Making Inventory Adjustments
For: Warehouse Staff, Administrators
Overview
Inventory adjustments correct discrepancies between system counts and physical inventory. Whether you're receiving stock, correcting count errors, or writing off damaged goods, proper adjustment procedures ensure accurate inventory tracking.
What You'll Learn
When to make inventory adjustments
Step-by-step adjustment process
Understanding adjustment impact
Viewing adjustment history
Special cases and best practices
Common issues and solutions
What Are Inventory Adjustments?
Inventory Adjustment = Changing the on-hand inventory quantity in the system to match reality
Adjustments update:
On-hand inventory count
Available inventory (automatically calculated)
Inventory value (if cost tracked)
Audit trail and history
Adjustments do NOT:
Change allocations (those stay with confirmed orders)
Affect historical data (only adds new adjustment record)
Automatically sync to QuickBooks (may require configuration)
Who Can Make Adjustments
Role permissions:
Administrators - Full adjustment rights
Warehouse Staff - Adjustment rights (usually)
Sales Representatives - Usually cannot adjust (read-only)
Product Managers - May have adjustment rights
Some systems require:
Approval for large adjustments
Supervisor override for certain reasons
Manager approval for backdated adjustments
When to Make Inventory Adjustments
Understanding when adjustments are appropriate ensures proper inventory tracking.
Receiving Inventory
Purchase order received:
✅ Preferred method: Receive through PO workflow
✅ Creates adjustment automatically with PO reference
✅ Better audit trail tied to purchase order
Direct receipt without PO:
Manual adjustment needed
No PO reference
Document vendor and reason
Less common but valid
Vendor returns processed:
Return defective inventory
Credit from vendor
Increase on-hand upon replacement receipt
Inventory Count Corrections
Physical inventory count discrepancies:
Annual full inventory count
System shows 100, physical count is 95
Adjustment brings system in line with reality
Most common reason for adjustments
Cycle count adjustments:
Regular partial counts
Count subset of inventory
Adjust discrepancies found
Ongoing accuracy maintenance
Found inventory:
Misplaced inventory discovered
Thought lost, but found
Increase on-hand to reflect reality
Inventory Decreases
Damaged goods (write-off):
Products broken or unsellable
Bottle broke during storage
Cases crushed
Remove from sellable inventory
Expired products:
Especially important for alcohol with dates
Best-by or sell-by dates passed
Remove from inventory
Dispose properly per regulations
Theft or loss:
Shrinkage discovered during count
Unexplained missing inventory
Security issue
Document and investigate
Samples given to customers:
Promotional samples
Tasting room usage
Sales samples
Track for cost accounting
Spoilage or breakage:
Product quality compromised
Damaged during handling
Not resaleable
Write off
Missing inventory (shrinkage):
Physical count lower than system
Cause unknown or mixed
Shrinkage category
Investigate large discrepancies
Transfers (if multi-warehouse)
Moving inventory between warehouses:
Decrease from source warehouse
Increase to destination warehouse
Two adjustments (one for each side)
Use consistent notes for traceability
Note: Some systems have dedicated transfer feature instead of manual adjustments.
Making an Inventory Adjustment
Complete step-by-step workflow for adjusting inventory quantities.
Step 1: Navigate to Product
Find the product/variant:
Go to Products list
Search for product needing adjustment
Search by name, SKU, or UPC
Use filters if needed
Click into product detail page
Select specific variant (if multiple variants)
Verify you have the correct variant:
Check SKU matches
Verify product name and details
Wrong variant = wrong adjustment
Step 2: View Current Inventory
Review current inventory levels:
On-Hand Quantity:
Current system count
Physical inventory in warehouse
What you're about to adjust
Available Quantity:
On-hand minus allocated
Sellable inventory
Will recalculate after adjustment
Allocated Quantity (if shown):
Inventory reserved for confirmed orders
Does NOT change during adjustment
Important to understand impact
Warehouse/Location (if applicable):
Which warehouse has this inventory
Multi-warehouse: select correct location
Single warehouse: default location
Example display:
Step 3: Initiate Adjustment
Click "Adjust Inventory" button:
Usually on product detail page
May be under Actions menu
Opens adjustment form
Dedicated adjustment interface
Or navigate to: Inventory → Adjustments → New Adjustment
Step 4: Enter Adjustment Details
Complete all required fields carefully.
