Effective inventory management is essential and can save you from expensive costly errors. A few of the most common inventory issues include: overstocking, missing stock, and outdated practices.
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Every day that inventory sites on your sales floor, stock room, or warehouse costs your business money. Overstocking can happen when a manager fears losing sales if a high demand product runs out when bulk orders are made to save costs, or because of poor inventory management.
Turn this dead stock into cash by liquidating it at discounted prices. You can also try returning excess goods to your vendor, but you may have to pay a restocking fee. To avoid this issue:
- Track your inventory to know when stock levels are high so you can avoid unnecessary re-stocking or liquidation of items. Watch for spending trends to more accurately predict when it is time to re-order your best sellers and phase out poor selling items.
- Invest in a perpetual inventory system that gives you real-time data on current inventory levels and automates reordering as needed and tracks the performance of products and services.
Loss from inaccurate tracking
Whether stock loss is due to theft or inventory miscalculations, losing stock is a serious issue for business owners. This type of loss can be circumvented by:
- Switching to an automated system to improve accuracy by reducing the potential for human error if you are doing inventory manually.
- Recouping costs by writing off any items you cannot sell due to breakage or other damage.
- Staying on top of your current inventory to quickly identify when something is amiss– including the unpleasant possibility of employee theft.
Outdated inventory management systems
Are you are still using spreadsheets for tracking inventory? If you are, consider updating to professional accounting software. You will improve efficiencies and reduce errors, especially when responsibility for inventory tracking is shared among employees.
The right accounting software will make your inventory process more efficient because it is already set up to handle the task—freeing your time for other necessary business activities. Accurate inventory tracking ensures you always have enough stock on hand, so you do not lose sales or customers. Invest in a system that will protect your business from costly errors that reduce profitability and could potentially put you out of business.
At MicroAccounting, we are here to help you do business better. If you’d like to explore products or just ask us some questions, give us a call.
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This information appears courtesy of sage.com.