to meet those requirements. Xero does not have an inventory module despite annual promises that it is on its way, QuickBooks Online (QBO) has somewhat rudimentary inventory functionality, Saasu also provides basic inventory (but I am not a big fan of this software) and ReckonOne also has no inventory functionality.

Xero has a plethora of add-on partners that provide inventory functionality that integrate to Xero financials (15 at the time when I counted) although some were specific rather than general in their application. QBO currently has just 3 add-on Inventory solutions with Unleashed still at the pre-release stage. There are no advanced inventory products that integrate with ReckonOne.

Since Xero and QBO are the main cloud accounting software packages that I support and recommend, I chose to road test two of  the  add-on inventory products that could be integrated into both of these – DEAR and Unleashed (this last one is still in beta for QBO but should be available within the next couple of months). CIN7also integrates to both but not reviewed because but I had issues accessing a trial version, I couldn’t test the integration to Xero or QBO, it has more in depth functionality than the other two so is not directly comparable and is a lot more expensive so is probably best suited to a larger organisations with more complex requirements.

I focused a fair amount of effort on the financial aspects of the total solution including the integration to the accounting software but also reviewed the Logistics functionality.

Product/Item details

Both software products supported:

  • Ability to clone/copy products
  • Stock & Service product types
  • Price Categories/Tiers
  • Dimensions
  • Reorder levels
  • Default supplier for purchases
  • Attach jpegs
  • Drop shipments

Only Unleashed allowed for an automatic mark up of product selling prices based on a variety of cost prices and only Unleashed allowed for a default purchase price by product – with DEAR you had to set a purchase price by supplier.

Customers and Suppliers

The data stored on customers and suppliers was standard across both software products with just a couple of notable features:

  • I could not find that I could set a credit limit on Customers in Unleashed although there was a tick box for stop credit. I could set a credit limit in DEAR.
  • A plus for Unleashed was that against a customer I could set up separate email addresses for Invoicing and Packing slips which was a nice touch. DEAR just allowed for separate email addresses by contact not function.

Logistics Functionality

Both software products supported the standard logistics functionality:

  • Quotes, Pick, Pack and Ship for Sales Orders and Receipting for Purchase Orders
  • Partial receipts of Purchase Orders and Partial Shipments of Sales Orders
  • Assembly and Production orders however only DEAR allowed the inclusion of labour costs against a production order. This functionality is still in the pipeline in Unleashed
  • Unit of measure conversion although this was fairly limited in both but may be better in CIN7
  • Multi Warehouses with transfers between warehouses
  • Stock on Hand and Stock Availability reporting

Landed Cost

For businesses that import goods from overseas the concept of a landed cost for gross profit margins rather than a purchase price is important as it allows for components such as duty and freight to included. The process appeared more straightforward in Unleashed as I could add these additional costs against the purchase order but this must be done before the goods receipt is recorded which may pose a procedural challenge however the solution did work quite neatly.

In DEAR due to the one for one link between the purchase order and the supplier bill, landed costs needed to be added to the purchase order via a manual journal which appeared a little more cumbersome but certainly doable.

Stock take

These are a necessary evil especially at year end.  Both software products had functionality for a complete stock count by warehouses but I found Unleashed to be lacking some desirable features:

  • It did not allow for a date to be entered which means that at year end – you have record and finalise the count before midnight on 30th June for it to be affective in that financial year. I know many of my clients would struggle with this challenge.
  • It did not allow you to specify which account the stock take variance will be posted to, it is automatically posted to the account specified in the integration set up for Cost of Goods Sold – many businesses prefer to have a specific Stock Adjustment account in their P&L. The work around would be to change the cost of goods sold account just to post the stock take and then change it back.
  • The quantity on hand was not displayed when entering the count (this was available via a parameter setting in DEAR). This can sometimes prevent errors but the Variance report will assist here

DEAR was more flexible in its approach as I could specify the write off account on the stock take and the ability to enter the date for the count meant that I could backdate it, however data entry of the count was more laborious requiring the user to click each line and enter the quantity in a pop up window making it a rather slow process. The recommendation from DEAR is to export the stock take to Excel, enter the quantities there and import back if the product list is long.

 

Both software products allow for Stock Adjustments for ongoing adjustments. DEAR I found to be a bit cumbersome as there are separate sections for products with a positive and zero quantity on hand.  Only Unleashed appeared able to do a Value Adjustment which can be helpful for obsolete stock.

