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1. Fundamental Inventory Accounting Principles that Could Save your Business
If you are selling products you need to ensure you start doing proper inventory accounting as
soon as possible. The market today is very dynamic and you need to keep up with the changes.
The price of your products is likely to fluctuate within weeks of being in the store. If the cost
changes then you need to ensure you have a record of the original prices and the amount of stock
at all times. To avoid feeling overwhelmed, you must ensure that you have a policy on how you
review your stock. The following are some of the important things that a business should do.
Review Products
Every business should make a point of reviewing all the products and establishing patterns that
will determine how each product is handled. Some businesses approach inventory accounting
using one approach for all products. The way the stock gets in and out of your business is
important in establishing what technique you will use to handle the stock.
You may use the LIFO (Last In, First Out) or FIFO (First In, First Out) or other techniques when
handling the stock. However, in your shop all the goods move at a different rate. Some goods
will move faster off the shelf than others and therefore a blanket approach on all of your products
is not the best way to do inventory accounting. Make a point of reviewing all the products using
past records to determine the best technique.
Understand Product dynamics
As each product has different characteristics and shelf life, it is important to determine the other
dynamics that may affect its movement from the shelf. Things such as customer service
commitments requiring goods to be delivered to the customer within a certain period of time
should be reviewed in the context of inventory management.
Good stock management identifies fast moving stock and determines which products should be
stocked more and which ones should be phased out. Overstocking can cause losses and
confusion especially when prices fluctuate. Therefore price and stock are the key factor in
Inventory Services.
Have proper Records
A proper record of the movement of goods is also very important and is sometimes taken for
granted. Stores with a considerable number of goods should consider getting good inventory
software instead of using Excel spreadsheets. An investment in good software may help
demystify all the different areas of your business that affect stock management. Also, invest in
professional help so that you can establish a good foundation in the way you manage your stock.