With QuickBooks 2012
, you can now track your item receipts and bills separately. This feature is called Enhanced Inventory Receiving (EIR)
, it improves how you receive and pay for inventory in QuickBooks. This feature is irreversible, one you turn the preference on, you can’t turn it off so it’s vital that you read and understand these important considerations before you turn EIR on.
Here are a couple of scenarios that can help you decide whether EIR is right for your business.
- You receive and pay for items in QuickBooks in a completely different way.
- You receive one bill that covers multiple item receipts
- You receive multiple bills for one item receipt
- You pay for items before you receive them and don’t want your inventory quantities to increase (With previous versions of QuickBooks and EIR turned off, QuickBooks increases inventory quantities when you enter a bill for inventory items.)
- You want to separate the receiving department (item receipts) from the accounts payable department (enter and pay bills) (With previous QuickBooks versions and if you’re not using EIR in QuickBooks 2012, item receipts are converted to a bill when you receive the bill.)
If all or some of the scenarios applies to your business, then you should consider using EIR. However, it’s important that you read the following cautionary points before you begin because you can’t turn EIR off.
1. With EIR, Item receipts don’t increase accounts payable, Bills don’t affect inventory and Bills against item receipts no longer replace item receipts. To enable this feature, QuickBooks changes past transactions during the EIR setup.
2. EIR separates item receipts from bills. This creates a new process for receiving and paying for items. This new process also comes with some restrictions.
3. You can’t turn EIR off. Once it’s on, you must use the new EIR process for receiving and paying for items.
Here are the following changes that will take place during the EIR setup.
1. Because bills do not increase inventory quantities in EIR, QuickBooks has to create an item receipt for every bill that included items. This increases the number of transactions in your company file.
2. If you haven’t received a bill for an open item receipt, the amount no longer shows up in Accounts Payable. This is correct because you haven’t received the bill yet. QuickBooks only shows the amount in Accounts Payable when you receive the bill.
3. When QuickBooks creates the new item receipts, it recalculates inventory average cost. These item receipts change the order of inventory transactions within each day. This change in transaction order can sometimes result in minor changes to average cost of an item.