How to take inventory in 7 steps – a comprehensive guide
Inventory taking is one of the key processes in managing a company’s resources, regulated by the provisions of the Accounting Law. According to Article 26 of this law, companies are required to conduct an inventory of assets and liabilities at least once a year, on the balance sheet date. The purpose of this process is to ensure that accounting records are in line with actual holdings, which is crucial to the integrity of financial statements.
The fourth quarter of the year is a particularly busy time in many companies when it comes to inventory processes. The approaching end of the fiscal year and preparations for the financial close make companies pay special attention to the accuracy of the physical inventory. This is a period when the intensity increases, and careful planning and meticulousness in carrying out the inventory have a direct impact on the accuracy of accounts and reports.
To help guide you through the process, here are 7 steps that will allow you to take inventory without problems!
Formal resolutions and decisions
Before starting the physical part of the inventory, formal preparations should be taken care of.
- Inventory Ordinance: To begin with, issue an ordinance defining exactly the date, place and scope of the inventory.
- Establish an inventory committee: The committee should include employees responsible for coordinating and supervising the process. It is important that those who are materially responsible not participate in the inventory to ensure objectivity.
- Prepare inventory instructions: The instruction should precisely describe the steps and procedures, as well as the responsibilities of individual employees. It is also worth including how to account for differences so that everyone knows how to act if discrepancies are detected.
Preparation of warehouses and resources
Proper preparation of warehouses and resources will allow for a smooth and trouble-free inventory.
- Organize storerooms: Prior to starting the inventory, organize and properly mark goods to enable a quick and accurate inventory.
- Zoning warehouses: Separate zones for counting and mark areas that have already been counted, which will reduce the risk of double counting or omitting some goods.
- Secure warehouse data: Make sure all warehouse data is secure and the ERP system is up to date. This will make it easier to compare inventory results with system data.
Technology and equipment
Using the right technology tools can significantly speed up the inventory process and reduce the risk of errors.
- Barcode scanners: Prepare an adequate number of barcode scanners that are compatible with ERP systems.
- IT equipment testing: Conduct tests on both hardware and software before the inventory to avoid technical problems during the inventory.
Conducting the inventory
The physical inventory process itself is a key stage of the inventory. It’s worth ensuring that it runs smoothly and without disruption.
- Training for employees: Conduct training for committee members and employees that covers inventory procedures and the use of technology, such as scanners.
- Documentation of the physical inventory: Prepare inventory forms such as census sheets and difference reports to document results quickly and accurately.
- Marking inventoried areas: After counting each area, take care to label it to avoid double counting or missed areas.
Audit the census – follow-up activities
After completing the census, analyze the results and account for any differences.
- Verification of census results: Compare the census results with the accounting records, documenting any difference.
- Accounting for differences: Explain all differences and account for them according to the company’s internal procedures.
- Approval of results: The final step is for management to approve the results, thus closing the process.
Contingency plan
Unforeseen situations may arise during the inventory. So it’s worth having a contingency plan.
- Backup technical support team: Ensure technical support is available in case of hardware or system problems.
- Alternative inventory methods: Also secure manual census tools, which can be invaluable in the event of a technology failure.
Our company supports clients at every stage of the inventory process. We offer comprehensive solutions and assistance with formal preparation, employee training, as well as technology support and results control. With our services, you can be sure that the inventory process will be carried out efficiently and professionally, and you will save valuable time and resources. Contact us to learn more about how we can help your company with this important task.
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