The Importance of Stocktaking for Retail & Wholesale Businesses
Stocktaking is one of the most important activities in retail and wholesale businesses. This activity is a general requirement of a periodic inventory system and may also be required as part of the company’s annual audit. To understand it more clearly, let’s break it down into three parts: What is it actually? What are the functions of it? When is the right time to implement it?
What is stocktaking?
Stocktaking (or stocktakes) is an activity of calculating physical inventory or goods owned by a company. The person responsible for carrying out this activity should identify all items, calculate them, and summarize the quantities. The purpose of this activity is to ensure the accuracy of accounting records, which is one of the procedures in the Internal Control System.
Implementing stocktake practices is actually quite time consuming, because you have to check the quantity and condition of your goods manually. In order to increase efficiency and effectiveness, many companies are now using barcode scanners. They are believed to be able to help companies speed up the process of stocktaking.
Basically, stocktaking is not only important for retail and wholesale businesses, but also for those engaged in other industries such as manufacturing and food and beverage. Every company needs to make sure that the quantity of goods they have is equal to the quantity of goods recorded in their computer system.
What are the functions of stocktaking?
Stocktaking not only serves to calculate and check company’s goods, but also to calculate cash, assets, debt and accounts receivable (AR). In retail and wholesale companies, stocktakes are usually done by counting stock quantities and cash amount. Meanwhile in manufacturing companies, stocktaking is implemented to inspect the quantity and condition of raw materials, semi-finished goods and finished goods.
If there is a difference between calculation results and the stock quantities recorded in the system, then the solution depends on the policy of each company. In general, if there is a difference between the two, then the company needs to do a re-check to see if there were just errors during the count or if there is really a difference between the two. Furthermore, the results of the re-check can be submitted to the accounting department so they can create adjusting entries and stock adjustment in the system.
When is the right time to implement stocktaking?
Stocktaking is usually done at the end of the month or the end of the year. However, each company has their own regulations on when to implement it, according to their needs. Generally, this activity is done monthly, quarterly or yearly.
In large retail and wholesale companies, stocktaking is usually done once a month. Usually, the preparation is done a week or at least a day prior to the start of the stocktaking process. Conducting this activity on a regular basis will help the company spot the difference in stock quantities early so they won’t have too much trouble finding the cause.
To help your company manage your inventory efficiently, you can count on an Inventory Management Software. This system has been widely used by small and large scale companies, especially those engaged in wholesale and retail that have several stores and warehouses in different locations. Most Inventory Management Softwares can be integrated with barcode scanners that will help you speed up stock tracking activities and can also be customized to fit your business needs.