Tips on Performing an Initial Count of your Entire Stock
Key Decisions to Make Before Conducting your Count
- Why are you counting your inventory?
- What are you going to count?
- Where are you going to count?
- When are you going to count?
- Who is going to be doing the counting?
Why are you counting your inventory?
You probably already have a good reason for counting your inventory. But this is a good time to consider other benefits to keeping track of your inventory, and the reasons for tracking it. The following list of reasons is meant to remind you of common reasons for tracking inventory, as well as stimulate your imagination as you think about why you're doing this.
Asset Tracking and Valuation
Most businesses have a large part of their capital tied up in assets. These assets may be things like buildings, automobiles, machinery, furniture, fixtures, equipment, computers, etc… Often businesses need to know the value of these assets along with other information as to where they are, when they were purchased, for how much, etc.. Your accountant may need this information, banks, insurance companies, partners, people in operations, and management. You can’t get the best use of your assets if you only have a vague idea of what they are, where they are, and what they cost. This is as good a time as any to count your longer term assets.
Managing Stock Levels
Can you save money while still delivering your products on time? Are you chronically over ordering certain items? Do you need to free up space for other products? If these business decisions are important to you, then you will need to have a count of the items that may be involved.
If you are in a business or enterprise that experience demand changes based on the seasons, time of year, holidays, days of the week, etc… Then you will want to have an accurate count of those items that are most affected by these factors. You’ll want to know how much of an item you used last time, and how much was left over so you can decide how much to buy this time.
Shrinkage, Theft, & Loss control
If people know that no one’s keeping track of things, they will tend toward carelessness at best, and outright theft at worst. When an organization demonstrates through actions that an accounting of its goods and equipment is a regular part of their operations, people will know that someone’s paying attention, and they had better do so as well.
If disaster strikes how quickly will you be able to account for all of your stock and equipment? And if you keep track of these things, where are those records kept? On site? When considering why your counting your stuff, ask yourself what you’d want to know if everything was gone tomorrow. What would your insurance company want to know?
Do you need to provide your accountant with a value of your current inventory at the end of every fiscal year? Will you need to at some point in the future? A solid record of your inventory can make an annual chore that people dread into a task that can be completed in seconds. And if something’s easy to do, chances are, it will get done.
Will you want to know where the most frequently accessed items are located? Will you want to know the locations of your most valuable stock? Lots of small businesses set up their storage locations by feel, or sometimes by habit. Once you get in the practice of tracking your inventory, you’ll be able to make better decisions on the best locations for your stock.