How can I avoid selling underwater inventory? You can avoid being in an underwater state with inventory items by following these tips: Insist on prompt entry of item receipts. Require item receipts to be entered with the date of receipt instead of the entry date if the receipt is not entered the same day it is received. Always use sales orders to sell inventory. Always fulfill orders from sales orders. Set the Fulfill Based on Commitment preference to Limit to Committed. For more information on this preference, see the Order Management Accounting Preferences . . Avoid entering standalone cash sales and invoices. Standalone transactions have no commitments or checks and balances to prevent you from selling out or going underwater. Use the Inventory Level Warnings preference. This preference gives you instant feedback on each transaction as to whether or not you have items in stock. For more information on this preference, read Inventory Level Warnings. Perform a physical inventory count on a regular basis to assess whether your inventory data is consistent with the physical count of your stock. If the physical count is higher or lower than the quantity on hand based on the item record, the count needs to be reconciled to match actual inventory levels. Use the Review Negative Inventory page to identify inventory items that are underwater. To learn more, see Reviewing Negative Inventory.