If you’re coming from a clipboard-and-spreadsheet world, or even from another POS system, this is probably your first question: How does TORO actually keep track of what I have? The short answer is that TORO watches everything coming in and going out of your store, and it does the math for you in real time. The longer answer is worth understanding, because once you see how the pieces fit together, you’ll make better decisions about ordering, pricing, and managing your stock.
The Big Picture #
Every product in your store has a quantity on hand — the number of individual units you should have on your shelves and in your back room right now. TORO doesn’t just store this as a single number that gets bumped up and down. Instead, it calculates it from everything that’s happened since your last physical count:
- Your last inventory count (the baseline)
- Plus everything you’ve received from vendors
- Minus everything you’ve sold
- Plus any customer returns
- Minus any damaged items you’ve logged
- Minus anything returned to vendors
- And a few other adjustments along the way
This means your numbers are always grounded in real events — not just someone typing in a number and hoping it’s right. And if something ever looks off, you can trace exactly what happened.
Understanding SKUs: The Box and the Single #
Here’s a concept that trips up new users, but once it clicks, everything else makes sense.
Most products come in two sizes: the box (or case, or bundle) that you order from your vendor, and the individual unit that you sell to a customer. In TORO, these are called the Master SKU and the Transaction SKU.
The Master SKU is the packaging you buy in — a box of 20 cigars, a case of 12 drinks, a bag of pipe tobacco. This is the unit that appears on your purchase orders and the one your vendor invoices you for.
The Transaction SKU is the smallest unit you sell — one cigar, one can, one pouch. This is the unit that gets scanned at the register and added to a customer’s receipt.
TORO links them together automatically. When you tell it a box costs $100 and contains 20 cigars, it knows each cigar costs $5. When you sell one cigar, it knows your box count went down by one-twentieth. When you receive 5 boxes, it knows you just added 100 individual units to your inventory.
You set this up once when you add a new item, and TORO handles the math from there. Your quantity on hand is always tracked in individual units — the smallest sellable size — no matter how you buy or count it.
Getting Inventory Into Your Store #
There are two main paths for bringing inventory in, and they serve different purposes.
Path 1: Purchase Orders (The Right Way for Regular Orders) #
This is the method you should use for every routine vendor order. You create a purchase order, add the items you want, and send it to your vendor. When the shipment arrives, you receive it against that PO — confirming what actually showed up, noting any discrepancies, and letting TORO update your stock automatically.
Why this matters: PO-based receiving doesn’t just add quantity — it also updates your costs. If you paid a different price than last time, TORO recalculates your average cost for that item. That flows directly into your margin reports and profit calculations. Without POs, your cost data slowly drifts from reality.
There are two ways to create a purchase order:
Manual PO — You build the order yourself. Pick the vendor, add items, set quantities and costs. This is what you’ll use when you’re calling in an order or placing it through a vendor’s website, and you want TORO to track what’s coming.
Analytic PO — TORO builds the order for you. It looks at your sales velocity, your current stock levels, and the minimum stock targets you’ve set for each item. Then it generates a suggested order that you can review, adjust, and convert into a real PO. This is incredibly powerful for routine reordering — instead of walking the floor with a notepad, you let the data tell you what you need. Over time, as you fine-tune your stock targets, the analytic orders get more and more accurate.
Both types follow the same lifecycle: create the order, send it to the vendor, receive the shipment, then verify it against the vendor’s invoice. Each step is tracked with dates, employee names, and full line-item detail.
Path 2: Manual Adjustments (For Everything Else) #
Sometimes you need to adjust your stock without a purchase order. Maybe you found extra product in a closet, miscounted during your last inventory, or need to correct a data entry mistake. TORO gives you several ways to do this:
Quick Adjust — The fastest option. Scan a barcode or search for an item, see the current quantity in big bold numbers, and type in the corrected amount. If an item has a box SKU (master pack), you’ll see a box count multiplier — type how many boxes you have and TORO calculates the total units automatically. Hit Enter to apply. This works on both the initial count screen and the adjustment screen, so you never have to do the math yourself. Great for quick fixes.
