Whether you run an online business or a brick-and-mortar shop, whether you have 100 weekly customers or 1,000, your software inventory management process will become a lot easier if you understand what inventory on hand and future inventory are and how they differ from one another.

On Hand Inventory

On hand inventory, also know as quantity on hand, is the inventory present in your warehouse. It’s in there, ready to be made available to customers as soon as they place their order.

Future Inventory

Future inventory or forecasted inventory is the actual inventory quantity available. It’s calculated in this way:

on hand inventory — outgoing inventory + incoming inventory

When future inventory exceeds on hand stock, it means that you have probably already placed a purchase order and new inventory is coming in.

On the other hand, when future inventory is smaller than on hand stock, it means that part of your inventory has been already reserved for customers or for other purposes. Calculating future inventory is important because it tells you how much you can sell, helping you avoid understock or other inventory problems.

An Example

Here is an example that illustrates how on hand inventory and future inventory work. Let’s assume you run an e-commerce business, say an online store that sells record albums. You have 43 products in your stock when a customer places an online order for 3 products.

Your on hand inventory will remain 43 until the products are shipped to the customer.

The future inventory, on the other hand, will decrease to 40 if you haven’t already placed a new order for new inventory. If you have, then your forecasted inventory will be…

43 — 3 + incoming inventory

If the incoming inventory will consist of 10 new products, then the future inventory will look like this:

43 — 3 + 10 = 50

Maintaining Right Inventory Levels

Ideally, you want your future inventory to be above your on hand inventory to ensure that all orders for that product will be fulfilled. An Intuit QuickBooks app for inventory that comes integrated with a sales forecasting inventory tool can help you maintain an adequate future inventory, as well as easily keep track of your inventory on hand, even if you offer some products as free samples, give others away to specialized reviewers, or include part of them in seasonal promotional campaigns.

With an Intuit QuickBooks app for inventory such as DataQlick, on hand as well as future inventory management becomes a quick and efficient process. DataQlick’s inventory tab integrates a convenient Inventory on Hand value and also lists the number of stock items reserved. At the same time, DataQlick features a sales forecasting inventory tool that helps you maintain the right future stock at all times.