When making up sales orders, sometimes you may want to create them while not having the necessary stock quantity on-hand. Negative stock enables you to create those sales orders, save them, and then eventually through the use of backordering, to receive the stock into their warehouses and replace the negative stock with actual items at some future date.
While companies should always fear the over-investment in stock that just sits in the warehouse that only might eventually be used one day, a larger concern is that stock that is required immediately has yet to be ordered for projects with medium-length deadlines for completion. If the stock is there when it is needed, this leads to greater customer satisfaction and less interruptions to throughput.
The need for order flow keeps those involved in stock management aware of precisely how many orders have been created and how many units of inventory stock items they will need. This streamlines the process by reducing the number of purchase orders created in the system, and enables the items placed on negative stock to be added to existing purchase orders before they go out. The stock software you need should already incorporate the concept of negative stock, which can be one of the most useful concepts for many businesses to coordinate their inventory orders.