At the end of each financial year it is important to do a stocktake to have an accurate idea of the stock on hand. Knowing the number of items that your business owns and that are in inventory allows you to reconcile physical stock to inventory records. This process will highlight variances and identify any issues with stock management and control; allowing you to make informed decisions about theft, slow-moving items, damaged stock and warehouse processes.
Here are some tips to an easy and stress-free stocktake:
- Clearly identify what is owned by the business and where it is.
Ensure that stock that has been invoiced to a customer but is still in the warehouse is clearly labelled and separated, likewise with stock that has been received but not yet recorded. Your stockroom should always be in an orderly condition so at any point in time you know what is owned by the business, invoiced but not shipped and received but not yet recorded.
- Tools for the stocktake
- Stock sheets – these should not include the number of inventory on hand as recorded in the system, if the inventory is barcoded ensure the barcode is written down clearly.
- Write-off sheets – Ensure that as the inventory is counted the condition is checked.
- Pens – Each person doing the stocktake should use a different coloured pen to ensure the audit trail can be followed, for example the first counter might use a black pen, second to use a blue pen and when the sheets are submitted to the stocktake coordinator they use a red pen.
- Hand Held Scanners – if the inventory uses a barcode
- Discourage the use of mobile phones, iPods and talking
These items can be very distracting and lead to mistakes, while stocktake can be dull it is important that it is accurate.
- Count every item of inventory
Although this seems tedious it will ensure that you get an accurate stocktake the first time.
This includes opening boxes and counting the number of items in the box – sometimes there are discrepancies between the number of items that the box says that it has and how many it physically has inside.
- Check the physical count against accounting records
Ensure you note any variances and follow up.
- Update your records
When the stocktake has been finalised and discrepancies checked ensure that you update your accounting system to reflect the physical stock on hand
If your systems and processes are in order and the stocktake is well planned this should result in minimal disruptions.
If you would like assistance on how to make doing a stocktake easier, speak to our team at NBC to see how Xero cloud accounting software can assist your business. Contact us for an obligation free consultation on (07) 3862 8777.