9 handy hints to make stocktake easy
There’s one task that business owners tend to procrastinate on, sometimes for years, and it’s taking count of stock. It is a lengthy job, which can take days to perform, but is a vital task.
1. There are tax implications
A stock item that is written off reduces profit. If a business has a warehouse or a shop, there is no way to know the year’s profit or loss if a stocktake isn’t performed.
2. It keeps the inventory list accurate
It enables the business to have accurate records of the stock in hand, in terms of the stock code, stock quantity and stock value.
3. It identifies slow moving, missing, damaged and obsolete stock items
This in turn helps business owners decide on the next steps to take, whether the items need to be discounted or written off. It also avoids wrong re-orders and keeps stock size at the most economical level.
The traditional time for conducting a stocktake is the last few days of the financial year.
- On the day of the stocktake, if you are using MYOB accounting software for stock control, print an inventory count sheet that is organized by quantity. If you are auditing based on location, print the same inventory sheet by location.
- Make sure your employees know the stock items. There is no point having anyone count them, if they allocate them to the wrong stock codes!
- The stock should be counted systematically. If stock items are in multiple locations, then have a plan for which location will be counted first or put a person in charge of each location.
- Have two staff members counting in each location – one to count and one to record the count. If you have the manpower, get another person to recount the stock. The figures should tally up. If there are discrepancies between the two numbers, then get the stock counted a third time while you observe.
- Stock items that have been counted should have something to identify it, so that it doesn’t get counted twice. Those sticky coloured paper dots are good to use. Any stock item that is damaged should be put in a separate location. Identify it and decide if it is going to be repaired or disposed of.
- You should have someone entering the figures into your accounting solution. As stock sheets are completed, the sheet is handed to the person doing the data entry. Make sure the sheets that have been entered are clearly identified so that they don’t get entered twice.
- Don’t add any new stock item into the inventory while the count is being done. Any new stock item should be placed aside and recorded in your system after the stocktake is completed. This helps keep the workload down.
- If possible, don’t record any sales transaction while stocktaking (unless you are using software that “freezes” the inventory). You can still generate sales, but it will be easier if you hold off updating the inventory list until the stock count is completed.
- Increasingly, our clients are using barcode scanners to help them record the count straight into their software, which certainly speeds up the process. There are options for this to be done with MYOB AccountRight. You can use a remote scanner, which then updates the software with the quantity of stock in hand.
READ: 10 commandments of a stress-free stocktake
Don’t forget at the end of the process to thank your staff. It can be a physically demanding, dirty and boring job. No doubt pizzas and wine will go down well at the end of the day!
The information provided here is of a general nature for Australia and should not be your only source of information. Please consult an experienced and registered tax agent as each small business’s circumstance will vary for end of financial year.