How to Track Your Inventory

How to Track Your Inventory

In the past, most companies had to have special times during the year in order to take inventory of their products and equipment. This could take them over a week to complete and took away from any time they may have been able to sell their merchandise. Keeping records of inventory has always been a necessary part of business since you need to know what you have and what you need. Special inventory recording companies could be hired to bring people in to do it for the business or they simply used their own people to do it. It was very time consuming and expensive. However, there is now software on the market that allows you to maintain and update your inventory easily.

Keeping A Record Of What You Have

Inventory accounting is very specialized. Each piece of merchandise you have that you are reselling must be counted and the records kept on file. Even your equipment must be inventoried at least once a year. This is so you can claim any losses or profits on your income tax. There are accountants who have taken special courses in order to be able to accurately track your inventory. These specialists are now using this software in order to do so. The software allows them to list each item you have and input the amount you have on hand at the time. Whenever an item is pulled off your shelf, the employee removing it uses a handheld device to scan the bar code of it. This information is then forwarded to the inventory software and deducted from the amount on hand.

How To Use The Information You Receive

When an item is removed from the inventory list and the total updated, based on the information you have put in, it will send a notice to your purchasing department to buy more of it. If you have an item that you must keep a quantity of six in your stock and two pieces are sold and removed from the list, a notice will go out stating that only four pieces remain and more should be ordered. In the long run, with accurate records, it enables your purchasing department to keep their costs down. They no longer will be making purchases for unnecessary items.

End Of Year Accounting

When your auditors go over your records at the end of the year, they will want to know what your profit or loss is for the business. In order to do this, they will need to know how many sales you have had and what the sales price is. Inventory management software keeps these records up to date, so it is much easier for them to get the information they need to report to the Internal Revenue Service.

Human error has always been a problem with tracking inventory. Businesses cannot keep accurate records if there are many people involved with handling it. Using a software program lessens these errors. The software programs are relatively inexpensive to purchase also.

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