We were baffled by the fact that Square was accurately tracking most of our inventory, but certain items were not being tracked accurately. After we took year-end inventory at the end of 2020, it became clear that the items with incorrect inventory numbers were all new items we brought in; items we had never carried before.
After some investigation and testing, I figured out the issue. I thought I'd post here in case someone else may be having the same problem.
We use purchase orders as a means of tracking inventory, but we don't actually use purchase orders to place orders with our vendors. We order by phone, the products arrive with a paper invoice, and I use those invoices to create PO's in Square. After I create a PO, I immediately mark all the items as "Received." Often, I am entering the PO's days after the actual product has already arrived.
When a new product arrives, employees "Create a New Item" using the Square Retail POS app. I had instructed them NOT to update item quantities at this stage, since I would be doing that via the Purchase Order. What we found out is that Square does not assign new items a 0 stock quantity... that field remains blank. Therefore, if these items are sold before the PO is created and the items are "Received," the inventory does not deplete.
Example: on a Monday, we receive 12 bottles of a new wine. A new item is created. We sell 2 bottles of that wine on the same day, and 2 bottles the following day. After that, I enter the new item on a PO and mark it as "Received." The system updates the quantity to 12. In reality, we only have 8 bottles. Square continues to track the inventory from this point on, but we're off by 4, to start.
Solution: When creating a new item on the Square Retail POS app, click on Stock and enter a zero for quantity received. Entering the zero triggers Square to begin tracking inventory depletion. Therefore, in the above example, the stock level on Tuesday would be -4 (negative). When I "receive" the 12 bottles on the PO, inventory automatically updates to 8 because -4 + 12 = 8.
It would be nice if Square changed the default for new items to 0 instead of a blank, to prevent this from happening. But for now, you can work around it by simply entering a zero stock quantity when you create a new item.
