Negative inventory in QuickBooks Online means you sold more of an item than the system thinks you had. This messes up your cost of goods sold, throws off your profit margins, and makes your financial statements unreliable. The good news is that fixing it is straightforward once you understand what went wrong.

The most common cause is timing. A sale gets recorded before the purchase that brought in the product. Maybe you entered an invoice on Monday but didn’t enter the bill from your supplier until Thursday. QuickBooks now thinks you sold something you didn’t have yet, creating a negative quantity.

Start by running an Inventory Valuation Detail report. Go to Reports, search for Inventory Valuation Detail, and look for any items showing negative quantities. This report shows every transaction affecting each inventory item in chronological order. You can see exactly where the quantity went negative.

Once you identify the problem items, look at the transaction history. Usually you’ll find a missing purchase or a bill that was entered with a date after the sale. The fix depends on what’s actually missing.

If you never entered the purchase at all, create a bill or expense transaction for when you actually received the inventory. Make sure the date is before any sales that would have used that stock. QuickBooks will recalculate the quantities based on the corrected timeline.

If the purchase exists but has the wrong date, edit the transaction and change the date to when the inventory actually arrived. This pushes the incoming stock earlier in the timeline and prevents the negative count.

Sometimes the issue is an incorrect starting quantity when the item was first set up. If you started tracking an item with zero quantity but actually had stock on hand, you need to create an inventory adjustment. Go to the Plus menu, select Inventory Quantity Adjustment, and enter the correct starting quantity with an appropriate date.

After making corrections, run the Inventory Valuation Detail report again to confirm all quantities are now positive. Check your profit and loss statement too because fixing inventory timing also corrects your cost of goods sold for those periods.

To prevent this going forward, enter purchase transactions as soon as inventory arrives rather than waiting for the bill. If your supplier invoices you later, you can create a bill with the actual receipt date. A Findlay bookkeeper who handles your books regularly will catch these timing issues before they become a bigger problem.

Setting up a consistent process for inventory and COGS tracking prevents most negative inventory situations. When purchases and sales are entered promptly and dated correctly, the numbers stay accurate. The problems usually start when transactions pile up and get entered out of order.

If your inventory has been neglected for a while and you have dozens of items showing negative quantities, the cleanup takes more time but follows the same process. Work through each item, find the missing transactions, and correct the dates. It’s tedious but necessary for accurate financials.