QuickBooks Bill of Materials: The Secret to Making it Work
Spoiler Alert: This article investigates the limitations of your QuickBooks bill of materials (using online and the desktop version), the feature gaps which need to be bridged, and how to set up your online BOM.
Let’s jump headfirst into this article with a hypothetical set in the pinnacle of popular culture, Hell’s Kitchen.
You have a fast-food background but are confident that you can easily transition to a fancy restaurant's working conditions.
Before you start, you study the dishes, but unfortunately, as soon as you’re in the kitchen, Gordon Ramsay asks you for a risotto with scallops which wasn’t on the list of dishes.
Uh-oh, turns out you don’t know how to make it.
As a manufacturer using QuickBooks bill of materials, you’re going to need to know how and where you can save your products recipes.
Maybe your bill of materials is saved in that entrepreneurial noggin of yours. But, if you don’t have it written down and stored elsewhere, just like the hypothetically inexperienced chef, how can you expect to scale your business if any new staff doesn’t have access to those all-important QuickBooks bill of materials?
In this article, we’re going to give a brief overview of what is a bill of materials, how to save them in QuickBooks (or if you can...), and how you can get more control over your QuickBooks bill of materials.
So, if you don’t want to become the screaming, quick-to-anger, swearing Gordon Ramsay we all know him as because your teammates are struggling to put a product together, then be sure to read all the way through.
PRO TIP: If you’re using QuickBooks online bill of materials, you’ve probably learned the hard way that you’re going to have to save your bill of materials elsewhere. That’s why we offer a free small business inventory spreadsheet template that you can use to manage your inventory levels and define your bill of materials.
What Is a Bill of Materials?
A bill of materials (often referred to as a BOM or product recipe) is a document which contains a list of the materials and components which are used to make your products, and the manufacturing process these products pass through.
Recall the last phenomenon of an IKEA purchase you made. Remember the instructions it came with (and like a responsible consumer read before you blindly started constructing your item)?
That is basically a bill of materials.
However, a bill of materials comes in different forms depending on the complexity of the product:
— Configurable; and
But we bet you already know this, you’re here because you want to figure out how you can configure your QuickBooks bill of materials.
And we have some potentially unfortunate news...
How Does QuickBooks Bill of Materials Work?
If you can even use QuickBooks bill of materials all depends on what package you purchased:
— QuickBooks bill of materials is possible, but still missing some features, with some desktop versions; and
— QuickBooks online bill of materials isn’t an option, unfortunately.
Most modern manufacturing businesses start off with the online version of QuickBooks.
And why wouldn’t they? QuickBooks Online doesn’t require installation, can be accessed on multiple devices and allows anyone to easily access company accounts.
But, don’t panic if you’re one of these companies who got set up with QuickBooks Online. QuickBooks online bill of materials is possible, but you will need to implement a manufacturing scheduling software for small business which can integrate with your QuickBooks account.
PRO TIP: Regardless of if you’re using QuickBooks bill of materials or any other software for managing your business, configuring your bill of materials is just the tip of an iceberg when it comes to manufacturing.
That’s why we’ve put together the ultimate guide to small business inventory management to help you take your business to the next level.
To get yourself QuickBooks Online bill of materials, instead of going all-in on one piece of software (in this instance QuickBooks), you should marry it with another tool which can help you get those missing features.
Use QuickBooks for what it was originally designed for, tracking finances, and find something else to help you manage the rest of your business.
So, what do you need to look for when choosing a QuickBooks online inventory management software?
How to Get Yourself QuickBooks Online Bill of Materials
QuickBooks Online bill of materials is possible if you use a Smart MRP Software which has integration QuickBooks that can take your manufacturing to the next level.
But what is Smart MRP Software?
Katana’s Smart MRP Software is a QuickBooks inventory management integration designed by manufacturers, for manufacturers.
But, it goes beyond improving your inventory management, it also; centralizes your business management, gives you more control over your inventory, helps you plan production, gives you an option to easily save your QuickBooks bill of materials, and helps you improve your order fulfillment rate.
So how exactly does the QuickBooks integration work?
Once you connect Katana to QuickBooks, you can close the gap between your manufacturing operations and finance tracking.
When using Katana, you can sync invoices by tracking your sale orders in Katana and generate invoices for QuickBooks once an order is fulfilled, with just a click of a button.
You can also transfer purchases by taking your purchase orders for raw materials and pushing them into QuickBooks as a bill.
Finally, once you have integrated your accounts you can synchronize all your contact details, so all your customer and supplier information (their details, invoices, and bills) are pushed into QuickBooks.
But, that’s just some of the many juicy features that come with integration, the headache cure for when using QuickBooks for manufacturing is the ability to save your QuickBooks bill of materials.
