The quick answer
Open the non-inventory item in view mode and click Convert to Inventory. NetSuite opens the same record on the Inventory Item form with its values filled in. On the Accounting subtab, the old Expense Account carries over as read-only text. Set an Asset Account for the stock and a COGS Account that is different from the expense account, then save. The item keeps its internal ID, name and past transactions, and you can't convert it back. From then on, item receipts add stock and post to the asset account, and shipped fulfillments post cost of goods sold.
The example item is Trail Headlamp 300, a Non-inventory Item for Resale with three past invoices. After the conversion, the example buys 24 at 18.40 into Boise Warehouse and ships 3 to a customer, so you can see the receipt land in 1200 Inventory and the fulfillment post 55.20 to 5000 Cost of Goods Sold. Every person, company, customer, vendor and amount in the screenshots is fictional example data.
Before you start
Convert to Inventory shows up on the view of a Non-inventory Item for Resale or for Purchase, and on matching Other Charge items. It isn't offered while the item is in Edit mode, and non-inventory items for Sale aren't part of the documented scope. Your role needs Edit permission on items. The example uses the Administrator role.
Decide on the accounts before you start. The converted item needs an Asset Account to hold the value of the stock and a COGS Account that isn't the same as its current Expense Account. Your accounting preferences may fill in defaults for both, so check what's there rather than trusting it.
The conversion is one-way. An inventory item can't be turned back into a non-inventory item, so if you're unsure, try it on a test item or in a sandbox first.
01 · Review the non-inventory item
Go to Lists > Accounting > Items. In the example, Trail Headlamp 300 is the one row with the type Non-inventory Item. The business buys it when an order comes in and keeps no stock.
Open Trail Headlamp 300. The title reads Non-inventory Item for Resale, and the Purchasing subtab shows Purchase Price 18.40. On the Accounting subtab, Income Account is 4000 Sales and Expense Account is 6150 Merchandise Purchases. Purchases of a non-inventory item for resale post straight to that expense account.
Open Related Records > Transactions. The item has three invoices: INV2041 for 6, INV2058 for 12 and INV2073 for 4. Keep these in mind; you'll check that they're still there after the conversion.
02 · Convert the item and check its accounts
Stay in view mode and click Convert to Inventory. The arrow beside the button offers Convert to Serialized Inventory and Convert to Lot Numbered Inventory when those features are on. The example uses the plain conversion.
NetSuite opens the item on the Inventory Item form. The name, display name, vendor code, units and location are already filled in. This is still the same record, so it keeps internal ID 3317.
Open the Accounting subtab. Expense Account shows 6150 Merchandise Purchases as read-only text. It carried over from the non-inventory item and you can't change it on this form. After the conversion, NetSuite uses it in inventory costing, which is why the COGS account has to be a different one. In the example, Asset Account is 1200 Inventory and COGS Account is 5000 Cost of Goods Sold. Make sure the COGS account is a different account from the expense account. Income Account stays 4000 Sales.
Click Save. There's no undo after this.
03 · Confirm the item kept its history
The saved record shows Confirmation: Item successfully Saved and the title Inventory Item. The Convert to Inventory button is gone.
Open Related Records > Transactions again. INV2041, INV2058 and INV2073 are all still there. The old invoices keep their original non-inventory accounting; only new transactions use inventory behavior. An open order entered before the conversion can keep the old behavior until you remove the item line and add it again.
On Purchasing/Inventory, the Locations list now tracks stock. Boise Warehouse shows Quantity On Hand 0, because nothing has been received since the conversion.
04 · Buy and receive stock
Go to Transactions > Purchases > Enter Purchase Orders. Choose vendor Brightbeam Lighting Co. and location Boise Warehouse. Add Trail Headlamp 300 with Quantity 24. The rate fills in at 18.40, so the amount is 441.60. Save. The example's purchase order is PO4410. A purchase order doesn't post to the GL.
Click Receive. The receipt line shows To Location Boise Warehouse, Quantity 24 and On Hand 0. Save the receipt.
Open the saved receipt's GL Impact subtab. It debits 1200 Inventory 441.60 and credits 2150 Accrued Purchases 441.60, the account for goods received but not yet billed. Before the conversion, this cost would have gone to the expense account instead.
The credit account name depends on your setup. Advanced Receiving, landed cost, foreign currency and special-order flows can add or change lines.
05 · Check the stock on the item
Open Trail Headlamp 300 again. On Purchasing/Inventory, Item/Cost Detail shows Costing Method Average, Average Cost 18.40 and Total Value 441.60. In the Locations list, Boise Warehouse has Quantity On Hand 24. Those numbers line up this neatly because the item had no earlier stock, landed cost or variances. With existing cost layers or another costing method, expect different values.
06 · Sell and ship, then check cost of goods sold
Go to Transactions > Sales > Enter Sales Orders. Choose customer Ridgeline Outfitters and add Trail Headlamp 300 with Quantity 3 at 34.00. Save. A sales order doesn't post either.
Click Fulfill. The line ships from Boise Warehouse, which has 24 on hand, and Quantity is 3. In the example, Status is Shipped. Save.
Open the saved fulfillment's GL Impact subtab. It debits 5000 Cost of Goods Sold 55.20 and credits 1200 Inventory 55.20. With average costing and a single receipt, that's 3 units at 18.40. Standard, FIFO or LIFO costing, landed costs, negative inventory or later cost adjustments can give you different amounts or extra lines. With pick, pack and ship turned on, the fulfillment posts once its status is Shipped. Revenue posts separately, when you invoice the order.
Check the result
- Item: Trail Headlamp 300 is an Inventory Item and still lists INV2041, INV2058 and INV2073.
- Receipt: IR4411 debits 1200 Inventory 441.60 and the item shows 24 on hand at an 18.40 average cost.
- Fulfillment: IF2091 debits 5000 Cost of Goods Sold and credits 1200 Inventory 55.20, which is 3 × 18.40.
Common questions
Can I convert the item back to a non-inventory item?
No. Once you save the conversion, it's permanent. NetSuite doesn't convert an inventory item back to a non-inventory or other charge item, so test on a throwaway item first if you're unsure.
Why does the COGS account have to differ from the expense account?
The item's Expense Account carries over and can't be changed, and after the conversion NetSuite uses it in inventory costing alongside the COGS Account. Using the same account for both would mix the two postings, so NetSuite requires them to be different.
Do past transactions stay on the item after converting it?
Yes. The item keeps its internal ID and its history, and the old invoices keep their original non-inventory accounting. New transactions treat the item as inventory.
What happens to open purchase orders or sales orders entered before the conversion?
They can keep the old non-inventory behavior until they're completed. If you remove the item from one of those transactions and add it back, NetSuite treats the new line as an inventory item, so check open orders before editing them.
Can I convert a non-inventory item for sale?
The documented conversion covers non-inventory items for resale and for purchase, plus the matching other charge items. Items for sale aren't part of that scope, so check whether your item's view offers Convert to Inventory before planning around it.
Should I convert the existing item or create a new inventory item?
Convert it when you want one record for the product, so sales history, reports and saved searches keep working. Create a new item only if you want a clean break with a separate history or a different setup.
Can I convert to a lot numbered or serialized item instead?
Yes, when lot numbering or serialized inventory is turned on. Use the arrow beside Convert to Inventory and pick Convert to Lot Numbered Inventory or Convert to Serialized Inventory.