What would be the best method to account for non-inventory items that are received but not billed from an accounting perspective? I know that item receipts do not have GL impacts for non-inventory items so I'm not sure of the best way to handle this. We need to receive items against a PO for the purchase of software licenses. My assumption was to use non-inventory items for purchase but then we lose accounting visibility to what is received but not billed.

Unless you used inventory items your only option would be to manually account for the cost passing through an RNI-type account using journal entries. You would never, under normal circumstances, account for the received cost of an item if it's not an inventory item. If you use a non-inventory item then the cost will be expensed upon entry of the vendor bill and no COGS would be attached to any fulfillment (assuming you're selling these). If the licenses are to be used internally then an inventory item would be used to receive the product, put the cost into an asset account, and could be expensed via an inventory adjustment when the license is consumed.

That's great info @Simon Whittle. Is it normal to use inventory items for purchase for products that we're using internally and not selling, so we have no need to track actual inventory?

It would depend how far you buy them prior to consumption, whether the cost is material, and whether or not they are depreciable. If you purchase units way in advance of consumption and they are not a depreciable asset then they probably need to be accounted for as an asset of some kind which would normally be inventory. For this I would recommend using an inventory item. If the purchased item is immediately consumed (and therefore expensed) or is a depreciable purchase (an asset) then no need to use an inventory item under normal circumstances. In this case the non-inventory expense account would simply reflect the expense or asset account and would be impacted when billed. As you state, the one thing you lose is an RNI entry on the books. The way around this is to build a saved search that gets you RNI for non-inventory items and book an adjusting entry each month. This assumes, again, the RNI is material in both time and cost.

Thanks again Simon! This helps a lot. It's sounding like we will want to use inventory items to support this requirement.

no problem

There's Generate Accruals option in the non-inventory and service items to record accruals upon Item Receipt. Although I personally prefer the saved search and then JE it every month with a reversal on the first day of the next month.