Trading companies live and die by inventory accuracy. Zoho Books' inventory module covers most needs, SKUs, locations, valuation, low-stock alerts. Here is the setup we use with traders moving 100 to 10,000 SKUs.
What you'll learn
→ Enabling inventory and choosing a method → Creating items and SKUs → Tracking locations and warehouses → Period-end inventoryEnabling inventory and choosing a method
Settings → Items → Enable Inventory Tracking. Choose your costing method: FIFO (recommended for fashion, perishables, anywhere batch tracking matters) or Weighted Average (recommended for commodity-like SKUs). The choice is largely irreversible mid-year, decide carefully.
Set up Item Categories first. Categories drive reporting and tax treatment. A trading company might have categories like 'Electronics - Mobile Phones', 'Electronics - Accessories', 'Apparel - Men', 'Apparel - Women'. Mirror your sales segmentation.
Creating items and SKUs
Items → Create Item. Each item has: SKU code, name, category, unit of measure, sales price, purchase price, opening stock, reorder point, preferred vendor. Use SKU codes that encode meaning if your inventory is large, first letters for category, then a sequential number.
Bulk-create from a CSV import for the initial load. After that, every new product gets created in Zoho before its first sale. A discipline of 'no item without a Zoho record' prevents inventory chaos.
Tracking locations and warehouses
If you operate from multiple warehouses or shops, enable Multi-warehouse (Premium plan and above). Each location has its own stock balance for each SKU. Internal transfers move stock between locations without affecting sales.
Movement of stock between an FTA Designated Free Zone warehouse and the mainland triggers VAT, Zoho can be configured to calculate this on transfer. Document the workflow with your accountant; the VAT treatment of intra-company stock movement is one of the more nuanced areas.
Period-end inventory
Run a physical count at year-end (and ideally quarterly for fast-moving categories). Zoho's Inventory Adjustment screen lets you adjust system stock to physical count. Each adjustment posts to a Stock Adjustment account, review monthly for unexplained shrinkage or overage.
For Net Realisable Value tests, run Reports → Inventory Valuation. Compare the carrying value to current market price for slow-movers and obsolete stock. Write down where NRV is below cost; the auditor will check.
This guide is general information, not professional advice. For situations that involve specific facts, talk to your accountant, or hire one of ours from the marketplace.