Once you’ve integrated Katana, you’ll be able to store your QuickBooks bill of materials in one place to speed up your production processes and easily access them in the future.
The great thing is, if you’re a manufacturing business with multiple variants of the items you sell, Katana is equipped to help you easily generate each possible variation when creating your QuickBooks bill of materials.
However, not only can you save your raw material information, but in your bill of materials, you can also track:
— Lead time;
— Scrap factor;
— Quality criteria;
— Done criteria; and
— Roll-up cost.
To view and create a bill of material (or product recipe) in Katana simply follow these four steps:
Log in to Katana or sign up for the 14-day free trial if you don’t yet have an account.
Once you have logged in, at the top of the dashboard select “Items” to proceed.
Here you will be able to see all the products your store manufactures under the “Products” tab.
To access your bill of materials, simply select one of the products. Once you have accessed the Product Card, make sure to then select the “Product Recipe” tab.
From here, you’ll now be able to create, reconfigure, and edit the respective quantities on this bill of material.
And that’s it! Ooh, fun fact, the stock cost will automatically update too (assuming the relevant fields have been correctly filled in).
If you’re more of a visual learner, our handy tutorial on how to set up a bill of materials on Katana will have you covered.
However, all of the above are steps which you can take to get yourself QuickBooks Online bill of materials.
As we said earlier in the article, there is a bill of materials available on some of the desktop versions, but they also come with limitations.
QuickBooks Desktop Bill of Materials
Consider this chapter a quick QuickBooks bill of materials tutorial.
If using the correct QuickBooks Desktop package, you can find your QuickBooks bill of materials under the Inventory Assembly (sometimes referred to as an assembly).
But what is an Inventory Assembly? Basically, it’s an Item in QuickBooks.
QuickBooks bill of materials contains labor, other assemblies (or sub-assemblies) and other components used to make a product.
When you select the Inventory Assembly, you can see your QuickBooks bill of materials report partially, which shows component parts, item type, quantity, and the total cost for the materials and product.
But, now comes that special QuickBooks finish, tracking the finances behind manufacturing a product.
QuickBooks calculates the costs of manufacturing by crediting raw materials used and debiting the cost of the finished product.
If you want to see the entire QuickBooks bill of materials report, simply select the “Full View...” button.
If you look under the info area in the Assembly Item, you can find the Quantity on Hand, Sales Orders, and Quantities already allocated for Other Assemblies. At the bottom of the Assembly Item info, you can also find your current Quantity Available.
Finally, if you look at the very bottom of the Build Assembly window, the QuickBooks bill of materials report gives you a calculation, based on the number of components available, detailing how many products you can construct from your current raw material levels.
So, we’ve mentioned a few times that only particular packages offer QuickBooks bill of materials.
Inventory Assemblies (which by extension means QuickBooks bill of materials) are only available in the expensive QuickBooks Premier and QuickBooks Enterprise packages.
In the Inventory Assemblies you’ll be able to change:
— The items;
— Delete items;
— Add a new item; and
— Change the quantity.
However, to have access to this QuickBooks bill of materials is pretty expensive, and it’s still lacking a lot of features which are essential to help manufacturers get their production under control.
Here’s a video which explores QuickBooks bill of materials further to help you get a better understanding of how it works:
Regardless of if you’re using QuickBooks Online or the desktop versions, other small business’s still turn to third party integration tools to get more functionality, flexibility, and more reporting's depending on what they need.
Though whichever version you pick, you’ll still need to implement software that can bridge the feature gap that’s present on QuickBooks when it comes to running a manufacturing business.
Even though the desktop version has it, QuickBooks bill of materials is outdated and still lacks a lot of features that are necessary to organize and grow a manufacturing business to its full potential. Features such as production scheduling, manufacturing overview, managing multiple sale channels, and handling raw material.
But considering many of us manufacturers go for the online version, which doesn’t even give you the capability of storing your bill of materials and forces you to use other methods of saving such as using inefficient Excel spreadsheets, using QuickBooks to manage your entire business can be problematic.
However, QuickBooks Online bill of materials doesn’t have to be a thing of fiction.
Simply integrate cloud manufacturing software, which can save your QuickBooks bill of materials and help manage your entire manufacturing operation, all from one easy to navigate dashboard, to give your business’s performance a massive overhaul.
Have a see for yourself how Katana is a perfect match for your business with the video below.
And that’s it for today, we hope you’ve found this article beneficial, and if you have any questions, please do not hesitate to get in touch!
But remember, regardless of if you’re a lone wolf or a growing business, selecting the right software will be key in helping you become a successful entrepreneur.
Until next time, happy manufacturing!