Reports

Both software products had a range of reports which appeared to satisfy most reporting requirements. DEAR did have an Inventory Aging report which I couldn’t see in Unleashed.

DEAR had filtering on each column meaning the report could be very specific if required. It also appeared to have more analytical reports e.g. Purchase Order vs. Invoiced, Goods Received vs. Invoice, Profit by Sales Representative etc.

Both software products allowed for exporting to pdf and Excel

Costing Methodology

DEAR uses FIFO along with Batch and Serial number specific prices and Unleashed uses Average Cost. For most businesses, the costing methodology is not an issue, neither is necessarily better except under certain circumstances.

Multicurrency

Both products support multi currency in terms of purchase and sales orders however I encountered a few issues

  • Neither DEAR nor Unleashed converted product sales prices into the currency of the customer. This was the same for Purchase Orders, although DEAR did allow for a purchase price to be recorded for the supplier, so the FX price could be recorded there.
  • Unleashed values stock using the exchange rate recorded on the purchase order, but when the draft bill is passed to Xero, Xero uses its exchange rate current at that date which may not be the same as the exchange rate used in Unleashed. This will result in a variance between the Unleashed Inventory Valuation report and the QBO balance sheet. The solution from Unleashed is to do a Value Adjustment in Unleashed to get the values back into synch. This could be a time consuming and laborious practice. DEAR passed the exchange rate recorded on the purchase order across to QBO so no variance due to FX rates was experienced.

Integration to accounting systems

I integrated DEAR to QBO and Unleashed to Xero so I wasn’t exactly comparing apples with apples however, in both instances the integration was easy to set up. Unleashed continuously synchronises in the background to the accounting software whereas in Dear, user intervention is required to set it off.

  • With Unleashed, a sales account can be specified on a product so it is possible to post sales invoices to different sales accounts, however the Cost Of Goods Sold account is set up in the integration mapping so only one COGS account can be used across the board. In DEAR, I can specify both sales and cost of sales at the product level giving a little more flexibility, especially as neither product supports Tracking Categories (Xero) Classes (QBO)
  • Unleashed unexpectedly created a draft Invoice for the sale transaction and a separate Draft Bill for the Cost of Goods Sold entry. As they are draft documents, they need to be separately Approved before the accounts are updated. I was advised that a similar process will happen when the integration to QBO is available except there is no concept of ‘draft’ documents.
  • DEAR unexpectedly passed both the Supplier Bill and the Purchase Order to QBO – whilst the purchase order did not create ay updates to the financials, it was possible to record a bill against this in QBO which was both confusing and could lead to errors
  • I also had some issues with the correct treatment of orders on overseas suppliers and the GST status which I am still following up with DEAR.

Help – Unleashed won this one hands down – from a data entry screen, I could go directly to the relevant section in the Help Centre. DEAR had some comprehensive video Tutorials which were not too helpful when needing assistance in a particular screen. There were some Knowledge Browser articles on the DEAR website – separate access, also ability to log a Support Ticket

Licence Costs

  • DEAR subscriptions are priced in US dollars (Australian users could be in for some unexpected shocks with the current currency volatility) – $50 USD for 1st user and then $25 per user after that.
  • Unleashed is AUD $38.50 for a basic single user licence but more realistically most businesses would want the $104.50 per month (or $86.90 if billed annually) Professional licence which allows for 3 users, 3 warehouses, 10,000 products and multicurrency.
  • CIN7 was pricier at NZD $225 per month for a minimum of 3 users.

So licence costs for 3 users on DEAR and Unleashed are similar but CIN7 is somewhat more expensive reflecting the greater depth of features.

Conclusion

My recommendations would be:

  • Start with a clear understanding of business requirements from the inventory software.
  • Fully test the trial version of both including the integration to the financials based on the business requirements.
  • Consider also if the business will need to link to an E-commerce or CRM solution and how this will work with the inventory product.
  • Remember – you are likely to be paying a lot more in monthly subscription for the Inventory add-on than you are for the financial software – so careful checking is worthwhile.
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One comment on “Inventory Add-ons for Xero and QuickBooksOnline

  1. […] A version of this post first appeared on Cloud Accounting Buzz. […]

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