Chemical and Parts Inventory for Pool Companies: Expense or Stock?

What pool inventory books need to track

A pool service company does not just buy parts. It buys jugs of chlorine by the case, acid by the drum, tablets by the bucket, and small parts like o rings and filter grids by the box. Some of that sits on a shelf for weeks. Some of it goes out the same day.

The question your books need to answer is simple. Did the cost match the work? When you buy a case of chlorine and pour half of it this month and half next month, the cost should split the same way. When you buy a box of o rings and use three this month and ten next month, the cost should follow the use.

When every buy goes to one flat supplies line and stays there, your supply cost jumps around. You look busy one month because you stocked up, and you look cheap the next month because you lived off the shelf. Your profit and loss report tells the wrong story either way.

Here is what a clean inventory line looks like.

When the cost follows the use, your margin per route is real. When it sits in one pile, you are guessing.

When to hold chemicals as stock

Chemicals are the biggest cost on a pool route, and the way you buy them is the reason they need a stock line. You buy a case of liquid chlorine because the price is better by the case. You buy a drum of acid because you do not want to run out. You buy a bucket of tablets because the route runs all summer. Each buy is bigger than one day of work.

The clean way is to hold the full buy in a supplies or inventory account when you pay for it. The cost sits on the shelf. When a tech pours half a jug on route one and half on route two, the cost moves to each route in the amount they used. The stock account goes down and the route cost goes up by the same amount.

When the stock account matches the shelf, your books tell the truth. When you buy a case and expense the whole thing at once, your supply cost spikes in the month you paid the bill and drops the next month, even though the work was the same both months.

Here is how to keep chemical stock clean.

• **Hold bulk chemical buys in a stock account: ** not in the expense line.
• - **Move the cost to the route when a tech pours it: ** not at the end of the month from memory.
• - **Count the shelf now and then: ** so the stock account matches what is left.
• - **Watch for price changes: ** a higher chlorine cost changes your margin per route.
• - **Split a case across routes by use: ** not by an even guess.

When the stock line matches the shelf, the books stay clean month to month.

When to expense a buy on the spot

Not every buy needs a stock line. A single jug of chlorine picked up on the way to a job is a small buy. A pack of test strips is a small buy. A single o ring from the hardware store is a small buy. When the buy is small and the use is the same day, the clean way is to expense it on the spot.

The rule of thumb is simple. If the buy is small enough that tracking it costs more time than it saves, expense it. If the buy is big enough that it sits on the shelf for more than a week, hold it as stock.

The mistake is to expense the big buys too. A case of chlorine expensed in one month makes that month look expensive and the next month look cheap. The work was the same both months, but the books tell a different story.

Here is how to decide.

• **Same day use and small: ** expense it on the spot.
• - **Sits on the shelf for a week or more: ** hold it as stock.
• - **Bought for one specific job: ** expense it to that job.
• - **Bought for many jobs over time: ** hold it as stock and move the cost by use.
• - **When in doubt, hold it as stock: ** it is easier to move a cost than to unspend it.

When the big buys go to stock and the small buys go to the expense line, the books stay clean and the month to month cost stays steady.

How to move a cost from the shelf to the route

The hard part is not buying the chemicals. The hard part is moving the cost from the shelf to the route when a tech uses them. This is where most pool books get messy.

The clean way is to log the use the day it happens. A tech pours half a jug on route one and half on route two. You move the cost from the stock account to route one and route two in the amounts they used. The stock goes down. The route costs go up. The total does not change.

The messy way is to wait until month end and guess. The tech does not remember how much chlorine went on which route. You split it evenly or by a gut feel. Now the cost per route is a guess, and the stock account does not match the shelf.

Here is how to keep the move clean.

• **Log the use the day it happens: ** not from memory at month end.
• - **Move the cost by the amount used: ** not by an even split.
• - **Keep a simple use sheet: ** a tech writes down what they poured and where.
• - **Tie the move to the route name or class: ** so the cost lands on the right line.
• - **Check the shelf against the stock account now and then: ** so the two match.

When the cost moves the day it is used, the margin per route is real. When it moves at month end from a guess, the margin is a story you told yourself.

