PREPARING AND CONDUCTING STOCKTAKES
By Ayoade Apelegan
What is Stocktaking?
Stocktaking is a form of inventory control. Stocktake is the manual counting and recording of all inventory a business has on hand.
STOCKTAKE AND ITS IMPORTANCE
At the end of each financial year, all businesses must account for the value of their trading stock (closing stock) and also at the start of the next financial year (opening stock).
Stock is anything your business acquires, produces or manufactures, for manufacturing, selling or exchanging.
Stocktake is a fundamental part of any business that deals in goods. It’s the only way through which you can keep track of inventory, see if your ordering process is efficient, and reduce over-stocking.
Advantages of Stocktake
- Improved Cashflow
cashflow can be improved by identifying slow-moving stock items and therefore reducing the level of such stock held
- Accurate Profit Margins
regular stocktakes enable you to accurately monitor profit margins across a range of products
- Identify Slow-Moving Stock
regular stocktakes will also identify items of stock that are slow-moving and allow you to make decisions on such items, such as selling at a discounted price
- Improve stock management
having a better understanding of your stock levels will enable you to minimise waste and will allow you to identify if you have a problem with theft
- Gaining a better understanding of your stock levels
- Making sure you don’t have too much or too little inventory on hand
- Identifying what inventory you need to buy
- Detecting theft and gaps in your stock levels
- Reviewing your pricing strategy
HOW TO CONDUCT A STOCKTAKE
If you will be having other members of staff helping out with your stock take, it is important to make sure that they are properly organized and understand the process of the task at hand. Having co-workers or friends assist during stocktake will greatly reduce the time it takes, and help minimize the likelihood of errors. Delegating the task is also a good idea. When allocating teams for the stocktake you should always appoint a supervisor to each section and ensure all staff fully understands how the stock is to be counted. For example, during a stocktake, it may be advisable to count from top to bottom and from left to right of the stock room, to avoid count duplications.
Set a date
Before commencing stocktake, it is important that you have a full understanding of the resources and time required. Choosing the right time to conduct a stock-taking exercise is important. Stocktaking can be a time-consuming task (especially if you have a lot of stock). As a result of this, you’ll need to pick a day when you’ll have all the resources you need. This might involve setting aside staff hours during a less busy period or, in some circumstances, it might even require you to close business for the day while you conduct the stocktake.
As part of the planning procedures, the following tools/items should also be gotten ready for members of the stocktaking team.
Stock sheets – this shows on a count the stock numbers against each stock item
Pens – for writing down figures
Write-off sheets – used to always check the condition of the stock as you count, make a note if it is damaged
Hand-Held Scanners (for the barcoded stock)
Distractions will always lead to errors. You should also ensure that the use of anything capable of causing distraction is avoided or at best minimized. Any extraneous noise wherever possible should be reduced. Ban on the use of phones, iPods, idle chatting and the use of radio while the exercise is being carried out should be encouraged.
It is also good practice to mark items that have been counted, to avoid duplication and to identify items which may have been missed in error.
Organizing of stock and stock room
The stock room needs to be clean and tidy and stock items should be laid out.
You should also ensure that you attach labels to the shelves to identify different types of stock and location.
Once the stock has been arranged, you might want to appoint a separate member to each category. More staff should be assigned to larger categories of stock.
You can also decide to give your stock counters clear guidance on the direction they should count; eg start from a specific location and end in a specific location.
Print your stock sheets
Stock sheets are the documents against which counts during the stock-taking process are made. They are the basis of the stocktake. Some software solutions allow you to do this with a couple of clicks. Make sure that you’re using the most up to date records you have. You should have printable stock sheets built into your existing stocktaking system.
Setting aside any stock that has already been sold but is yet to be delivered or picked up by a customer is an important part of the stocktaking process.
After this, you should start categorizing your existing stock. Your total stock will likely fall into several different categories, and it will be easier to properly account for everything you have if you begin with a system. This might well involve physically moving items around your premises and counting on that basis.
It’s important to avoid making estimates. This might seem tedious, especially if you think you have an idea of your stock quantities. Stocktake should be accurate, and this requires methodical counting. Mark items as you go to avoid duplicate counting. Always open up boxes (If the label on the box says 100 items in the box do not mean there are 100 items)
Always make a note of all variances and follow up where necessary to identify the reasons for the variances.
You can also read about Managing Business Inventory
At the end of the stock count, you need to validate your stock take. Compare the results of the count to the stock records you printed out earlier. Any inconsistencies should be noted and accounted for.
For example, you need a procedure in place for dealing with damaged items. If the business has multiple branches, ensure that you are properly tracking intra-store transfers, and that purchase orders are being effectively dealt with.
Update your stock records
The last step in stocktake is updating stock records. You will need to update your stock records with the results of your latest count in your accounting records. If you’re using a software solution to track stock, this should be a simple process. If you’re still using paper-based systems.
For your stocktaking services, call 0802320 0801 or email firstname.lastname@example.org. Alternatively, you can fill the contact form below.