To have inventory and order management within your accounting software means considerably less manual grunt work. Your books can communicate every sale to update things like your stock levels, the cost of goods you’ve sold, and the revenue you’re earning.

These are critical features that you’ll find on popular products such as QuickBooks Online. But not all accounting programs offer them. Here’s what to look for in bookkeeping software when your business needs inventory and order management.

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Why does inventory and order management matter in accounting software?

Inventory and order management support saves a lot of time, and it also reduces your potential for data entry errors. It gives you as a business owner a current picture of how profitable you are—instead of needing to wait until you’ve fed all the information to your bookkeeping software.

Order management lets you view your purchase orders, supplier costs, and fulfillment tracking all in one place. That’s extremely helpful if you sell items from more than one channel, because it can instantly inform how you spend your money and keep you from selling stock you don’t have.

For example, if you sell from your physical store, on a website, and through an online marketplace like Amazon, you’ll know when to buy products and when to hold off so that your inventory doesn’t spend months gathering dust on a shelf.

Key features to look for

Accounting software handles inventory differently. It’s worth comparing its core capabilities to help you decide which is the best fit for your business. Here’s what we think are the ideal inventory and order management features to look for when selecting accounting software.

Real-time stock tracking

The software you choose should automatically update your stock count after a sale, a return, or a restock. This will help to keep your on-hand numbers reliable. Not all tracking options give you the ability to track inventory from multiple locations, however, so if you sell from more than one warehouse, make sure this feature is included (it’s more common among enterprise resource planning systems than standard small business accounting software).

Purchase order automation

With a purchase order, you can record what you intend to buy from your suppliers and stay abreast of anything currently coming your way. Depending on the platform, you can even create and send purchase orders directly from the software and get alerts when your stock drops below a certain level. Some will even create a reorder draft for you.

This saves you the mental and physical bandwidth required to check these details regularly, and it can help to cut down the normal back-and-forth between you and your suppliers.

Multi-channel sales integration

If your business sells from more than one place—again, think an online storefront, a brick-and-mortar location, etc.—your accounting software will ideally sync all orders and give you live inventory numbers. If you’re relying on manual input for this kind of tracking, it can be easier to sell more stock than you’ve got.

Inventory valuation methods (FIFO, average cost)

Inventory valuation tells your books how much to record as your cost when you sell an item. This can be a big help at tax time.

For example, if you buy an item for $10 and you sell it for $20, your gross profit will be $10. But if you later buy the same item for $15 and sell it for $20, your gross profit is $5. Accounting software that tracks which specific items you sell—even if they’re the same product—can help you to know your true profit.

3 popular accounting software for inventory and order management

QuickBooks Online

Cloud-based QuickBooks Online is a hyper popular accounting software option that prides itself on making the most important bookkeeping tasks (invoicing, expense tracking, payroll, etc.) accessible to all small business owners.

To access its inventory and order management tools, you must have a Plus plan or higher (regularly $140 per month). You’ll get real-time stock tracking, alerts when your supply is getting low, and the ability to make purchase orders into bills when your orders arrive.

Its sales orders feature lets you record what a customer wants to buy before you send an invoice. That order will set them aside in your inventory but wait to count it as a sale in your books until the invoice is sent. This is helpful because it keeps you from accidentally selling that stock to someone else. In other words, it gives you a better overall picture of your current supply.

Those in need of heavier-duty tools, such as juggling multiple warehouses and barcode scanning, will prefer QuickBooks Desktop Enterprise. It’s designed for more complex businesses with higher volume.

Xero

Xero is intended for a similar demographic as QuickBooks Online—and is entirely cloud-based. Those with small- and medium-sized businesses looking to cover the basics. Its inventory feature automatically updates stock levels, so you don’t have to toy with manual data entry to get a read on your supply. You can quickly create an invoice, thanks to its auto-populated item prices and descriptions and send those from within Xero. As soon as an invoice or purchase order is created, your stock levels will update.

If you’re doing business through multiple sales channels with lots of different products, you’ll likely want to upgrade to Inventory Plus—available only for Xero’s “Growing” subscription tier and above. The add-on costs $39 per month. But it unlocks the ability to manage more than double the orders of Xero’s standard inventory feature. It’s a bit more involved, but it does offer a guided onboarding process to expedite the learning curve.

Zoho Books

Another cloud-based competitor in the accounting software space is Zoho Books, also targeting small- and medium-sized operations. It gives you all the standard invoicing and expense tracking you’d expect from accounting software, and it’s also more than competent at handling your inventory.

For example, you can store details like SKUs, product costs and images, taxes, even preferred vendors. This lets you autopopulate information into invoices and automatically. The feature gives you real-time insight into what you’ve got and which inventory is already promised to buyers.

Just like Xero, Zoho offers an add-on for those with more complicated inventory tracking needs. Zoho inventory gives you modules such as composite items (a bundle that lets you sell multiple items at once), packages (one or more items that will ship together), and a link to shipping carriers.

How to choose the right software for your business

The right software for your business comes down to the size of your company and how complicated its books are. A lemonade stand takes less horsepower than dealing with complex supply chains through a variety of sales channels.

If your company is small- to medium-sized, you’ll likely be drawn toward user-friendly options that are fully equipped for inventory and order management—such as QuickBooks Online. If you’re dealing with a high order volume or selling items from multiple warehouses, you may need something more, like NetSuite or Intuit Enterprise Suite.

You’ll also need to consider the cost and difficulty of learning a software’s ecosystem. The most comprehensive and powerful options tend to take more time and effort to master. Some software may also not integrate very well with your current payment processors and sale platforms. The last thing you want is to pay for accounting software and find yourself manually inputting inventory and order management data, anyway.

The takeaway

Inventory and order management aren’t necessary for every type of business. But if you sell physical items, these tools can be a huge time saver. They’ll track your stock levels, automatically fulfill orders from your customers, and likely help you to avoid manual-entry inventory errors. Highly rated options like QuickBooks Online are reliable and make the learning curve quick and easy.

FAQs about accounting software and inventory management

Is QuickBooks Online good for inventory and order management, or do I need an add-on?

QuickBooks Online is good for inventory and order management. No add-on is required, but it’s worth noting that you must have either a Plus or Advanced plan to take advantage of these features.

How do I choose between ERP systems and SMB accounting software with inventory features?

If you’ve got a medium-sized business or below, your day-to-day management will likely be covered by SMB accounting software like QuickBooks Online. An ERP (enterprise resource planning) system is likely overkill for you. ERPs come in handy when you’re managing multiple warehouses or have extremely high order volume.

Do I need separate inventory management software if my accounting platform tracks stock?

Tracking your stock is typically enough if all you need is to keep an eye on the number of items you have. If your business is higher-octane, such as operating out of multiple warehouses or the need for barcode scanning, you’ll likely want an add-on or a more expensive subscription tier.

How does integrated inventory and accounting software reduce manual data entry and errors?

Integrated inventory and accounting software reduces manual data entry by auto-populating the relevant areas of your books. The auto-populating also cuts down on errors, as it eliminates user error-related mistakes.

Are free accounting tools capable of reliable inventory and order management?

There are some free tools that can handle basic things like stock counts. But they tend to have a cap on how many items they track and how many automation perks they offer. If you’re a growing business, a free tool may work temporarily, but it won’t be your long-term solution.