How It Works

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Inventory API process flow

Inventory unit counts are calculated by applying all the adjustments received since the last recorded physical count. If no physical count has been recorded, the adjustments are applied with an assumed starting unit quantity of zero.

Inventory changes (including changes due to sales transactions) can be sent to Square out of order. As a result, adjustments and physical count updates require a client-specified RFC 3339 timestamp (occurred_at) so the inventory history can be ordered correctly.

Consider a situation where the Square Point of Sale (POS) application processes transactions in offline mode while a custom inventory management solution makes inventory adjustments through the API.

Assume that the related item variation starts with 100 IN_STOCK units.

  1. At 13:10 GMT, the inventory management backend sends an InventoryAdjustment request using the Inventory API to record a sale through a non-Square system and move three units from IN_STOCK to SOLD. At this point, there are 97 IN_STOCK units.
  2. At 13:20 GMT, the Square POS device goes offline. The seller sells two units in offline mode with a recorded transaction time of 13:20 GMT.
  3. At 13:30 GMT, the inventory management backend sends an InventoryPhysicalCount request using the Inventory API to reconcile the computed quantity in the Square inventory service (97 units) with a verified physical quantity available for sale (90 units).
  4. At 13:35 GMT, the Square POS device reconnects to the Internet and pushes the offline sale to Square, which moves two IN_STOCK units to SOLD. Square applies the transaction results, with a client timestamp of 13:20 GMT, before the InventoryPhysicalCount request that occurred at 13:30 GMT. Although the POS transaction was the last change sent to Square, the IN_STOCK quantity is still 90 units, as indicated by the physical count update, because the last change according to the client timestamp was the InventoryPhysicalCount request.
  5. At 13:40 GMT, the inventory management backend sends another InventoryAdjustment request using the Inventory API to move two from IN_STOCK to WASTE because they're no longer suitable for sale. The InventoryAdjustment request has a client timestamp that happens after the count reconciliation so the IN_STOCK count is now 88 units and the WASTE count is two units.

A diagram showing inventory state transitions involving a Square application, the Square backend, and Square Point of Sale.

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Reconciliation with InventoryPhysicalCount

InventoryPhysicalCount should only be used to reconcile the inventory count computed by Square with the results of performing a physical count or syncing with a trusted external system. Don't use InventoryPhysicalCount to apply sequential adjustments to CatalogItemVariation quantities. Retrieving an InventoryCount from the server, modifying the count based on recent changes, and pushing the updated inventory count as an InventoryPhysicalCount forces Square to ignore changes that might have occurred in the interim and results in inaccurate tracking.

Consider the case where the Square POS application captures a sale after the InventoryCount request but before the InventoryPhysicalCount update.

A diagram showing the inventory state before the inventory count is reconciled.

Assume that an application knows that three units were sold through a non-Square channel. The application calls the Inventory API and the InventoryCount result indicates 10 units in the IN_STOCK state. At the same time, the Square POS application captures a sale of two units and moves those two units from IN_STOCK to SOLD. There are now eight units in the IN_STOCK state.

Based on the InventoryCount result, the application incorrectly believes there are currently 10 units in the IN_STOCK state. If the application uses InventoryPhysicalCount to reduce the IN_STOCK quantity by three, the final quantity of IN_STOCK units is forced to be seven units (10 IN_STOCK units − 3 units sold externally) when it should be 5 units (10 IN_STOCK units − 2 units sold through the Square POS application − 3 units sold externally).

The correct way to track sales through a non-Square system is to push an InventoryAdjustment that moves units from IN_STOCK to SOLD. Inventory adjustments force Square systems to apply inventory changes in the correct order rather than explicitly overwriting the count. For example, by subtracting the three units sold externally after subtracting the two units sold through the Square POS application.

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Batched state transitions

Square servers record inventory operations based on timestamps provided by the communicating client and batched updates succeed or fail as atomic operations. For example, consider the case where a single request batches the following changes for a single item variation:

  • 100 units move from the NONE state to the IN_STOCK state.
  • Five units move from the IN_STOCK state to the WASTE state.
  • Record a physical count of 90 units.

A diagram showing batch inventory state transitions.

Individual changes in a batched state are recorded based on their individual client timestamps, but they're applied (all or nothing) as a single request. Assuming that the inventory count for the targeted catalog item variation starts at zero:

  1. 100 units move from NONE to IN_STOCK with a timestamp of 23:00 GMT, making the calculated inventory count 100.
  2. Five units move from IN_STOCK to WASTE with a timestamp of 23:10 GMT, making the calculated inventory count 95.
  3. The system records a physical count of 90 units with a timestamp of 23:30 GMT, resetting the calculated inventory count to 90 rather than 95.

