Tips and tricks for a successful inventory

Inventory: The name alone gives many entrepreneurs an uneasy feeling. On the one hand, an inventory is usually very costly and time-consuming, on the other hand, the necessary procedure can also wear on the nerves. However, in most cases the question is not whether, but rather how the inventory can be organised as efficiently as possible, since it cannot be avoided.

Well-prepared inventory saves time

If you have a battle plan for inventory, you can significantly reduce the time spent on it. You should first ask yourself a few basic questions that will make it easier to proceed:

• Which type of inventory do I prefer?
• When should it be carried out?
• How much time do I plan for it?
• How many staff do I have at my disposal?
• And as motivation: What consequences will I face if I do not carry out the inventory?

Which type of inventory do I prefer?

This question is relatively easy to answer: If I use an enterprise resource planning system, then the items for the inventory basically run throughout the year and stocks can be called up at the touch of a button. The problem is that all items still have to be counted and due to, for example, theft or incorrect bookings of incoming and outgoing goods, it is very likely that there will be discrepancies in the figures. This is a point that is difficult to limit, even with the greatest care. Fortunately, there are other factors that are easily scalable in an inventory.

Personnel planning during inventory

An inventory is difficult to do on the side and during day-to-day business, as this task requires concentration and stocks must be constant for the time of the inventory. It is therefore important to plan appropriately. No employee wants to be busy counting late into the night just because too few people have been budgeted for it. If the previous year’s inventory was completed on time with the employees who helped out, then additional capacities must be entrusted with the task in the current year, because new products are usually added, not all employees are equally fast and, last but not least, a buffer should always be built in, because something unforeseen can always happen. If you plan on the edge, you have to expect unpleasant surprises that can be avoided with well thought-out planning.

What type of inventory should be taken and when should it be done?

In the case of an annual inventory, the stock of goods is recorded and counted on a fixed day. Depending on the size of a company, it is also possible to spread this type of inventory over up to 10 days, provided that all postings leading to the change in stock can be tracked during this period. As a rule, the cut-off date is 31 December of each year, as this is when the old business year ends for most companies. Since such a large amount of work usually cannot be done in a short time, the legislator grants a transitional period, which, however, only postpones the inventory and makes everything a bit more complex. So if you have the necessary manpower, you should see to it that the inventory can be carried out on a single day.

The perpetual inventory is only conditionally easier with the help of the merchandise management system, because there is one thing that no computer programme, no matter how good, can do for you: The manual counting of the goods actually present, which must be compared with the stock in the system.

Incidentally, it is advisable to carry out a voluntary stocktaking at regular intervals: This has two major advantages. On the one hand, you can get an estimate of the stock of goods in the middle of the year, for example, and thus gain an insight into the figures that you usually only rarely have in this form. On the other hand, you can counteract negative developments and reduce inventories, as these usually cause costs that can be avoided.

How much time do I plan for stocktaking?

That depends entirely on the individual nature of the company. Large companies with dozens of employees and thousands of inventory items should definitely plan well before taking inventory. It is true that the large number of employees helps to record the items to be counted more quickly, but as a rule the stock of goods is disproportionately higher here than in a small company with only a few employees. The more efficiently the employees work, the faster it goes, and so inventories should ideally be recorded in one day, as each additional day for counting requires additional measures, unless it is possible to pause ongoing processes during the inventory – for example, in an online shop, orders continue to come in.

What consequences do I face if I do not carry out the inventory?

In most cases, taking inventory is not an option, but an absolute must. If you do not take inventory or do it sloppily, you risk a more detailed audit by the tax office. The tax office explicitly looks for tax inconsistencies that affect the inventory. If there are errors or discrepancies in the bookkeeping, the corresponding auditor can make estimates for turnover and profit. In most cases, these estimates are not in the company’s favour, and this can result in back tax payments which, depending on the size of the company, can threaten the existence of a business. There are therefore two important points in the inventory that have absolute priority: On the one hand, it is imperative to ensure completeness, because any stock of goods that is not recorded is a grossly negligent error. On the other hand, absolute care should be taken during the inventory, because discrepancies in the stocks lead to inconsistencies in the target figures, which a company will have to explain willy-nilly. In order to avoid surprises, inventory lists should be kept and every stock should be double-checked.

Stay positive with inventory

It’s a big task, but one that you can’t avoid as a business. Therefore, there is only one thing to do: stay positive and bring it to a conclusion in the best possible way. If you look at it from an operational point of view, stocktaking ultimately also presents opportunities. You can rethink your strategy, investigate the causes of inventory discrepancies and save taxes if you work meticulously. A well-executed inventory soothes one’s conscience and as a manager one can look forward to the coming business year with confidence.