Adjustment Type:
Option 1: Increase
Adding inventory
Receiving goods, found inventory
Enter positive quantity
Option 2: Decrease
Removing inventory
Damaged, expired, sold off-system
Enter negative quantity (or positive decrease amount)
Option 3: Set (to specific amount)
Change inventory to exact count
Useful after physical count
Enter new total (system calculates difference)
Example:
Quantity:
If Increase or Decrease:
Amount to add or subtract
Examples: +50, -10, +100
If Set:
New total on-hand amount
System calculates adjustment automatically
Reason (required dropdown):
Standard reason codes:
Received (no PO) - Goods received without purchase order
Count Correction - Physical count didn't match system
Damaged - Products damaged or broken
Expired - Past sell-by or best-by date
Theft/Loss - Inventory missing, theft suspected
Sample - Given as samples or tastings
Transfer In/Out - Moved between warehouses
Other - Specify in notes
Select most accurate reason:
Used for reporting
Helps identify patterns
Shrinkage analysis
Operational improvements
Notes (optional but strongly recommended):
What to include:
Detailed explanation
Reference numbers
Supporting documentation
Who discovered discrepancy
Any relevant context
Examples:
Date/Time:
Usually auto-filled as current date/time
Some systems allow backdating (with permission)
Backdating affects historical reports
Use current date unless special circumstance
Warehouse/Location:
Select if multiple warehouses
Which location is being adjusted
Defaults to product's primary location
Step 5: Review and Confirm
System shows preview:
Current state:
Adjustment:
New state (after adjustment):
Warning if negative available:
Confirmation prompt:
Final check before committing
Review numbers carefully
Adjustment takes effect immediately
Cannot undo (but can create offsetting adjustment)
Step 6: Submit Adjustment
Click "Submit Adjustment" or "Confirm":
Adjustment processed immediately
Inventory updated in real-time
Confirmation message displays
Audit record created
What happens:
On-hand inventory changes
Available recalculates automatically
Adjustment logged in history
System notifications (if configured)
May trigger low-stock alerts
QuickBooks sync (if configured)
Confirmation message:
Understanding Adjustment Impact
How adjustments affect various parts of the system.
Impact on On-Hand Inventory
Immediate changes:
Increases or decreases right away
Reflected in all views instantly
Product detail page updates
Inventory reports show new count
Historical data unchanged:
Past orders still show old quantities
Reports for past dates unaffected
Only current/future affected
Adjustment record added to timeline
Impact on Available Inventory
Calculated automatically:
Key principle:
Adjustments change on-hand
Available recalculates based on new on-hand
Allocated stays constant
If on-hand increases, available increases same amount
If on-hand decreases, available decreases same amount
Impact on Allocations
Critical understanding:
❌ Adjustments do NOT change allocations
Confirmed orders keep their allocations
Allocations only release when:
Order fulfilled
Order cancelled
Order adjusted/items removed
Adjustments independent of allocations
Why this matters:
Impact on Accounting/QuickBooks
Depends on configuration:
May sync as inventory adjustments in QB:
Creates QB inventory adjustment record
Affects inventory value
Impacts GL accounts (inventory asset)
Cost of goods sold may be affected
GL account impact:
Configuration dependent:
Some organizations sync all adjustments
Others sync only certain types
May require manual QB entry
Check with accounting team
→ See QuickBooks: Understanding the Sync Process
Example Scenarios
Scenario 1: Receive shipment (no PO)
Scenario 2: Damaged goods write-off
Scenario 3: Physical count correction
Viewing Adjustment History
Every adjustment is logged for audit and troubleshooting.
Accessing Adjustment History
From product page:
Navigate to product/variant detail
Look for "Adjustment History" or "Inventory Log"
Shows all adjustments for this product
Chronological list
From inventory module:
Global adjustment history
All products' adjustments
Filter by date, reason, user
Export for analysis
Information Shown in History
Each adjustment record shows:
Date and Time:
When adjustment made
Timestamp for ordering
Helpful for troubleshooting
User Who Made Adjustment:
Which staff member
Accountability
Contact if questions
Adjustment Type and Quantity:
Increase, decrease, or set
Actual amount (+50, -10, etc.)
