So why are inventory accounts so important? Making sure you have an accurate account, can make the efficiencies and customer service in a business the best. Although most counts are time consuming and drain you resources, they are very important.
Here are a few reasons as to why they are:
- They give you a more accurate count. This gives you the ability to ship/sell items quicker because you know that they are available.
- A more accurate count for insurance purposes in case of a disaster.
- For any adjustments of counts, it can point out any quantity discrepancies and/or shrinkage, therefore it can lead to additional billing or if there is any theft going on along with any damaged stock
- Counts are also done to control inventory stock.
- Too much inventory stock means cash outflow with not enough cash outflow (shipment/billings to customer) and you may sit on the inventory and not sell it in a timely manner
- Not enough inventory stock means that you are constantly ordering inventory stock, which in turn you are spending more on time and/or shipping and may even lose a sale, if it’s not readily available.
Inventory counts need to be done at least once a fiscal year (12 months), either physically counting all at once or cycle counting though-out the year.
The counts can be done more frequently if necessary, but as long as all of the inventory is physically counted once a fiscal year, that is all that is necessary.