If all three changes succeed, the new calculated inventory count for IN_STOCK units is 90. However, if any of the individual changes fail, the entire update fails and the calculated inventory count remains unchanged at zero.

Inventory quantities are also affected by Square payment APIs and POS applications. In the previous example, when the Square POS application records a transaction, it moves three units from the IN_STOCK state to the SOLD state. Assuming that the transaction timestamp places it after the batch update succeeds, the new calculated inventory count for IN_STOCK units is 87.

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Special InventoryState values

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The NONE state isn't a true inventory state. NONE is a from_state placeholder to represent the fact that a given CatalogItemVariation was introduced as new inventory. Inventory quantities can be transitioned from the NONE state, but cannot be transitioned to the NONE state.

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The IN_STOCK state doesn't represent a pool of available items decremented over time. Item variation quantities move in to and out of the IN_STOCK state as they do with other states. In general, when quantities move between states, the total quantity for that item variation across all states doesn't change. For example, consider the item variation "Small Leather Collar" with a total of 100 units. Initially, all 100 units are in the IN_STOCK state. If three units become damaged, there are still 100 units at the end of the day: 97 units in the IN_STOCK state and three in the WASTE state. The IN_STOCK state is only special in that the Square POS application and Seller Dashboard use the quantity of item variations with the IN_STOCK state to determine the number of units currently available for sale.

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The SOLD state is a terminal state. When inventory items move to the SOLD state, the units are no longer explicitly tracked. Transferring quantities from SOLD to some other state introduces a new quantity into inventory rather than changing the quantity in the SOLD state. For example, consider the case where "Small Leather Collar" has 100 units in the IN_STOCK state. If five units are sold online and three units are sold in the store, there are 92 units tracked. If a customer returns two units to the store, there are 94 units tracked: 92 units with the IN_STOCK state and two units with the RETURNED_BY_CUSTOMER state.

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Supported state transitions

Inventory state transitions represent real-world changes to inventory quantities. As a result, some state changes are permitted (such as IN_STOCK to SOLD) while others aren't (such as WASTE to RETURNED_BY_CUSTOMER). Square supports the following inventory state transitions:

An updated diagram showing supported inventory state transitions.

From state To state Related event
NONEIN_STOCKA quantity of items was received and is available for sale.
IN_STOCKSOLDA quantity of items was sold.
IN_STOCKWASTEA quantity of items was damaged or lost and cannot be sold.
UNLINKED_RETURNIN_STOCKA quantity of items was returned by the customer and is available for sale. The return isn't affiliated with a specific transaction.
UNLINKED_RETURNWASTEA quantity of items was returned by the customer and deemed to be unsellable. The return isn't affiliated with a specific transaction.

In addition to the support state transitions, the Inventory API might return additional read-only states as part of the change history for a given item variation. Transitions to or from read-only states can only be triggered from within Square products.

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Automatic IN_STOCK adjustments

If inventory tracking is enabled in the Seller Dashboard, completing an itemized transaction with Square products automatically moves the quantity sold from the IN_STOCK state to the SOLD state.

For example, consider a Payment API request that references an Order object containing three catalog line items: a small leather dog collar, a 5-foot retractable leash, and Chewy chicken trainer treats.

A diagram showing the inventory state after the inventory count is reconciled.

When the CompletePayment or PayOrder endpoint is called to process the transaction, Square automatically adjusts the IN_STOCK quantities by moving one unit of the small leather dog collar from IN_STOCK to SOLD, one unit of the 5-foot retractable leash from IN_STOCK to SOLD, and two units of Chewy chicken trainer treats from IN_STOCK to SOLD.

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ignore_unchanged_counts flag

Requests to the BatchChangeInventory endpoint include an ignore_unchanged_counts flag. The ignore_unchanged_counts flag tells Square to skip updates for the CatalogItemVariation if nothing has changed. When the new physical count for a CatalogItemVariation is the same as the previous physical count and no InventoryAdjustment requests have been received between the two physical counts, the physical count update is skipped. The ignore_unchanged_counts flag lets third-party systems push potentially redundant inventory counts to Square without polluting the Seller Dashboard with unnecessary adjustments.

The ignore_unchanged_counts flag is enabled by default so developers don't inadvertently spam Square servers with redundant InventoryPhysicalCount requests. Don't disable the ignore_unchanged_counts flag unless the associated InventoryPhysicalCount request represents a true reconciliation, such as an actual physical count by a person.