Item Details Adjust — Open any item’s detail screen, go to the Inventory panel, and click “Adjust QOH.” You can enter a new total or add/subtract a specific amount. TORO may ask you for a reason depending on your store’s settings — this creates an audit trail so you can review adjustments later.
Full Inventory Count — For thorough physical counts where you walk the store and count everything (or a section of it). TORO lets you count in familiar packaging units — “3 boxes on display, 2 boxes in backstock” — and it converts everything to individual units behind the scenes. For the full rundown on counting methods, check out Taking Inventory.
Spreadsheet Import — If you’ve done a count in a spreadsheet, you can upload it directly. Map the columns and TORO processes it all at once.
Every manual adjustment — no matter which method — is logged with the date, the employee who made it, and the reason. Nothing happens invisibly.
What Happens When You Sell Something #
When a customer buys an item, the transaction records exactly what was sold and in what quantity. If they buy one cigar, TORO records 1 unit. If they buy a whole box of 20, it records 20 units. Your quantity on hand drops accordingly — automatically, in real time.
The same principle applies to other events that move inventory:
- Customer returns (resellable items) add units back
- Damaged items you log get subtracted
- Vendor returns (sending product back) get subtracted
- Wholesale invoices (selling to other businesses) get subtracted
- Items on customer accounts (unpaid tabs) get subtracted until resolved
TORO tracks all of these separately, so your QOH always reflects reality.
How Costs Stay Accurate #
One of the most valuable things TORO does behind the scenes is maintain your average cost for every item. Here’s how it works:
When you receive inventory on a purchase order, TORO records the exact price you paid. Over time, as you receive multiple shipments at different prices, it calculates a weighted average based on what you currently have in stock. This average cost is what drives your profit margins, your daily reports, and your pricing decisions.
This is why receiving against purchase orders matters so much. If you just manually adjust quantities without recording what you paid, your cost data becomes a guess. And when your cost data is wrong, every margin and profit number in the system is wrong too.
For a deeper look at how margins flow through your reports, see Understanding Your Profit Margins.
Keeping Your Numbers Honest #
No system is perfect. Inventory numbers drift over time — a miscount here, an unlogged damage there, a sticky-fingered situation you’d rather not think about. The gap between what the system says and what you actually have is called shrinkage, and the only way to catch it is to count.
TORO supports several counting approaches:
- Full counts — everything in the store, ideally while closed
- Cycle counts — one category or section at a time, rotating through your whole inventory over weeks
- Spot counts — quick, targeted checks on items that seem off
The stores that count regularly catch problems while they’re small. The stores that count once a year get surprises. See Taking Inventory for the full guide on counting methods and best practices.
The Bottom Line #
TORO gives you a complete system for managing your inventory, from the moment you decide to order something to the moment a customer walks out with it. The key ideas are simple:
- Everything is tracked. Sales, purchases, returns, adjustments, damage — it all feeds into one calculation.
- SKUs link your buying and selling. You order in boxes, sell in singles, and TORO handles the translation.
- Purchase orders keep your costs accurate. Always receive against a PO when you can.
- Manual adjustments exist for everything else. Quick fixes, physical counts, and corrections are all logged.
- Regular counting keeps you honest. The system is only as good as the data you put into it.
Get these basics right and you’ll always know what you have, what it’s worth, and what you need to order next.
Related Articles #
- Adding a New Item to Your System — Setting up products with the right SKU structure
- Creating a Purchase Order — Building and sending orders to vendors
- Receiving Inventory — Checking in shipments and keeping costs accurate
- Taking Inventory — Physical counts and reconciliation
- Setting Up Product Types — Organizing items into categories with markup rules
- Printing and Managing Barcodes — Labels for scanning and tracking
- Understanding Your Profit Margins — How cost data flows into your reports
- Spotting Problems Early — Using reports to catch inventory issues
- Reports That Actually Matter — Making sense of your data
