Nobody likes taking a physical count of stock. It is, however, inevitable and crucial to your enterprise. Knowing just what you have on the document and what’s really in stock will be quite useful. It ensures precision and can discover the motives for conducting from inventory premature. Additionally, it helps companies to have what they need in stock in any way times.
This article made by our staff at ConnectPOS clarifies what a physical count of stock is and provides suggestions about how to get it done.
Physical Inventory Count — What Exactly Can It Be?
A physical stock count denotes the counting of all of the goods available in person. This usually means an employee (or a group ) should count every product that’s present in the shop and warehouse. Employees may use a pencil and paper or a digital technique to capture the info.
This count helps to ensure that there aren’t any inaccuracies or discrepancies in stock levels. The physical stock items must match the amounts recorded in the stock books (or management applications ).
When a discrepancy occurs, update the stock list to reflect the physiological amount. Taking a physical inventory count is a necessity of the national law.
This makes sure that companies don’t oversell, and they do not keep an excessive amount of stock in stock. Additionally, it’s helpful to find the appropriate inventory valuation to your own tax returns.
Considering all the above in mind, it’s essential to perform a physical stock count with caution. Truth will stop any unwanted upshots. By way of instance, exaggerating the physical count of stock raises the gross profit and net profits. This causes a higher income tax fee.
To aid you with this essential procedure, below are a few helpful methods for planning and implementing the physical stock count.
Before And During a Physical Inventory Count
After choosing the way of executing the count, then it is required to get ready for and execute it. Follow the steps below to make sure the validity of the count.
Obtain Needed Supplies
Some companies use stock applications to print out barcode tags. Others might use stock tags. These tags indicate that things are counted and the number of times. Make sure there are sufficient paper, pencils, and pens available. Give clipboards to make writing more comfortable and productive. Consider the availability of things and also, where necessary, supply step stools, ladders, masks, and gloves.
Select the Counters
Don’t pick random workers to count on the stock. Even though it can appear to be a simple task, counting is subject to mistakes. You are able to pick both new and seasoned workers. But always pick those that are diligent and focused.
Notify All Storage Sites
Counting inventory held at outside locations or on shipload is also vital. It’s ideal to perform a physical stock count on precisely the exact same date, across all places.
Inspect the Shelf Tags
Make sure that each of the goods on each shelf contrasts together with the description about the label. Employees might presume that the labels are right, without double-checking. Assessing a visual review will stop any possible disagreements.
Halt Warehouse Activities
Be certain that you put aside the newly delivered product. To prevent confusion and prevent errors, cancel any deliveries to the time of this count.
Map From the Region
Bear in mind that every item of your stock has to be counted. Focus on details. Don’t overlook even the smallest place, bin, shelf, or drawer. Developing a map can make it much easier to run the count. Additionally, it will let you assign counters to certain places with no fear of these doubling up on one another. The bigger the segments, the simpler the count.
Group that the Merchandise
Categorize all goods into classes. Then arrange similar classes in a logical sequence. This will permit the workers to rely quicker and with more precision.
Orientate the Team
Walk your staff through the last measures. Make sure they are knowledgeable about the map and understand the areas allocated to them.
When you’ve moved anything about or altered any labels make certain they’re conscious of it. Don’t send them in the task unprepared. Display them around the sales floor or warehouse. Allow them time to become familiar with that.
Throughout the groundwork, you might observe that a few commodities don’t belong to some particular location or class. Included in these are:
- Products exhibited in the shop window
- products transferred from other places
Decide what to do together beforehand. Utilize the POS system to maximum benefit. Register classes from the POS system on the cutting sheets together with the prices. Make sure the prices are right (regular vs. sales).
Conduct a Pre-Count
You are able to count some things the day prior to the stock count day. Place all bought goods in boxes and then seal them. This day, ensure the seals aren’t broken (in which case you’ll need to count the things again).
Counting one thing after another for a very long time is physically and emotionally tiring. The counters will appreciate something fast to eat and drink during breaks. It helps them recover physical energy and mental focus.
Implementing the Count
After each little segment, the appointed supervisor should confirm the count. It’s sensible to begin with the product that brings in the most money and the items which move the quickest. It’s crucial to find those done early because they’re subject to more counting mistakes. In case the supervisor has confirmed the counts, then record it from the spreadsheet or direction system.
After the conclusion of the stock count, then print out and examine discrepancy reports.
Meet together with the team to examine the counting procedure and record the processes. Ask employees what they thought worked well and what areas require improvement. Utilizing this info, make needed adjustments to your upcoming physical count. This will make it is simpler and more effective.
