Getting started with tracked inventory
Before you can use tracked inventory, there are some preliminary steps you need to complete. These steps are required to ensure that tracked inventory works correctly for you in Xero.
We recommend you review the information on this page, and the information about adding items and entering opening balances, before you begin entering data in Xero for tracked inventory items.
You might also like to take a look at this video, which give an overview of what tracked inventory is and when you would use it, as well as how to create tracked items and enter their opening balances.
The preliminary steps you need to complete are:
Once you've completed these setup steps, you can:
Add items to your tracked inventory list in 2 ways:
Set up your inventory asset account
Xero uses a special account type called 'Inventory' to manage tracked inventory. Xero will only allow you to select an account with this account type when you create tracked inventory items.
If you used Xero's default chart of accounts when you set up your organisation, you may already have an account with the Inventory account type in your chart of accounts.
If you don't already have an account in your chart of accounts with the Inventory account type, you will need to create one.
Xero treats an inventory account as a system account that you cannot journal to. The key benefit of this is that this account can never be out of balance. It will always equal the sum of the tracked inventory items in the account.
Set up your Cost of Goods Sold account
Xero needs to know which account to use to track the cost of goods sold (COGS) for your tracked inventory items. You don't need to use a particular account type for your COGS account.
If you used Xero's default chart of accounts when you set up your organisation, you may already have a COGS account in your chart of accounts.
If you don't already have a COGS account in your chart of accounts, you will need to create one.