Negative Inventory in Retail: Everything You Need to Know
Negative inventory in retail, as the term implies, means the stock of any particular item is less than zero in your system. When you record a sales transaction for such an item, the system inventory for that item will become negative.
Why Negative Inventory Happens?
The system can indicate negative inventory for a particular item/s due to a number of reasons. If you are using a manual system for entering transactions, this can lead to data entry errors. For example, the physical quantity of the stock may be more than the quantity entered while creating a Goods receipt note. In such cases, your system will start showing negative inventory during sales while the physical stock is still present.
Similarly, negative inventory can happen if there is a time lag between creating the goods receipt note and the actual receiving of the stock. if during this time lag, sales are made or a stock transfer note is created, the system will start showing negative inventory.
Why do you Need to Allow negative Inventory for Sale?
Now that you know what negative inventory is, the question arises should you always block sales of items not present in the system or should you allow it. The answer is you need to have the best of both worlds. You should have the option to both allow or block negative inventory sales or transfers.
You need to allow negative inventory for sale because sometimes the received stock is yet to be entered into the system but the customer is asking for it. You can’t let the sales suffer, so it is recommended to allow negative inventory in the system.
Allowing negative inventory means the cashier can sell the physical items even if they are not showing up in the system inventory. Any good retail software should provide the facility to enter negative sales. When the stock is entered, the system should automatically take into account the negative inventory sales and adjust the inventory accordingly.
How Candela Handles Negative Inventory
Candela retail software is built to make retail simple! All the features in Candela are designed to help you handle various retail needs. Negative inventory is no exception.
let’s learn how Candela handles negative inventory.
How to Allow Negative Inventory for Sale
The first step is to configure Candela to allow negative sales. For the configuration, go to Configuration>System Configuration>Sale tab.
If you don’t want to block negative inventory sales but want the system to give a negative inventory warning, mark the checkbox: Show Negative Inventory Message
How to allow Negative Inventory for a Particular Store
Candela also gives you the option to block negative inventory for a particular store or even a particular line item.
Go to Configuration>Store defintion>
Select the store for which want to block or allow negative inventory sales, and click the Misc tab. From the Negative Inventory drop-down field, select the required option. If you select ‘system configuration’ the system will block or allow sales based on the configuration setting on the system configuration screen. If you select Block for this Shop or ‘Allow for this Shop, the system will work accordingly and ignore the system configuration settings for the selected shop.
When a goods receipt note is created for the items sold as negative inventory, the system will automatically adjust the quantity by taking into account the negative quantity.
How to block Negative Inventory for a particular line item
Candela retail software also gives you the option to block negative inventory for certain line items. You can opt for a warning message or simply block the sale of any item under the selected line item if the inventory doesn’t exist in the system.
Select the shop
Click the Misc tab
Click customize line items link
All line items of the selected shop will load in the grid
Click the drop-down in each line item field and select the required option
How to Allow or Block Negative Inventory for Stock Transfer
You may want to block the stock transfer of items with negative inventory in the system. Blocking negative entry stock transfer for a particular store means the selected store will not be able to dispatch stock if the system shows negative inventory for the items to be dispatched.
To block or allow Stock Transfer for a particular store, go to Store Definition
Select the store
Click Misc tab
From the Negative Inventory (STR) drop-down menu, select the required option.
How to Allow Salesperson to View Stock During Sales
If you want to allow your salespersons to view the stock of items they are selling, you can give them the right to do so. As you know, Candela has a robust security module where you can assign various rights to different user groups. To allow salespersons to view stock during sales, go to Security>Group Rights
From the User Groups drop-down menu, select sales shop
From Form Categories, select Shop Activities
Expand Shop Activities and click the plus icon to expand it
Now select Sales/Return
And mark the checkbox ‘Show Stock’
How to Check the Stock of Items on Sales and Return Screen
If on the Group Rights screen the sales group has the right to view stock, the cashier at the pos can simply click the link ‘current stock’ and view the stock of the loaded item. You can check the stock of one item at a time.
Regardless of the reasons for negative inventory, it is important for retailers to be able to handle negative inventory both in sales and stock transfers. Do you handle negative inventory? What do you think is the right approach to handling negative inventory? Should you allow negative inventory sales or do you think that negative sales should be blocked? Let us know in the comments section below.