If you operate a business such as a shop or warehouse that sells physical products, knowing how to complete an accurate stock take is essential to the smooth running of your business.
A stock take is the act of counting and recording what you have in stock and then, using previous records, setting the figure alongside what you should have in stock. The process provides insight into what’s selling well (and what isn’t), prevents over or underordering, helps you manage perishable goods, and can potentially expose a theft issue.
This article covers the 7 steps to completing a stock take. Clipboards and pens at the ready…
1. Choose manual or software
When managing your stock, you typically have a choice between two options: do the job in-house by storing your stock information on a spreadsheet (or, if you’re feeling particularly old-school, paper) or use inventory software (Xero and Sage both provide these services).
Which you choose will generally depend on your business size and budget. While software undoubtedly makes managing your stock easier, ultimately, you’ll still need to take the time to stand there and count your stock (or at least scan the items if you count via barcode).
Nonetheless, the useful features that software solutions provide, such as invoice integration, barcoding, and forecasting, make them a smart choice if your budget allows. And, of course, they save paper.
2. Ascertain how often you need to do a stock take
Completing an accurate stock take is time-consuming (and unlikely to be anyone’s idea of fun). Frustratingly, the busier you are, the more time you’ll need to spend on the shop floor, and the more frequently you’ll need to do your stock take.
If you sell perishable goods, you should complete a stock take at least once a week (daily might be appropriate). Otherwise, the frequency will depend on how much you sell, with your general options being weekly, monthly or even yearly.
Remember, you can complete your stock take in parts, with each session dedicated to a different product. For example, if you operate a newsagent, you can complete a daily stock take on food items and magazines (which will eventually be outdated) and a monthly stock take on essential medicines and children’s toys.
3. Pick the right time of day
The person or group completing the stock take should be able to do the task without interruption. Constantly stepping away from the job to deal with a customer or an issue will result in miscounts. You must also ensure that an adequate amount of time is allotted to the task. Again, a rushed effort will lead to mistakes.
With this in mind, if you’re operating the business alone, complete the stock take out of operating hours. If this isn’t an option, choose the quietest times of the day and break the job into small, manageable sections.
If you have a team, pick the right people for the job. If people power is limited and you can’t afford to have individuals step away from their normal roles, consider offering overtime dedicated to the task.
4. Get everything in order before you start
If you have the space, organise the area before starting your stock take. If you accept online orders, ensure that products sold but not shipped are removed from the stock-taking area.
You (or your team) should be able to complete a count without moving from one shelf or pallet to the next, skipping past items that should not be included; each product should be grouped together. This will make the process much easier and quicker.
De-clutter the space as much as possible, setting aside items that do not need to be counted. If anything that you are moving is large, always be mindful of health and safety procedures and get help if necessary (from a fellow team member, not a member of the public).
5. Prepare your stock take sheet
The stock take sheet is the physical document on which you record the number of items you have in stock. You can then cross-reference this information with what should be in stock. If you’re using inventory software, you can quickly and easily print off stock take sheets that pre-populate the information from your previous count in the relevant fields.
The exact information included on a stock take sheet can vary, but it typically includes the following item information:
- Code
- Description
- Value
- Number in stock
- Previous number in stock
Before you start your count, get your stock take sheet in order. You can then complete the form as you work through the task.
6. The count
The key to getting the job done correctly is being able to focus. If possible, don’t engage in conversations that distract you from the task. If it helps you concentrate, listen to some music, and if you have any, use noise-cancelling headphones.
To prevent mistakes, ensure that everyone participating in the stock count uses the same methodology and marks items as counted, as and when appropriate. To assist with this, come prepared with post-it notes. These will be handy for marking a product line as done and will also prove helpful if you’re disturbed halfway through the job, as you can note down your current figure and stick it on the last item counted.
Ensure that you and everyone else involved take regular breaks. Whilst it might not be the most complicated of jobs, it can be draining, so keeping well-fed and hydrated is always a good idea and will help you steer clear of mistakes.
If the amount of stock you must count is vast, we recommend using a barcode scanner to simplify the task. If you use one, this information can be fed back to your inventory software provider, making the overall job that much easier.
7. Record and act accordingly
As soon as the count is complete, record the information on your stock take sheet and, if necessary, on your inventory software platform. Once this is complete, it’s time to analyse the information.
Do you have sufficient levels of stock? Perhaps you have too much stock. Is a particular product selling quicker than you anticipated? You’ll need to place a larger order next time. Do the figures from your previous stock take tally with your most recent one? If not, you might have an issue with the supplier or a staff member.
If you’re diligent about your analysis, you’ll be able to streamline your ordering process, reduce waste, and save your business a considerable amount of money.
So, there you have it
That was our 7 steps to doing a stock take. We hope you found this article useful. Please comment if you have any questions, and we’ll get back to you as soon as possible. Thanks for reading.
Please note that the information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While our aim is that the content is accurate and up to date, it should not be relied upon as a substitute for tailored advice from qualified professionals. We strongly recommend that you seek independent legal and tax advice specific to your circumstances before acting on any information contained in this article. We accept no responsibility or liability for any loss or damage that may result from your reliance on the information provided in this article. Use of the information contained in this article is entirely at your own risk.