Editor's Note: Intuit recently released its QuickBooks Desktop 2023 line-up. Murph has been evaluating various pre-release versions of these products for almost a year, spending hours communicating with Intuit personnel so we can help you learn about the new products. This is the fourth in our series of individual product articles intended to provide additional content to what can be found in our QuickBooks Desktop 2023 Product Summary.
About Inventory Item Categories
QuickBooks Desktop has had a limited number of ways of defining inventory items:
- Item Name/Number
- Purchase Description
- Sales Description
- Manufacturer’s Part Number
Enterprise Advanced Inventory users also had the option of tracking Barcodes along with Serial or Lot Numbers.
But only the Item Name/Number field is provided for establishing a hierarchy of inventory items by creating sub-items of an item. Unfortunately, no restriction existed, as with accounts/sub-accounts, to prevent a user from selecting the parent item rather than being required to choose only sub-items.
Furthermore, QuickBooks provided no way to effectively track or report on items using the item/sub-item naming/numbering convention. This effectively rendered categorization of items an impossibility.
But new for 2023, QuickBooks Enterprise provides a more effective way for users to manage their inventory with Inventory Item Categories. Furthermore, they can establish a hierarchical system for their Inventory items by creating up to four (4) levels of subcategories.
Inventory Categories are available to all QuickBooks Enterprise (v 23) subscribers, including Enterprise Accountant subscribers, in both the US and Canada as of the initial product (R1) release.
Using Inventory Item Categories
With Inventory Item Categories, QuickBooks Enterprise users can:
- Create categories for their inventory items
- Establish a hierarchy for their categories with up to four (4) levels of subcategories
- Assign a category or subcategory to inventory items
- Run reports based on inventory categories (or subcategories)
Activating Inventory Item Categories
The Company file Admin must activate the Company preference for this feature.
(1) Log in to QuickBooks Enterprise as the Company file Admin in Single-user mode
(2) From the Edit menu, choose Preferences
(3) On the Preferences menu, select Items & Inventory
(4) Choose Company Preferences
Source: Image captured from a Pre-release of QuickBooks Enterprise (v23).
(5) Check the Activate categories box in the Categorize Items section
(6) Click "OK" and confirm you wish to save your preference change
Assigning Categories to Items
Users can create and assign categories to their Inventory Items. Item Categories are accessed only from the Add/Edit Item option of the Item list.
The Item list can be accessed from either the Lists or Inventory menus or the Items & Services icon under the Company section of the Home Page.
(1) Access the Item list from the Lists or Inventory menu of QuickBooks Enterprise
(2) From the Item drop-down menu, select either Add or Edit Item
(3) To add a category to an existing item, select the Item you wish to edit
(4) The Edit Item window will be displayed
Source: Image captured from a Pre-release of QuickBooks Enterprise (v23).
(5) The Category field shows “Uncategorized”
Source: Image captured from a Pre-release of QuickBooks Enterprise (v23).
(6) Click on the Category field drop-down
(7) Select <Add New>
Source: Image captured from a Pre-release of QuickBooks Enterprise (v23).
(8) Enter the category name you wish to create in the Category field
(9) You can also checkmark “Is a subcategory of” (only if you have an existing parent category)
(10) If a subcategory, select the parent category from the subcategory drop-down list
(11) Add a Description for the new category (or subcategory); the description is optional
(12) When you’re done, select Save
Source: Image captured from a Pre-release version of QuickBooks Enterprise v23.
(13) If appropriate, you can repeat this for multiple items and create a hierarchy of categories
(14) Make sure to click "OK" to save the edits you have made to your inventory item
Inventory Reports with Classification Information
You can run various Inventory item reports and include the new Category field in those reports. Additional reports specific to Item Classification will likely be released soon, along with the ability to sort or filter by item category.
Source: Image captured from a Pre-release of QuickBooks Enterprise (v23).
This is a feature that is still "in progress," and the team that is working on it is interested in hearing what you think, so be sure to use the Send Feedback feature in QuickBooks Enterprise to let them know what you think of Item Classification and what other enhancements would benefit this feature.
You also can post your thoughts about this new QuickBooks Enterprise feature in the 'Comments' for this article (below) and we will pass suggestions on to the development team.
Think Before You Create Your Categories
In the first article I wrote about Tags for QuickBooks Online, I warned that “without a system of control, or some fundamental guidelines on how tags should be used, tags just become so much ‘graffiti.’"
I also mentioned a problem with people who applied so many tags that “they would not be able to see their ‘data forest’ for their ‘tree tags.'”
These same things will likely be true of the new Inventory Item Categories unless QuickBooks ProAdvisors take the time to work closely with their clients to assist them in setting up meaningful classifications and an appropriate hierarchy. Just because you can have four levels of hierarchy doesn't necessarily mean you should use four levels.
Consider your client's case-specific rationale for using categories carefully and work with them, then "think before you build" the categories and hierarchical organization for inventory items.
"Interesting observation" — At the time of my writing, using the pre-release version I have been working with, the new Category field has not been added to the list of columns that can be displayed in several lists and reports you would normally expect to see them in including:
- The Item list
- The Inventory Center under the Inventory Item drop-down of the Company section of the Home page
- The Inventory Parts (list) of the Add/Edit Multiple List Entries feature available within QuickBooks Enterprise or QuickBooks Accountant.
- Various Inventory item reports (I won’t list them all here)
I’m confident this is just an oversight by the Intuit team developing this feature, and quite frankly, I didn’t even look during Beta testing or I would have mentioned it sooner. I’m confident this is on the "please do" list they are working on for future maintenance (R) release updates. (Note, the release version you download may possibly have some of these list issues already resolved.)
To learn more about this QuickBooks 2023 Desktop feature:
Please attend our September QB Talks webinar, scheduled for 2 p.m. (EST), Sept. 21, 2022. Here, Laura Madeira will bring you "A First Look at QuickBooks Desktop 2023." Laura develops this year's QuickBooks Desktop training content and exam materials for Intuit, so nobody is more knowledgeable about the new features. You can REGISTER HERE for the webinar.
Disclosures
Materials within this feature, including graphic illustrations, were developed from various pre-release versions of QuickBooks Desktop 2023. Therefore, the final product version you may acquire may appear, act, or be functionally different from that illustrated or described herein.
Portions of this feature have been adapted from Intuit QuickBooks Desktop 2023-related content. All such source materials were adapted by Insightful Accountant solely for educational purposes.
As used herein, QuickBooks, QuickBooks ProAdvisor, QuickBooks Payroll, QuickBooks Payments, and QuickBooks Desktop (products) refer to one or more registered trademarks of Intuit Inc.; a NASDAQ publicly traded "INTU" corporation, headquartered in Mountain View, California (USA).
Any or all other trade names used herein, including any other vendor (app/software) products discussed within this article, may be registered, trademarked, or otherwise held by their respective owners and are hereby acknowledged. They have been referenced for informational and educational purposes only.
This is an editorial feature, not sponsored content. None of the vendors within this article have paid Insightful Accountant or the Author any form of remuneration to be included within this feature. This article is provided solely for informational and educational purposes.
The publication of this article does not represent any form of endorsement by either the Author or Insightful Accountant.
Note: Both Registered Trademark ® and Copyright © symbols have been eliminated from the articles within this publication for brevity due to the frequency or abundance with which they might otherwise appear or be repeated. Every attempt is made to credit such trademarked products or copyrighted materials within our respective article footnotes and disclosures.
Like what you're reading?
Subscribe to our FREE newsletter and we'll deliver content like this directly to your inbox.