When you think about inventory tracking, you’re most likely thinking about physically counting goods or maybe scanning things in and out. Inventory management is more than checking the shelves or warehouse.
Robust accounting processes and accounting software help small- and medium-sized businesses in Canada make tracking and managing inventory easier and more efficient.
Finding an accounting team that understands and offers inventory management solutions is critical. A business that manages inventory requires accounting professionals who know how to value and account for changes in inventory, including raw goods, goods that are being manufactured or created, and the finished product ready for sale.
Over time, the inventory management processes and systems put in place will help to identify opportunities to save money (for example, if you have a business in the food industry, times that ordering in bulk make sense and will provide a discount) and calculate the turnover of items to ensure you’re not left with too much or too little inventory.
There are very good accounting software options that can be tailored to inventory management. These provide options for tracking everything from movement and storage of materials or goods to lot tracking and tracking by serial number or warranty.
It’s important to properly track inventory so that you and your accounting team have accurate information to use when determining and analyzing costs, which in turn determine your profitability and profit margins. Successful businesses are built on a foundation of good accounting systems.
If your inventory tracking is done poorly, it can cost your business in several ways. For example:
- Supply shortages of raw materials or products results in sales losses
- Scrambling to find inventory can cost more in shipping or higher prices for materials or much-needed products
- Losing customers who find what they want from your competitors because you don’t have it available
- Storing excess stock costs you in terms of warehouse space, and insurance
- Unsold inventory is capital tied up and unavailable for other business endeavors
- Excess inventory that expires before it is used or sold is a business loss
- Failing to recognize and mitigate losses due to damage, theft, or expiration
When tracking inventory, it’s important to:
- Establish routine stock reviews that review your physical inventory and include not just what you’ve bought and sold but also lost, stolen, damaged, or expired items
- Put processes and systems in place for restocking inventory so that you don’t run short or pay more than you need to for acquiring, shipping, or storing items
- Watch for trends or patterns that help you figure out seasonal factors and customer preferences
Looking for better ways of tracking your inventory? Our Virtual Accounting Team can help with improving your existing system or establishing processes. We can also help you use accounting software for inventory management confidently and efficiently.
We invite you to contact Finatics Accounting Solutions so we can help you achieve your business goals with better inventory tracking.