We’ve spent more than ten years working with finance teams and fast-growing small businesses. Helping them align operations, accounting, and inventory. Our real-world experiences show how different systems impact both daily workflows and long-term growth.
The key? Choosing the right inventory management system for your business’s size, complexity, and goals. For some, a simple spreadsheet is enough to stay on top of stock. For others, a complete platform that links inventory, sales, and accounting is crucial. In this guide, we explore three popular options: Cin7, Xero Inventory, and Excel. We’ll help you find the best fit for your business needs.
Systems are the backbone of scaling
We work with high-growth small businesses and see that systems are key for lasting growth. Small mismatches in the Inventory Management System, like timing gaps between stock updates and invoices, can cause big operational issues. Your inventory management system should be a part of your operational DNA, not an add-on. Inventory management should connect closely with finance, procurement, and sales forecasting in any growing organisation. Our inventory management approach relies on this understanding. It ensures these tools connect smoothly with the overall business and finance ecosystem.
Cin7 – The Best Overall
Cin7 is a cloud-based inventory management software designed for small to medium-sized businesses. Cin7 is designed for scaling small businesses that need multi-location control, manufacturing support, and modern automation. It’s a fully-fledged operations hub. What sets it apart is how well it handles real-world complexity without overwhelming the user.
Four features in particular make it the go-to choice for growing product businesses:
1. Multi-location management
Many businesses begin with one warehouse or store. But as they grow, complexity increases. This includes multiple sales channels, online stores, pop-ups, and extra warehouses. Cin7 makes this easy. You can assign stock to specific locations, transfer between them, and even link certain locations to your e-commerce channels so you’re never selling inventory you don’t have.
2. Bill of materials (BOM) and assemblies
If you manufacture or assemble products, Cin7 keeps track of every part. For example, a bicycle manufacturer can define that one bike equals two wheels, a frame, a chain, and pedals. When you make an assembly, Cin7 lowers raw material stock and adds a finished product to your inventory. It also lets you add labour or outsourced costs, so you can see the true unit profitability.
3. Split receipts from invoices
This is a common real-world issue that we see with countless clients. You can record stock when items arrive, and match the invoice later. Also, its link with Xero keeps physical stock in sync with accounting entries, even if the timing differs. Here’s a practical example: A furniture store gets a shipment of dining tables on Tuesday. However, the supplier’s invoice doesn’t arrive until Friday. With Cin7, the store can log stock right away and match invoices later. This keeps warehouse records and accounting accurate.
4. Depth and breadth of integrations
Cin7 links with over 700 software tools. This includes important ones like accounting (Xero), sales (Shopify, WooCommerce, Amazon), and logistics (3PLs, couriers). For finance teams, this means better reconciliations, fewer timing issues, and no more switching between separate systems. For operators, it means sales, stock, and finance finally speak the same language. The integration layer is where Cin7 excels compared to lighter systems. It reduces manual data entry. This often causes delays and inaccurate financials. What we like more than just the number of integrations is the depth of these integrations. We’ve worked with Cin7 for over 10 years. During this time, we’ve seen a lot of investment in integrations. Take, for example, the Shopify integration, which is very mature. Many of the initial issues have been fixed, and there are good manuals for them, too.
When Cin7 Might Not Be the Best Fit
- Very small or simple operations: If your business has just a few products, limited sales channels, and minimal inventory complexity, Cin7’s extensive features may be overkill. You might end up paying for functionality you don’t use. Simple tools like Xero Inventory or even spreadsheets can be sufficient.
- Limited time for setup and training: Cin7 requires setup, integration, and staff training. If your team can’t dedicate time to onboarding a full-featured system, simpler platforms might get you up and running faster.
- No need for multichannel or wholesale management: Cin7 shines when you’re selling across multiple channels, managing warehouses, and connecting with 3PLs or EDI partners. If your business only operates through one or two sales channels with no complex distribution needs, Cin7 could be unnecessarily complex.
- Preference for Simplicity Over Customisation: Cin7’s flexibility and depth are great for growing businesses, but if you prefer a lightweight, simpler system, Cin7 might not be best suited for you.
