We use Square for Retail and depend on its built-in inventory management features to track our stuff. I would really appreciate it if someone from Square would provide a clear explanation of the differences between each of the different "Stock Actions" I can apply to an item in my library. The names of the stock actions sound self-explanatory ("Stock Received," "Inventory Re-Count," "Damage," "Theft," "Loss," and "Return")… But let me explain what it is I don't understand and give an example of why this is important.
Since the Square for Retail package offers reports like Projected Profit and COGS, I keep thinking that these different stock actions have effects on the "bookkeeping" back end of things. If a customer returns a product that I paid $10 for from one of my vendors (i.e., the unit cost is $10), I have to think that Square bumps the total value of my inventory up by $10 when I take the "Return" stock action. And if I bought and recieved 5 of those items but only count 4 on hand and rack the missing one up to theft, then from the bookkeeping side of things, the system must think $10 dollars of value just got vaporized, because I still paid $50 for the initial purchase from the vendor of 5, but I'll only ever sell 4 of those. But what does applying the "Loss" action do—from the bookeeping side of things, does it do the same as "Theft"? What about "Inventory Re-count" and "Damage"? When it comes to the value of my inventory and how Square tracks/measures the profitability of my business, do these different stock actions have different effects? Or are "Inventory Re-count," "Theft," "Damage," and "Loss" all just different words for the same thing when comes to the numbers and measuring value? I can't find an article that explains clearly when I should adjust the count of an item using Inventory Re-count istead of Loss (or Stock Received). I'd really like someone to provide a "best practices" guide to what the appropriate scenarios for these different stock actions are.
Here's an example why this matters. My business sells a lot of products that we buy in 50 lb. bags. Some of those bags we just mark up and sell, and some of those bags we open and use to fill bulk bins, from which customers can buy as much or as little by the pound as they want. But Square can't deal with fractional quantities like this. At least not with the scales we use to weigh bulk bin purchases at the register. So instead I use the Square-suggested workaround of creating separate inventory items of 0.1 lb. versions of bulk bin products. When someone buys a whole 50 lb. bag of Stuff off the shelf, I ring them up using the "50# Bag of Stuff" item in my library. But if they scoop 8.35 lbs. of Stuff out of the bulk bin of Stuff, then I select the separate "0.1# of Stuff" item from my item library and ring them up for 84 of them. It's clumsy, but it works okay…
But I need to track where all this stuff is going and how much money I'm making, especially since there are significantly different profit margins for 50 lb. bags vs. by-the-pound bulk bin purchases. Suppose I'm completely out of Stuff, so I use Inventory Management > Purchase Orders to send a P.O. to a vendor for 8 bags of Stuff (50 lbs. each) at $24.35 per bag. Truck shows up, I hand the driver a check for $194.80 (let's pretend delivery is free, and since I'm a reseller I don't pay tax). I put away the 8 new bags. But the bulk bin of Stuff is empty, so my assistant manager opens one of the bags, fills up the bulk bin, and puts what's left in the bag in a closet to use for bin refills later. Square is telling me I now have 8 50-lb. bags of Stuff on hand. But that's not what's going on: there are 7 bags on hand, and a half-empty bag in the closet. So I need to back one of the bags out of inventory, and while I'm at it I need to "back in" to inventory 500 of the "0.1# of Stuff" item in my library. Updating the "0.1# of Stuff" item seems pretty straightforward—just use the "Stock Received" stock action, and up the count by 500 at a unit cost of $0.05 (24.35/50 = 0.487; let's ignore rounding errors, it's close enough I guess). But what do I do about the 50 lb. bags? Do I back one out as a "Re-count"? Or do I designate it as a "Loss"? Even though only 7 bags are now on hand to sell, $24.35 worth of value hasn't been vaporized the way it would be with a "Theft" (and maybe "Damage" too?). That value has just been converted to another item, and it's all still there. It's really, really important that the system still reckon that the full $194.80 that I wrote a check for is really all there.
I feel like there's a fair amount of math going on under the hood with Square when it comes to tracking inventory, sales, value, profit, etc. The different stock actions have pretty self-explanantory names, but I need to know if they affect that math in different ways so that I can track what's going on properly. Can you guys provide a clear explanation of how these differ and some guidance on best practices for different ways to adjust inventory? Thanks.
