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You will get the negative inventory balance alert because any of the following transactions have occurred:

  • An item type purchase debit note (negative purchase) which exceeds either or both the quantity/dollar value of an inventoried item.
  • Editing, reversing, or deleting a recorded item bill which exceeds either or both the quantity/dollar value of an inventoried item.
  • Editing, reversing or deleting an item type sale credit note (negative sale). This will remove items from inventory, and as such, the credit note must not remove more quantity/dollar value than is on hand.
  • An Inventory Adjustment that attempts to adjust an item's quantity/dollar value to less than zero.
  • An Inventory Transfer which attempts to adjust an item's quantity/dollar value to less than zero

    might receive the following error.

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    This means that while your inventory quantity will be zero, the value of the items you're adjusting would not return to zero.

    For example, if you tried to return 7 glasses at $10.00 each for a total value of $70.00 but AccountRight shows the 7 glasses to be worth $63.64 in total, you'll see this message.

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    If you try to record a transaction that would result in a negative inventory balance (physical quantity or dollar value)zero units on hand, you will receive a negative inventory balance alert like these:

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    <h2><i class="fa fa-comments"></i>&nbsp;&nbsp;FAQs</h2><br>
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    titleWhy did I get the negative inventory balance alert?
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    How did this happen? Even if your inventory and transactions were entered correctly, this discrepancy can still appear because of AccountRight's average cost method of calculating your inventory value.

    How can I fix it?

    Before you can record this transaction, you need to adjust your inventory value by the amount that it's unbalanced by. Follow the steps below to find the adjustment amount and record the inventory adjustment.

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    titleMy inventory should be above zero, but I still got a negative inventory alert. What should I do?

    If you still get a negative inventory alert, it could be because AccountRight uses the average cost to value inventoried items, so if purchases and sales of inventoried items are not entered in the order they actually occur, the average cost of the items will be affected.

    For example, on the following dates these transactions occured:

    • 1 July - 10 items purchased for $10.00 each, so the average cost of the items is $10.00.
    • 2 July - 3 items sold. The average cost of the items remains unchanged at $10.00. This can be calculated by dividing the total value of the items by the quantity of items on hand; $70.00 / 7 items=$10.00.
    • 3 July - 10 items purchased for $12.00 each. There are now 17 items on hand. The total value of the items is $70.00 + $120.00=$190.00. The average cost of these items is now $190.00 / 17 items=$11.18.

    If the two purchases were entered before the sale, then the resultant average cost of the Widgets would be as follows:

    • Enter both purchases - Average cost of items=total value ($220.00) divided by the quantity (20 items)=$11.00.
    • Enter the sale - The average cost of the items will be unchanged at $11.00. Total value=$187.00 divided by quantity 17 items=$11.00.

    From this example, you can see that the average cost of an item is affected by the order in which sales and purchases are recorded. In some cases, this can result in a negative inventory alert when returning items.

    1. Run an inventory report

    Run an inventory report

    Run the Item List [Summary] report for the applicable items.

    1. Go to the Reports menu and choose Index to Reports.
    2. Click the Inventory tab.
    3. Click the Item List [Summary] report (under the Items sub-heading) then click Advanced.
    4. At the Items field, select the items you want included in the report.
    5. Select the option Include Zero Quantities.
    6. Click Run Report.
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    title2. Compare the report with your transaction

    Compare the report with your transaction

    You'll now be able to compare the value of the items on the Items List [Summary] with those of the transaction which is generating the error. The quantity should be the same, but the dollar value will be greater or less.

    The example below shows the Items List [Summary] report filtered for the 100ml glasses.

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    The list shows that the total value of the glasses is $63.64. If the return was recorded, the total value of the glasses would drop below zero (-$6.36), even though the quantity would be zero.

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    This comparison shows that the total value needs to be increased by $6.36, so an inventory adjustment needs to be done.

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    title3. Make an Inventory Adjustment

    Make an Inventory Adjustment

    An inventory adjustment is used to increase the dollar value of the items. Keep the quantity of the items at 0, because we don't want to add any more into the inventory. You can also ignore the unit cost because it will adjust automatically when you record the adjustment.

    In the Amount column, enter the total value difference you found in the previous task. In our example, it was $6.36. If in your case you need to reduce the total value, enter the amount as a negative (minus).

    Finally, you'd enter the account you want to assign the adjustment amount to. This account is usually a cost of sales or inventory adjustment account.

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    Learn from the experts

    Managing a full inventory can sometimes be tricky. The MYOB Inventory Training Course is an excellent resource to better understand AccountRight's inventory and its features - helping you stock smarter.

    Learn more about this course for Australia or New Zealand.

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    titleRelated topics
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    Add a customer

    Printing, emailing and saving forms

    Changing or deleting a transaction

    Reimbursable expenses

    Credit limits

    Credit holds

    Recurring transactions

    Sales and purchases information

    Error: Not enough items on hand to record this transaction

    Inventory management in AccountRight

    Inventory

    Inventory reports

    Customising inventory

    Periodical inventory

    Making inventory adjustments

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