Inventory Settings
The Inventory Settings page allows you to configure how inventory is managed in Frappe Books. Here you can define inventory valuation methods, default accounts, warehouse settings, and enable optional inventory features such as batches, serial numbers, barcodes, and UOM conversions.
To access Inventory Settings, navigate to Setup → Settings and open the Inventory tab.
Tip
Configure Inventory Settings before recording inventory transactions to ensure stock movements and valuation are processed correctly.
Inventory Configuration
The following settings can be configured from the Inventory tab.
| Setting | Description |
|---|---|
| Valuation Method | Select either FIFO or Moving Average to calculate inventory valuation. |
| Default Location | Specifies the default inventory location used when creating inventory transactions. |
| Stock In Hand Account | Default account used when stock is received into inventory. |
| Stock Received But Not Billed Account | Account used for tracked items received before supplier billing is completed. |
| Cost of Goods Sold Account | Default expense account used when items are shipped to customers. |
| Enable Barcodes | Allows barcode management and displays barcode fields in inventory transactions. |
| Enable Batches | Enables batch tracking for inventory items. |
| Enable Serial Numbers | Enables serial number tracking for inventory items. |
| Enable UOM Conversion | Allows items to use multiple Units of Measure (UOM). |
| Enable Stock Returns | Allows creation of Shipment Returns and Purchase Receipt Returns. |
Valuation Method
The Valuation Method determines how inventory costs are calculated for stock valuation.
- FIFO (First In, First Out): Older inventory costs are consumed before newer inventory.
- Moving Average: Inventory value is calculated using the continuously updated average cost of available stock.
The selected valuation method is used to calculate inventory values shown in the Stock Ledger and Stock Balance reports.
Default Location
The Default Location specifies the inventory location that is automatically selected whenever a new inventory transaction is created.
Inventory Accounts
Inventory transactions automatically post accounting entries using the configured default accounts.
| Account | Purpose |
|---|---|
| Stock In Hand | Records the value of inventory received into stock. |
| Stock Received But Not Billed | Tracks inventory received before the supplier invoice is finalized. |
| Cost of Goods Sold | Records the inventory cost when goods are shipped to customers. |
Enable Barcodes
Enabling Barcodes allows barcode values to be assigned to items. Barcode input fields also become available in transactions such as Sales Invoices and Shipments for faster item selection.
Enable Batches
Enable Batches to track inventory by batch numbers. Tracked items will include a Has Batch option, and Batch records become available through Quick Search.
Enable Serial Numbers
Enable Serial Numbers to uniquely identify individual inventory items. Tracked items will include a Has Serial Number option, and Serial Number records become available through Quick Search.
Enable UOM Conversion
Enable UOM Conversion to assign multiple Units of Measure to an item. During inventory transactions, users can select an alternative UOM while quantities are automatically converted based on the configured conversion rates.
Enable Stock Returns
When Stock Returns is enabled, you can create returns directly against existing Purchase Receipts and Shipments, simplifying inventory reversal transactions.
Best Practices
- Select the appropriate valuation method before recording inventory transactions.
- Configure default inventory accounts to ensure accurate accounting entries.
- Enable Batch or Serial Number tracking only for items that require traceability.
- Use UOM Conversion when purchasing and selling items in different units.
- Enable Stock Returns if your business frequently processes product returns.
