Using inventory and build from BOM correctly

Question

Hi Everyone, 
 I am currently working for a company where they have not been utilizing the inventory module correctly- we are using Sage 50 Quantum Accounting. Currently we have all of our inventory (raw Materials, packaging and FG in Sage. We are only using the FG items, as we are completing AR from Sage. (Meaning we invoice out of Sage). HOwever we would like to track all inventory in Sage using the Build from BOM function. 
 We have been doing month end journal entries and inventory adjustments to true up the GL value to match our inventory counts. Our inventory tracking is currently done in Excel (and is getting very cumbersome). I am going to try to list all of the issues/questions I have below. Any and all support is appreciated. 
 I will not be able to provide much information as to why these accounting choices were made- as this is a process that we inherited. I don't know why they didn't just set everything up correctly and use it properly from the get go. 
 1) Currently all finished goods have a negative value as we are using the inventory module to invoice but are not actually updating the quantity of our FG in Sage prior to the invoicing. What will be the best way to bring these values to the correct number? 
 2) I can't seem to remember if there is a way to change inventory item descriptions for multiple items at once? I would like to update a large number of inventory descriptions (a couple of hundred) 
 3) We are looking to start building our recipes using the build from BOM feature. I understand that all of the raw materials must be entered into the system first. Some of our recipes require a combination of sub-recipes to achieve the final product. What is the best approach for me to take here? 
 3a) Should I set the subrecipes up as inventory items, and then build them from the raw materials? Then when the final product is being built, using the quantities from the subrecipe inventory items to produce the final product? 
 3b) Is there an alternate option? 
 4) What is going to be the best way to adjust all of my inventory values to the correct values? Given that we have been doing a work around to not use the function correctly, I would like to the staff correctly use the function going forward. 
 
 This is all that is coming to mind right now. Thank you for all of your time!

Richard S. Ridings · Answer

I'll just provide some quick answers right now and if you need more details after testing, then please post again. 
 1) Inventory adjustment module is used to bring individual items to the correct quantity and cost. It will move the money either from the Balance Sheet to the Income statement if you are lowering the quantity or cost, and the other way if you are increasing. Pick the Expense account accordingly. 
 2) No mass update capabilities are possible within the program. 
 3) Best approach is probably exactly as you have described it. Sage 50 will mimic this concept for you if you set it up appropriately. Your intermediate recipes may or may not be sold separately but they can be built before the final product is built and "kept on the shelf" until you need it for the final product. Yes all raw materials must be entered into the system, generally through the Purchases modules as you buy them. This will increase quantities and costs of what you have in stock. You can't build something if you don't have it in stock. 
 3a) Yes. In the final product ledger Build tab, just identify this intermediate subrecipe as one of the components with the quantity required to complete the build of the final item. 
 3b) You could continue to use Excel. You could also use the Inventory Assembly module. This allows you to alter the components in quantity or actual item substitution more easily. Costs have to be managed by you but you can set up recurring entries to handle the assemblies so you don't have to retype everything each time you assemble. I would use Build if your recipe is the same all the time. 
 4) See #1 
 It might help you to take a copy of your database and run some tests with the actual data of your company. Do some inventory adjustments on some items to see how they affect the reports. Do some builds, do some item assemblies and then determine the best way to set it all up in your live company file. 
 When you take a copy you can use File, Sage As but be sure to give the file a completely different name like InventoryTest.sai. That way you will see that name at the top title bar of the Home Screen so you know you are in the test file and don't think you are posting to your live database. Even change the company name to Test.... to make sure the reports you print will be labelled with Test as well.

Sage 50

Using inventory and build from BOM correctly

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