For any business, inventory management is a crucial means to a financially successful end. You must know what you have in stock, how much items cost, how to order those items, and more. Fortunately, FrontAccounting is up to the task.

FrontAccounting is a powerful, open source solution that could easily take the place of QuickBooks for businesses that don’t have the budget for the industry standard software. In a previous column, I covered the installation of the web-based software (DIY: FrontAccounting is a free alternative to QuickBooks), so now I’ll show how the tool can help you manage your inventory. I will assume you have a working FrontAccounting system set up, as well as have administrative access to said FrontAccounting installation.

Step-by-step instructions

Before you start adding inventory items, you must set up several pieces of information. The first piece of information you need to set up is the tax rate. You can have multiple tax rates in the system, but you should at least have one set up. To do so, follow these steps:

  1. Log in to your FrontAccounting system.
  2. Click the Setup tab.
  3. Click the Taxes link.
  4. In the Description section (Figure A), enter a name for the taxes (such as the state associated with the rate).
  5. In the Default Rate section, enter the percentage for the taxes.
  6. Select the Sales GL (General Ledger) account from the drop-down.
  7. Select the Purchasing General Ledger account from the drop-down.
  8. Click Add New.

Figure A

You can create different types of tax rates, such as reduced taxes for various institutions or clients.

There might be instances when you have different tax types. For instance, if you have clients that are tax exempt, you will need to set up a new tax type. To do this, follow these steps:

  1. Click the Setup tab.
  2. Click the Item Tax Type.
  3. Give the Item Tax Type a name (Figure B).
  4. If the Item Tax Type is fully tax exempt, select Yes from the drop-down. If the Item Tax Type isn’t fully exempt, select the tax to be used for the Item Tax Type.
  5. Click Add New.

Figure B

You can have as many tax types as you need, and you can make a tax type exempt from the tax type listing by clicking the check box for Exempt.

The next step is to add Item Categories, which will be used to help categorize your inventory and to help you stay organized. To create Item Categories, follow these steps:

  1. Log in to your FrontAccounting system.
  2. Click the Items And Inventory tab.
  3. Click Item Categories.
  4. Give the new category a name (Figure C).
  5. Select a Tax Type, Item Type, Unit of Measure, and any other information that is applicable.
  6. Click Add New.

There may be other configurations (such as Item Dimension) that you need to configure depending upon your needs, so follow the previous six steps for every new item category you need.

Figure C

Adding items

With all of your taxes and categories in place, it’s time to begin adding items to your inventory. Follow these steps:

  1. Log in to your FrontAccounting system.
  2. Click the Items And Inventory tab.
  3. Click Items.
  4. Enter the necessary information for the item to be added (Figure D).
  5. Click Insert New Item.

Figure D

If the information is not applicable, leave those sections blank.

When it comes to adding items to inventory, you don’t want to get into the habit of doing item adjustments. Not only is this poor accounting, it also will not work properly with your FrontAccounting system. You have to create a purchase order for the items, and then once the order has arrived, check in items for the purchase order (PO). In order to do this, you must first create suppliers. To create a supplier for a product, follow these steps:

  1. Log in to your FrontAccounting system.
  2. Click Purchases.
  3. Click Suppliers.
  4. Fill out all necessary information for the new supplier (Figure E).
  5. Click Add New Supplier Details.

Repeat the previous five steps for all necessary suppliers.

Figure E

Pay close attention to the associated accounts for the supplier; otherwise any purchases made from that supplier will be taken out of the wrong accounts.

Now you can create a new PO, order items, and check items in when they arrive. When you check those items in, the item inventory will be adjusted.

To create a PO, follow these steps:

  1. Log in to your FrontAccounting system.
  2. Click Purchases.
  3. Click Purchase Order Entry.
  4. Enter the information for the PO (Figure F).
  5. Click Add Item.
  6. Click Place Order.

Figure F

The Place Order button will not appear until at least one item is added to the order.

When the order arrives, click Purchases, and then click Outstanding Purchase Orders Maintenance (this link will not show up if there are no outstanding POs) to check the order in.

You have officially created items, ordered items, and checked items in. Inventory is now flowing into your FrontAccounting system.