Inventory Management Software Best Practices
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Digital business accounting software like WorkingPoint has some really awesome features and one of my favorites is inventory management. I still remember being a child, helping my mom out in her beauty salon, painstakingly counting the bottles and then putting hash marks in a paper notebook. Now with hosted accounting software, you get a sleek, easy to use inventory management software that far exceeds the usefulness and possibilities of that paper notebook.
How can you make the most of this technology to help you run your business better?
Inventory Management Best Practices
1) Take a Periodic Physical Inventory and Make Adjustments
The sad reality of running a business is that no matter how diligent you are at some point your actual inventory quantities can get out of sync with the quantities stored in your inventory management system. Some of the most common culprits are spoilage, breakage, theft, or data entry errors. The best practice is to schedule regular <em>physical</em> inventories of your products so that you have a failsafe built into your inventory management system. After the physical count, make sure to update your system or software so the quantities stored there match your actual quantities. How often should you schedule checks? The size of your business should determine how often you check. How closely will overages and shortages effect your bottom line? Choose a monthly schedule, others quarterly or even yearly schedule based on your individual business needs and resources.
2) Write-off Breakage or Spoilage as it Happens
If you experience:
– frequent breakage or damage of your products
– your product has a short life span
If your business experiences these inventory changes, it’s incredibly important to develop a system to easily keep track of these trends. WorkingPoint suggests you keep a clipboard in an easily-accessible location so you can write down important information about your unsellable goods. Develop a simple form with the product name, how many units you lost, why you can’t sell them and the date you pitched them so you can quickly fill in the data.
Before you take your scheduled physical inventory or close your books for a period, make sure to adjust the quantities in your inventory management software to get the unsellable products off your books. This will keep your inventory quantities current, your inventory valuation accurate, and reduce your tax liability.
3) Review Your Available Quantities Before Placing Orders
WorkingPoint Inventory Management Software lets you filter the items list to include only inventory items, so you can easily create a Stock Status Report. If your inventory management software can’t do this for you, make sure you create a list of all the products you keep in stock along with their current available quantities and review the list online or print it out to see what you need to reorder before you place an order.