Can Xero Manage Inventory?

Xero is an advanced and popular accounting tool designed for small and medium businesses. The APIs of the cloud-based accounting solution allow businesses to connect with their other systems seamlessly and manage everything from a unified environment. That means most common integration solutions for accounting systems, including MYOB integration solutions, can unify Xero with other systems.
However, businesses that haven’t used Xero before often raise a question: can Xero manage inventory? While most businesses prefer choosing a single system to manage their accounting operations and inventory, it’s important to have the right understanding of the inventory features of Xero before picking the accounting tool.
Let’s analyse whether Xero manages inventory or not irrespective of whether you are planning to induct Xero into your world or want to know all the inventory features of your existing Xero system.

Overview of Xero Inventory

Yes, Xero offers inventory management to help businesses manage their operations and take advantage of an all-in-one system. However, the inventory module of Xero is basic and allows you to manage the general tasks such as tracking items in stock, real-time view of the stock, adding items to invoices, view of the selling items, etc.
If your business demands sophisticated inventory features, such as multi-site inventory management, automatic purchase orders, complex sales orders, and more, you can integrate Xero with an advanced inventory system or choose Xero Add-ons from the marketplace. Importantly, Xero offers APIs to integrate it with other systems and centrally manage your inventory and accounting operations.
In addition to the inventory, the accounting tool also offers feature-rich purchase order software to make your inventory management hassle-free. You can create and forward purchase orders and track them – including deliveries – using the purchase order software.
Some of the additional features that make the purchase order software an excellent fit for your business include purchase order customisation, online order creation, and conversion of orders into bills.
Now, let’s discuss the specific features of Xero inventory in detail to help you understand how the solution can answer your inventory requirements and challenges.

Tracking Inventory

You can track and find the cost of items you sell using the Xero inventory module. The tool also enables you to get the accurate quantity and value of the stock on hand. This allows you to make demand planning and backorder products that are fast-moving.
The accounting gets simplified with each sale as Xero records purchase costs and revenue in the same accounting period. On the flip side of the coin, the inventory module of Xero can’t track raw materials and incomplete goods as the tool is designed to manage only the finished goods.
Additionally, you can’t set negative inventory balances, and therefore, you will find it impossible to record sales without recording the purchase. Therefore, it is also important for you to record each sale for seamless inventory management.
Regardless of these obstacles, the seamless integration with Shopify and other major ecommerce systems makes Xero an ideal choice for small and medium-sized businesses.

Simplified Product Management

The features to convert each inventory into products in a few clicks minimise most of the work related to product management and improve organisational efficiency. The inventory module of Xero has features to add photos and contracts to each stock and adjust the value and or quantity of the items.
The ability to add the supplier contract to each inventory allows you to improve your supplier relationships and ensure the availability of stock all the time for optimal sales. Similarly, attaching the photos to each inventory help you convert them to products on your frontend system.
The module also allows you to adjust the stock quantity on hand and stay updated about your inventory and products. Regardless of whether you get additional stock or some inventory got damaged, you have real-time visibility of your stock and can quickly identify the average cost and value per product. This also allows you to make demand planning better and ensure the supply of stock for uninterrupted sales.

Hassle-free Invoice Management

The inventory module of Xero also gives you a number of invoice management features to simplify your buying and selling. You can create invoices, quotes, and purchase orders with pre-set product descriptions and prices and save them for regular sales and purchases.
Additionally, you can select items to automatically add them to quotes, invoices, and purchase orders. The module also gives you options to change the pre-populated description, sales tax, and price in a few clicks. That means you can offer customised products with personalised prices to your customers hassle-free.

Choose An Inventory App

The Xero App Store offers several inventory apps that enable you to the extent the features and functionalities of your accounting tool. You can search and identify an inventory app that fits your functional requirements.
Do you want to plan your inventory and avoid the issues such as “out of stock”? Inventory Planner is an ideal tool for you with sales forecasting, financial planning, purchase orders, and much more. With the right amount of stock, you better manage out of stock issues and warehousing costs.
Choosing an inventory app can also help you overcome most of the challenges you experience during inventory tracking. You have multiple app solutions to track negative inventory to sort the common accounting and inventory reporting bottlenecks.
Do you want to use a different inventory accounting method, in place of average cost? You can find solutions for that as well, including FIO and LIFO.

Create a Unified Business Ecosystem for Growth

Although Xero is a feature-rich accounting tool for small and medium businesses, all your systems must be connected to each other for seamless data exchange and automation of repeated tasks. Working on key areas of your business including profitability, process efficiency, and improved business visibility are key areas of your business success.
SaaS Integrator is an advanced integration system for Xero that allows you to create seamless data connections between all your systems and makes your business processes straightforward. The codeless integration system allows you to customise your data flow based on your process flow. Discuss your data and process challenges with the integration experts of SaaS Integrator today.

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