Some products may be purchased indifferent units than its sold to customers.
Examples:
Purchased in truckload, sold in bushels
Purchased in yards, sold by the inch
Purchased in tons, sold by the pound
MicroBiz users can use the Inventory Adjustment feature to adjust inventory sold in different units of measure.
Step One: Create product records of item using units of measure for purchasing and selling
Example: If you are buying stone by the ton and selling topsoil by the bag, create a product record name 'Stone - Bulk Ton' and 'Stone - Bag'.
As the 'Purchasing' product will be sold in fractional quantities, be sure to select the Sell in Fractional Quantities in the Settings tab in the Product Record.
Step Two: Add stock to the product record in unit of measure used to acquire product.
As you will be acquiring products in one unit of measure and selling in a different unit of measure, you will need to add stock to the product that you are acquiring. This can be done through a vendor shipment or by editing Open Stock in the product record.
Step Three: Create adjustment reason code for converting units of measure
Go to Settings>Inventory>Adjustment Reason Codes and use the 'Add New' button top right to add a new adjustment reason code. Be sure to include (-)(+) in the adjustment name and select an Inventory Action of 'Both.
Step Four: Use Inventory Adjustment to convert product from Units Purchased to Units Sold
The final step is to create an Inventory Adjustment that will deduct units from the 'Purchasing' product record and add units to the 'Selling' product records based on the applicable conversion ratio.
In the example that we are using, assume that there are 50 40-pound bags in a ton. So you would deduct one ton of stone from the 'Stone - Bulk Ton' product record and add 50 units of the 'Stone - Bag' product.
Result> You have created units for sale by converting bulk stone inventory to bags of stone.
Best Practices
You can convert products when receiving goods or when the unit of sale product has a negative inventory. Or you can let the sale product record run at a negative stock until the time that you need to reorder of calculate an inventory balance or cost of good sold for reporting purposes.