Cin7 has become a turning point for businesses when stock complexity affects their finances. High SKU counts, multiple suppliers, and layered sales channels don’t just create admin. They mess with margins, slow down reconciliations, and make it hard to trust your numbers. With Cin7, the picture changes. Assemblies show real unit costs. Stock movements match invoices, so management can always see what’s profitable and what’s tying up cash. For many clients, it’s the first time they stop using workarounds. Now, they run their operations and accounts from the same reliable source of truth.
If you believe Cin7 can benefit your business, learn more about our Cin7 implementation service. We’ll help you access the key data to boost your profits.
Xero Inventory
Xero Inventory is built into Xero accounting, making it a natural first step for many small businesses. Xero Inventory is best suited for small to medium-sized businesses with single-location operations that need basic inventory tracking without the complexity of a full ERP system. Xero has a very straightforward inventory module that is easy to use: the moment you approve a bill, quantities update automatically, the value on hand adjusts, and cost of sales is posted seamlessly.
If you’ve ever wondered how to manage manufacturing processes with Xero, our guide to manufacturing in Xero, explains everything you need to know.
1. Seamless link to accounting
Because it’s built into Xero, every stock movement flows straight into your books. Purchases add to inventory, while sales take away from it. Your cost of goods sold is automatically updated. For business owners, that means you don’t have to reconcile two separate systems. You’re always working off one financial picture.
2. Straightforward tracking of quantities and costs
Xero Inventory uses average cost to keep things simple. You can record what’s on hand, track what’s been sold, and see at a glance what stock is worth. This helps owners make clear pricing and buying choices. They won’t get bogged down in operational details.
3. Low lift for small teams
Unlike advanced systems, Xero doesn’t require a warehouse manager or a factory team to run properly. For businesses that can’t afford to dedicate staff to inventory, Xero keeps things lean.
When Xero Inventory is Not Suited
Xero Inventory works well for small, straightforward product businesses, but it isn’t built for complexity. Here are the situations where it may fall short:
- High SKU counts: Managing hundreds of products can make Xero feel unwieldy. It lacks advanced tools for bulk updates, variants, or detailed stock locations.
- Multiple warehouses or sales channels: Xero tracks inventory at a single level. Businesses juggling multiple locations or marketplaces might need solutions to prevent stock errors.
- Manufacturing or assembly: As Ian Meaker points out:
“Manufacturing is another layer up on inventory… It’s very hard for a small business to maintain the resources on its factory floor to track all this stuff.”
Xero doesn’t handle components, assemblies, or production planning, so businesses producing goods from multiple parts will quickly outgrow it.
In short, Xero Inventory is ideal for keeping things simple, but when complexity grows, it’s often the signal to consider a system like Cin7.
Excel – The Beginner’s Go-To
Excel is a very popular spreadsheet program by Microsoft. Most people who have access to a computer will be familiar with it. It enables you to organise and manage data in tables where you can do calculations with formulas, create visualisations, and more. If you have around 50 products, you don’t need a complex inventory management system and using a simple excel sheet will work.
Why it works:
- Excel is universally available and low-cost. Most computers have Excel or some similar spreadsheet software installed when you buy it. If not, Google Sheets is available for free.
- It’s a great choice for micro-businesses, businesses with very small inventories, or DIYers looking for a free (or already paid for) option to track and manage their business’ inventory.
- There are plenty of free templates available online for stock control, reorder tracking, vendor and sales logs, dashboards, and bill-of-materials tracking.
- Sites like Inflow offer free Excel templates for product lists, picklists, POs (Purchase Orders), Sales Orders, and BOMs (Bill of Materials) to get you started quickly.
Limitations:
- Excel is prone to human error. Data can easily be misplaced and formulas can easily be overwritten.
- Prone to errors and breaks quickly once complexity ramps up.
- Scaling with Excel becomes messy as you add more SKUs or locations.
- Excel is difficult to automate and is prone to version control issues.
Integration
To us, the best system is not just about features, it’s about how your inventory and accounting systems talk to each other and reflect your real-world operations.
We recommend Cin7 as the overall best. Its tight integration with Xero gives you control, flexibility, and accuracy across inventory and finance. This way, you avoid silos and reconciliation issues.