Clear audit trail
Reason and Notes:
Selected reason code
Detailed notes entered
Context for adjustment
Before and After Quantities:
Filtering and Searching History
Filter by:
Date range
Adjustment reason
User
Positive vs negative adjustments
Amount threshold
Search for:
Specific products
Adjustment reference numbers
Notes containing keywords
Exporting Adjustment Reports
Export to:
CSV for Excel analysis
PDF for documentation
Accounting system import
Use for:
Shrinkage analysis
User performance
Operational trends
Compliance documentation
Special Cases
Unusual adjustment scenarios requiring extra attention.
Negative Adjustments Resulting in Negative Available
The problem:
System warning:
Alert when submitting adjustment
Highlights negative available
Forces review before confirming
What it means:
Promised more inventory than you have
30 cases short to fulfill all orders
Likely from damage/loss after orders confirmed
Actions needed:
Option 1: Receive more inventory quickly
Purchase from vendor
Transfer from another location
Minimum +30 cases needed
Fastest resolution
Option 2: Cancel some confirmed orders
Release allocations
Frees up inventory
Contact customers
Last resort
Option 3: Partial fulfillment and backorders
Fulfill what you can
Create backorders for shortfall
→ See Managing Backorders
Option 4: Adjust allocations manually (admin only)
Reduce allocations on specific orders
Rare and risky
Requires admin intervention
Backdated Adjustments
When needed:
Correcting past mistake
Adjustment should have been made last week
Affects historical reports
Permission usually restricted:
Administrators only
Requires justification
Audit flag created
Impact on reports:
Historical reports may change
Retroactive effect
Data integrity concerns
Use sparingly:
Only when truly necessary
Document reasoning thoroughly
Get approval first
Large Adjustments
What qualifies as "large":
Organization-specific threshold
Example: >100 units or >$10,000 value
Significant inventory change
May require:
Supervisor/manager approval
Approval workflow triggered
Adjustment locked pending approval
Extra documentation
Best practices:
Double-check count
Photograph evidence
Detailed notes
Manager review
Approval process:
Submit large adjustment
System routes to manager
Manager reviews details
Approves or rejects
Adjustment applies if approved
Transfer Adjustments (Multi-Warehouse)
Moving inventory between locations:
Requires two adjustments:
Adjustment 1: Source warehouse (decrease)
Adjustment 2: Destination warehouse (increase)
Use consistent notes:
Same transfer reference number
Links two adjustments
Audit trail complete
Balanced transfer
Some systems have dedicated transfer feature:
Single transaction creates both
Automatic balancing
Preferred if available
→ Check if transfer feature exists
Best Practices
Documentation
✅ Always include detailed notes explaining adjustment
Why adjustment needed
Who discovered discrepancy
Reference numbers or evidence
Context for future reference
✅ Select accurate reason code
Helps with reporting
Patterns and trends
Operational improvements
Compliance tracking
✅ Take photos of damaged goods for documentation
Visual evidence
Insurance claims
Vendor disputes
Audit support
✅ Reference related documents
Delivery receipts
Vendor credits
Transfer documents
Count sheets
Accuracy
✅ Perform physical counts regularly to minimize corrections
Monthly cycle counts for fast movers
Quarterly full inventory
Catch discrepancies early
Maintain accuracy
✅ Investigate large discrepancies before adjusting
Don't just adjust blindly
Understand why off
Prevent future issues
May indicate systemic problem
✅ Double-check quantities before submitting
Easy to mistype
Verify count accurate
Review before confirm
Mistakes are permanent
Workflow
✅ Process receiving through POs when possible (not manual adjustments)
Better audit trail
Links to vendor and pricing
Automatic adjustment
Proper workflow
✅ Schedule large adjustments during off-peak hours
Minimal user disruption
Inventory reports stable
Order entry not affected
What to Avoid
⚠️ Don't make adjustments without understanding why discrepancy exists
Investigate first
Root cause analysis
Prevent recurrence
Don't hide problems
⚠️ Don't backdate adjustments to manipulate reports
Data integrity violation
Audit concerns
Compliance issues
Use current date
⚠️ Don't decrease inventory below allocated amounts without plan
Creates negative available
Cannot fulfill confirmed orders
Customer service problems
Plan resolution first
⚠️ Don't forget to update QuickBooks if manual sync needed
Inventory value out of sync
Financial reports wrong
Check sync settings
Verify sync completed
💡 Tip: Perform physical counts monthly for high-volume products
Catch errors early
Maintain accuracy
Build counting routine
Cycle through inventory
💡 Tip: Use consistent reason codes for better reporting
Standard codes
Meaningful categories
Trend analysis
Operational insights
💡 Tip: Photograph damaged goods before adjustment
Evidence documentation
Insurance/vendor claims
Dispute resolution
Accountability
Cycle Counting
Regular partial inventory counts for ongoing accuracy.