Now it’s time to enter the info into the system. Your stock program application should include the choice to input the outcome of the physical count. This information will then be upgraded with barcoding. In case you used the pencil and paper method to execute the count, be more diligent. Be sure all the amounts are right when inputting the info into the system.
Run a Comparison
Together with the new data today entered, compare it with all the suspended inventory data in the system. Pay attention to the amount and the cost of this product. Based on system settings, the cost comparison will be determined by the typical or precise cost of every item. This comparison will reveal how weighty the discrepancy is.
Inventory Count Audit
It will not hurt to test one more time which the count was right. Conduct an inventory count audit whenever possible and before upgrading the inventory amounts. Never postpone the stock checks and checks.
Use the stock reports to inspect the information and find out how to enhance your small business. Discovering the proper report is straightforward. Utilize the’report creation’ alternative from the POS and retail management system when it is accessible.
These analytics can allow you to make processes that minimize disagreements. You are able to use physical stock count reports for some period to spot some other trends. You will observe that a particular field of the shop will have a far lower physical attraction. This may indicate that clients are stealing from that specific place. Focusing more attention on this region can prevent additional inventory postings.
The outcome of the count as well as the insights obtained from the following comparisons should notify how in which the company is run.
Top 10 Tips
Below are a few ideas which can enhance the speed, precision, and efficacy of a physical stock count.
Produce Programs in Advance
You have to conduct a physical count of stock annually as demanded by the law. But, it’s possible to perform points anytime which you find appropriate. If wanted, a physical stock count might be undertaken annually or even each month.
Workers must receive advance notification every time. They require enough time to organize their schedules because the count is generally conducted outside of standard work hours. If the count will happen during business hours, then notify customers at least 5 times ahead. Displaying a simple note on the storefront may serve this purpose.
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Select the Team Members Carefully
It’s advised to have a combination of new and experienced workers from the stock count staff. The old-timers are all well-acquainted together with the policies, processes, and places. They’re, nevertheless, more likely to overlook smaller details. Newer employees might be paying more attention and may spot certain difficulties.
Function in twos
Split the counting group into pairs and then devote a segment to every pair. 1 employee must do the actual counting. Another individual’s responsibility would be to tag the count tags with the appropriate data.
Create a Map
Mapping out the shop floor or warehouse simplifies the stock count process. Ensure the map is very clear and reveals all significance. Including all counters, walls, shelves, display components, workstations and backrooms, and whatever else that’s relevant. Then number them to indicate which area they belong to.
If any items aren’t visible (being such as in a box), use labels to demonstrate that those products should also be quantified. Don’t forget to indicate and tag everything before the stock count is penalized. Avoid wasting time coping with loose things which weren’t counted.
Strive Cycle Counting
A bicycle count is a stock process in which a tiny subset of stock, in a particular place, is counted on a predetermined day. Cycle counts are less disruptive to daily operations and are customizable. They can concentrate on product using a higher value, greater motion quantity, or items which are most crucial to company procedures.
The Ranking Method indicates that you count the faster-moving things more frequently. The foundation for this can be Pareto’s Law which states that 80 percent of effects come from 20 percent of the triggers. This 80/20 rule implies that 80 percent of your earnings is supplied by 20 percent of your inventory.
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Identify High-Risk Spots and Maintain Loss of Inventory Down
Utilize inventory count reports to identify trends in discrepancies. If you become aware of a pattern of stock reduction in a particular place such as bins beside the entry or where expensive products are, speak with your workers and educate them to keep their eyes open for thieves.
Require The Team’s Physical Needs Into Account
A physical inventory count is exhausting both physically and emotionally. It’s likewise time-consuming and dull, even dull.
Hungry, hungry, tired, or bored counters are vulnerable to commit errors. Because of this, you must offer meals and beverages and make certain normal breaks. Let staff members break their eyes and recover physical and psychological energy.
Additional Inventory Systems
The regular inventory system is a system of stock valuation for financial reporting purposes. Within this system, a physical count of the stock is done at particular intervals. It’s acceptable for smaller companies.
The perpetual system retains a constant track of stock balance. Sale or purchase of a product is automatically updated on the POS and asset management program.
End thoughts on taking a physical count of stock
Taking a physical inventory count is no one’s favourite action. It’s time consuming, tiring, and might even interrupt normal business operations.
The traditional method uses a pencil and paper. The counters record the points on a given sheet and then enter the results to the system. This way is slow-moving and awkward since it needs double data entry. The counting itself really has to be carried out physically and there’s absolutely no way about it. You don’t wish the excess task of manually summing up and documenting the data.
ConnectPOS is here to aid you. The Warehouses and Vendor Stock Management function streamlines the physical count of stock. The barcode scan feature empowers your staff to utilize a number of devices at precisely the exact same moment. This really helps to speed up the counting procedure.
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