You can read more about how we track route costs on our pool service bookkeeping post.

How parts and equipment differ from chemicals

Chemicals get used up. Parts and equipment sit around until a job needs them. A filter grid, a pump motor, a heater element, or a set of o rings might sit on the shelf for a month before a tech installs them. The way you book them is different from the way you book a jug of chlorine.

The clean way is to hold parts and equipment in a parts stock account. When a tech installs the part on a job, the cost moves from the parts account to that job. The income for the install goes to the job too. When the income and the cost sit on the same job, the margin for that install is real.

The messy way is to expense the part when you buy it and book the income when you install it. Now the cost shows up in one month and the income in another. The two never sit on the same line, and the margin per install is hard to see.

Here is how to keep parts clean.

• **Hold parts in a parts stock account: ** not in the chemical stock account.
• - **Move the cost to the job when the part goes in: ** not when you buy it.
• - **Book the install income to the same job: ** so the margin shows.
• - **Count the parts shelf now and then: ** so the stock account matches.
• - **Tag each install to a job name or class: ** so you can sort by job.

When parts and chemicals sit in their own stock accounts, the books stay clean and the two costs do not blur together.

How the month end close works for inventory

At month end, the stock accounts need a check. The chemical stock account should match the shelf. The parts stock account should match the parts shelf. If the two do not match, something was used and not logged, or something was bought and not booked.

We start with the bank. We match each supply buy to the payment that cleared. We check the stock accounts against the shelf. We move any costs that were used but not logged. Then we add up the month by route and by class. The income and the costs sit side by side, and the margin per route shows.

Here is a simple month end check for inventory.

• **Match each supply buy to the bank: ** every payment cleared.
• - **Count the chemical shelf: ** match it to the stock account.
• - **Count the parts shelf: ** match it to the parts account.
• - **Move any costs used but not logged: ** so the routes carry the right cost.
• - **Run the profit and loss by class: ** so the routes and the one time work show side by side.

When the close runs every month, the stock accounts stay clean. When it skips a month, the shelf and the books drift apart, and the next month is harder to close.

A situation we clean up

The shelf that never matched the books

A pool service company buys chemicals by the case and parts by the box. Every buy goes to one flat supplies line. No one tracks what was used on which route. At month end, the supplies line jumps around. One month it is high because a case of chlorine was bought. The next month it is low because the tech lived off the shelf. The owner can not tell which route eats the most chemical, and the parts shelf has no count for months.

Here is how we handle it. We set up two stock accounts in QuickBooks Online, one for chemicals and one for parts. We move the bulk buys from the flat supplies line into the stock accounts. We count the shelves and match them to the accounts. We start a simple use sheet so the tech writes down what they poured and where. We move the costs to the routes by the amounts used. We close each open month one at a time, from the oldest forward. Then the routine runs every month, so the shelf and the books stay in sync.

Mistakes we fix

• Every chemical buy booked to one flat supplies line
• A case of chlorine expensed in the month it was bought
• Parts and chemicals mixed in one stock account
• No use sheet, so the costs move at month end from a guess
• The stock account never counted against the shelf
• No route name or class on any supply cost
• Parts expensed when bought and income booked when installed
• No profit and loss by class run at month end

Common questions

Should I hold chemicals as inventory or expense them? Hold bulk buys as stock and move the cost to the route when a tech uses it. Expense small same day buys on the spot. When the big buys go to stock and the small buys go to the expense line, your month to month cost stays steady.

How do I move a cost from the shelf to the route? Log the use the day it happens. A tech writes down what they poured and where. Move the cost from the stock account to the route in the amount used. The stock goes down and the route cost goes up by the same amount.

How do parts differ from chemicals? Chemicals get used up. Parts sit around until a job needs them. Hold parts in a parts stock account and move the cost to the job when the part goes in. Book the install income to the same job so the margin shows.

How does the month end close work for inventory? Match each supply buy to the bank. Count the shelves and match them to the stock accounts. Move any costs used but not logged. Run the profit and loss by class so the routes show side by side. When the close runs every month, the shelf and the books stay in sync.