What is Cycle Counting
Cycle counting = Counting a subset of inventory on a rotating schedule
Instead of:
Annual full inventory count only
One massive disruption
Errors persist until year-end
You do:
Count small portion regularly
Weekly or monthly cycles
Continuous accuracy
Catch errors quickly
How to Perform Cycle Counts
Planning:
Divide inventory into groups (A, B, C)
A: High-value, fast-moving (count monthly)
B: Medium-value (count quarterly)
C: Low-value, slow-moving (count annually)
Create counting schedule
Assign to staff
Execution:
Select products for this cycle
Physically count on-hand
Record count on count sheet
Compare to system count
Investigate discrepancies
Make adjustments for differences
In Masava (if feature exists):
Cycle count module
Generate count lists
Enter count results
System suggests adjustments
One-click apply adjustments
If no dedicated feature:
Export product list with current counts
Print for warehouse staff
Count and mark discrepancies
Manually adjust each variance
Best Practices
✅ Count without looking at system first
Unbiased count
True physical verification
Then compare to system
✅ Count high-value items more frequently
A items monthly
Biggest impact on inventory value
Worth the effort
✅ Investigate before adjusting
Why is count off?
Misplaced inventory?
Recent unrecorded transaction?
Fix root cause
✅ Track cycle count accuracy
Percent of counts matching system
Improvement over time
Goal: 95%+ accuracy
Common Issues
"Insufficient permissions"
Problem: Cannot access adjustment feature
Check:
✓ Does your role allow inventory adjustments?
✓ Warehouse staff usually can, sales reps usually cannot
Solution:
Contact administrator for role adjustment
May need elevated permissions
Some adjustments require manager approval
"Cannot adjust below allocated amount"
Problem: Trying to decrease inventory but error occurs
Check:
✓ Current allocations
✓ Adjustment would make available negative
✓ System may block this
Solution:
Review confirmed orders (allocations)
Options:
Cancel some orders to release allocations
Receive more inventory before decreasing
Partial fulfillment creates backorders
Address allocation conflict first
Then make adjustment
→ See Understanding On-Hand vs Available Inventory
Adjustment not saving
Problem: Click submit but adjustment doesn't apply
Check:
✓ Required fields filled?
✓ Reason selected?
✓ Quantity entered?
✓ Validation errors shown?
Solution:
Review error messages
Fill all required fields
Check quantity is valid number
Verify permissions
Retry submission
Contact support if persists
QuickBooks sync failed
Problem: Adjustment made in Masava but QB sync error
Check:
✓ Is QB integration connected?
✓ Are GL accounts mapped for this product?
✓ Inventory asset account mapped?
✓ Loss/expense account mapped?
Solution:
Verify QB connection active
Check GL account mappings
Review sync error details
Manual QB entry if needed
Adjustment disappeared
Problem: Made adjustment but can't find it
Check:
✓ Did confirmation appear?
✓ Check adjustment history/audit log
✓ Different product/variant?
Solution:
Navigate to product detail
View adjustment history
Look for recent adjustment
If not there, may not have saved
Resubmit if needed
Screenshot confirmation messages
Related Documentation
Inventory Management
Understanding On-Hand vs Available Inventory - How adjustments affect inventory
Adding Products & Product Variants - Setting up products
Managing Product Information - Updating product data
Purchase Orders
Receiving Inventory from Purchase Orders - Preferred method for receiving
Order Management
Managing Backorders - When adjustments create negative available
Order Status Lifecycle Explained - How allocations work
Integrations
QuickBooks: Understanding the Sync Process - How adjustments sync
QuickBooks: GL Account Mapping - Account configuration
QuickBooks: Troubleshooting Sync Issues - QB problems
Need Help?
For count discrepancies:
Investigate before adjusting
Recount if large difference
Check recent transactions
Document findings thoroughly
For negative available:
Review allocations (confirmed orders)
Receive more inventory or cancel orders
Cannot fulfill if negative
Plan resolution before adjusting
For adjustment permissions:
Contact administrator
May need role change
Large adjustments may require approval
Document need clearly
For QuickBooks sync:
Verify integration connected
Check GL account mappings
Review sync error messages
Manual entry if needed
Last updated
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