Stock taking is basically an exercise where all the goods or products that belong to a business are counted as seen physically, and the resulting quantities are compared against the existing records which are usually computerized.
If you’re a business owner who deals in physical products, then you must be familiar with the term “Stock taking” or “Stock check”. In fact, if you’re not familiar with it, chances are, you’re losing money.
These physical goods are called inventory. For you to have an efficient management of your inventory, you must embrace stock taking or stock check. Unfortunately, as important as it is, so many businesses fail at inventory tracking and management.
Stock taking is generally a pain in the neck for business owners. There is this morbid fear for the exercise and yet, every other day, CEOs and MDs of small and medium-sized enterprises cry for the sake of unaccounted inventory.
In case you are still dragging your feet on this for your business, here are the benefits of stock-taking.
Advantages of Stock Taking.
1. Stock check allows us identify discrepancies between physical stock and financial records of the business.
2. With regular stocktaking, a business can track its inventory to gain information about the point where issues arose with balancing stock, to more easily trace the causes.
3. Stock check enables a business fish out theft of money or inventory.
4. It helps to realize early enough, when there is damage to a product so that it is handled before it leads to a substantial loss.
5. Very importantly, stock taking prevents losses due to expiry.
6. Finally, stock taking helps a business track the rate of consumption of their products and hence stock optimally. Simply put, it avoids overstocking and understocking by understanding fast-selling and slow-moving items.
Drawbacks of Stock Check.
Despite the apparent benefits of stock check, there are still a few reasons why businesses fall short of the exercise.
1. A major reason is the cost involved which is usually high. However, the benefits outweigh the cost of investing in stock check.
2. Another reason is that it is a tedious process and generally time-consuming. A stock taking exercise can take days to finish, correct errors and synchronize stock and financial records.
3. Also, the nature and location of the inventory may pose a hindrance. For instance, inventory that is stored in more than one premises can toughen the exercise.
With all stated above, one can see that for a business to successfully realize maximum profit, it has to patch up loopholes from which it loses money. And a fundamental means of achieving that is through efficient stock taking.
An efficient stock check empowers your business to better understand its finances, limit wastages due to theft, expiry, damage and overstocking, hence maximizing profits.
A business needs to map out the frequency of its stocktaking exercise, prepare a handy budget for stocktaking and consider it a fundamental investment that is part of its expenses.
So are you a business owner or do you work for one? What are your experiences with stock taking and tracking your inventory?
Do you want to discuss stocktaking for your business? Contact me.