This talks about a different approach to the process than you are taking.

I would imagine that there are different approaches to use if you are working with industrial diamonds (where you may have a larger bulk) than jewelry/investment grade diamonds. If you are tracking individual diamonds rather than a bulk then there are different approaches.

QuickBooks is not well set up for a situation where you have a large variation in yield in the process…

I was hoping to get the magical solution as to how I can manage my specific process of manufacturing. I am a diamond manufacturer. I am trying to find a way that I can transform the item of “rough diamond” to “polished diamond”. The weight of the polished diamond is tracked in carats which changes by 50 to 60 percent from the rough. I outsource this process to a diamond polisher and then have to add his charges. The charges are calculated based on the weight of the rough stone. The charges vary from various diamond polishers. I also have other small costs to add but they will be fixed costs and independent of the rough weight of the stone. I am currently doing it in a somewhat manual way. I sell the rough diamond to a vendor called Manufacturing and then buy it back at the sale price plus cost of polishing (based on the rough weight). The main option for me is to track each stone and the costs incurred until the final sale.

A simple example: Rough Weight = 5.49 carats —-> Diamond Polisher —-> Add costs —-> Two Polished stones of 1.02 and 1.05 carats came out of the 5.49 carats.

I want to be able to track the costs at any given time for any given rough or polished stone even if it is not in my inventory.

We are a one truck owner/operator company. We sometimes hire independant contractors to help us complete large jobs. We haul bulk rock and agrucultural lime – by the truckload. Basically we are the freight company, but occasionally we also purchase the product and pass on the cost (no profit or sales tax). All costs – including what the independant contractor charges for freight – are passed on to the company we are working for, we then pay for the product if applicable and for the freight charged by the independant contractor. Our profit is purely based on what we charge in freight for what our one truck hauls. (A side issue and huge problem is: What if we charge the independant contractor a percent of the freight for handling the invoicing?!?)

I need to track how much freight the idependant contractor charges so I can pay them and produce a 1099, as well as track the COGS. So far so good, and I understand the concepts up to this point for how to do it.

My problem arises when I get to the invoice itself. I would like it to be ‘seemless’. In other words, I’d rather the freight and the product (not to mention the percent charged to the contractor!) not be listed seperately.

(Then there is tracking the Bill of Lading, but this isn’t a perfect world so we can just skip that for now, too.)

In the past I would create (gulp) a New Item for each load and catigorize it for each contractor (including my husband to keep it seperate), then I would have to manually remove the product cost and post the payment back to the category of the contractor when I paid them. That would be the amount on the 1099. (By the way I’m trying to move from Home and Office 2006 to QuickBooks Pro 2008 – I don’t like change, but I’m willing to do what I have to.)

I’m just trying to figure out if I really need such a powerfull program to do the little bit I have to do. I am at a complete loss. I can go on with Home and Office (IS there a 2009?) and do like I’m doing, but if there is a better way I’d like to do it.

Any suggestions would be very helpfull

You can try using groups instead of assemblies. This has a big effect on how costs flow through the system. It also has an effect on your sales reports – group items don’t show up there, only the component items. With an inventory assembly you see sales of the assembled item. Read this article for some info on differences between group and assembly items: http://qbblog.ccrsoftware.info/2008/06/groups-vs-assemblies/

With group items you can use different COGS accounts if you wish.

The timing issue might not be resolved by moving to groups, though. If you are invoicing a group before you receive the purchased items, you still have the negative inventory problem. You might consider using sales orders to give the customer a document – only creating the invoice after you have received the purchased item. The sales order won’t pull the inventory so you won’t get a negative balance. Of course, this has an effect on the timing of your receivables. Also, if you have sales tax issues, it delays your liability on the sales tax (which is a good thing).

A lot of these issues are things that affect your financial statements, and so you must look at them with caution. And, talk to your CPA or tax advisor.

We use QB Premier 2009 and sell a made to order product that we compile from goods and services provided by other vendors (an inventory part, a non-inventory part and a service). We batch send a purchase order to our vendors for the non-inventory part and service only after we make sales (the customer is invoiced and we are paid a deposit). It was recommended by a QB Pro Advisor that we convert the items to inventory assemblies (and place them in a catchall COGS account) but this has created two main problems:

*Timing: We now have to backdate our POs, item receipts and assemblies to before the date of the invoice to avoid showing negative assemblies on hand (and throwing off our COGS account) making it difficult to manage what’s actually happening with any accuracy. It’s also a headache to track vendor bills when the items technically have not be received yet.

*Reporting: The P&L only shows a large COGS General account instead of the actual cost for the parts and services.

We also are now managing hundreds of items based on custom configurations.

Is there a way around these issues or would we be better served creating groups (or groups with assemblies)? Is there another solution to explore while using this version of QB?

Thanks,
Bobby