---
title: Why Negative Inventory is a Bad Idea
description: Small businesses need to move fast, often cutting corners by invoicing when their systems show insufficient inventory. You think you're saving time but not quite!
image: https://info.ordertime.com/hubfs/why-negative-inventory-is-a-bad-idea-stock-room.jpg
---

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# Why Negative Inventory is a Bad Idea

[Negative Inventory](https://info.ordertime.com/blog/tag/negative-inventory), [Insufficient Inventory](https://info.ordertime.com/blog/tag/insufficient-inventory), [Fix Negative Inventory Issues](https://info.ordertime.com/blog/tag/fix-negative-inventory-issues), [What Does It Mean To Have Negative Inventory?](https://info.ordertime.com/blog/tag/what-does-it-mean-to-have-negative-inventory)

 06 December, 2022

Small businesses need to move fast, often cutting corners by invoicing when their systems show insufficient inventory. You think you are saving time until it's time to clean up the mess!

---

Does this sound familiar?  You are not alone.  Here are the typical justifications:![mobile-device-inventory-management](https://info.ordertime.com/hs-fs/hubfs/mobile-device-inventory-management.jpg?width=257&name=mobile-device-inventory-management.jpg)

- We don't have time to receiver inventory into the system (either via purchasing or production)
- We know how much we have an the shelves. 
- We use negative inventory to see how much we need to buy. 
- We do an inventory count every week. 

 

 

Here is why negative inventory is a bad idea:

- You don't know what you have in stock until you count it. In the meantime, your sales, purchasing and production teams are in the dark. 
- You'll never be able to grow your business. Aside from the owners and tenured employees who know where everything is, what happens when you want to bring on new staff or when the owners are vacation. Who will know where the inventory is?
- You'll either buy to much inventory or not enough. Buying too much will impact your cashflow while not enough will affect your service level. 
- If you are a manufacturer, you won't be able to effectively plan production.  
- Your financials will be inaccurate. Cost of goods will be either to high or to low which in turn will make your balance sheet inaccurate. 

 

Negative inventory should never exist, yet systems like QuickBooks typically allow negative inventory with nothing more than a warning.  

 

![monitoring-inventory-checking-stock](https://info.ordertime.com/hs-fs/hubfs/monitoring-inventory-checking-stock.jpg?width=750&name=monitoring-inventory-checking-stock.jpg)

 

Here's how to solve the problem:

- Get a system like Order Time that can shut off negative inventory. Negative inventory is a preference that can be turned off and on by admin users. 
- Transact your inventory in the proper order; receive purchase orders, create work orders (production if applicable) then ship your orders. 
- ![barcode-inventory-count-report](https://info.ordertime.com/hs-fs/hubfs/barcode-inventory-count-report.jpg?width=350&name=barcode-inventory-count-report.jpg)Receive inventory the minute it comes in based your vendors packing slip.  Do not wait until the invoice from the vendor. 
- If applicable, keep up with work orders (production) so that finished goods are incremented and raw maters and components are decremented. 
- In a pinch,  create an inventory adjustment with a notation on why such and adjustment was necessary. 
- Do inventory counts less frequently. If you transaction your inventory in the proper order, you will notice that the need to do inventory counts will decrease. 
- Train your staff to do these steps properly. 

 

Next Steps

To learn more about Order Time and how it can transform your small to mid-sized business, [click here](https://www.ordertime.com/). 

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Sign up for a [one-on-one meeting ](https://info.ordertime.com/webinar-registration)to get all your questions and concerns answered, or check out our detailed [video tutorials](https://help.ordertime.com/help/videos)<https://help.ordertime.com/help/videos>and [knowledge base](https://help.ordertime.com/help). Order Time is constantly updating, so check out the [latest release notes](https://help.ordertime.com/help/release-notes). 

Feel free to call our sales representatives, 1-866-278-6243, dial 1 for Sales or visit our [website](https://ordertime.com/) for more details!

---

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- [inflation (1)](https://info.ordertime.com/blog/tag/inflation)
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