The difference between Tracked Inventory and Untracked Inventory in Xero
Xero offers different ways to manage SKUs, inventory and reconciliation and Reconcilely can fit nicely into your workflow based on your use case.
How Xero will do its inventory management is first determined by how your item codes are created:
Tracked inventory will defer inventory management to Xero. As you record sales against those products, the accounting software will automatically tick inventory up/down for you. While this solution has limitations, it often is good enough for many cases. If you sell tracked inventory, Xero will try to adjust your accounts for you.
Untracked inventory is used if you do not plan to track inventory or prefer to use a third party inventory management software, as the product inventory will not be automatically adjusted by the accounting software (ie. Xero).
Reconcilely inventory management is complementary and should be selected according to your use case:
Choose Inactive if you do not want to create item codes in Xero for each SKU nor adjust any inventory or COGS accounts on your behalf. Useful if there is no need to track inventory at all.
Choose Semi-Active if you want to create item codes in Xero for each SKU and delegate the inventory management to Xero or third-party software
Choose Active if you want to create item codes in Xero for each SKU and use Reconcilely to adjust inventory and COGS accounts for you.
Note: We don't currently support syncing inventory amounts between Xero and Shopify. Xero only allows us to "update a consumption of an item by a sale" in the current version, it does not let us update the amount available.
How Xero will do its inventory management is first determined by how your item codes are created:
Tracked inventory will defer inventory management to Xero. As you record sales against those products, the accounting software will automatically tick inventory up/down for you. While this solution has limitations, it often is good enough for many cases. If you sell tracked inventory, Xero will try to adjust your accounts for you.
Untracked inventory is used if you do not plan to track inventory or prefer to use a third party inventory management software, as the product inventory will not be automatically adjusted by the accounting software (ie. Xero).
Reconcilely inventory management is complementary and should be selected according to your use case:
Choose Inactive if you do not want to create item codes in Xero for each SKU nor adjust any inventory or COGS accounts on your behalf. Useful if there is no need to track inventory at all.
Choose Semi-Active if you want to create item codes in Xero for each SKU and delegate the inventory management to Xero or third-party software
Choose Active if you want to create item codes in Xero for each SKU and use Reconcilely to adjust inventory and COGS accounts for you.
Note: We don't currently support syncing inventory amounts between Xero and Shopify. Xero only allows us to "update a consumption of an item by a sale" in the current version, it does not let us update the amount available.
Updated on: 18/08/2022
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