What distinguishes tracked inventory from untracked inventory in Xero?

Tracked inventory in Xero is distinguished by its enhanced ability for monitoring and management, which is a fundamental aspect of effective inventory control. When businesses use tracked inventory, they can keep a precise record of items that come in and go out. This helps manage stock levels accurately, ensuring that businesses can avoid stockouts or overstock situations.

Furthermore, tracked inventory allows businesses to monitor the cost of goods sold, understand inventory turnover, and manage reordering more efficiently. This level of detail is essential for businesses that deal with physical goods and require a meticulous approach to their supply chain.

In contrast, while untracked inventory may offer a simplified approach where items are recorded without stringent counting or management processes, it does not provide the same level of granularity that tracked inventory enables. This distinction is crucial for businesses aiming to optimize their operations and maintain precise control over their inventory.