I remember as a little girl counting my dolls and teddy bears and making sure they were all accounted for. It may have been the start to my fascination with numbers and inventory control. As a business owner, properly managing and accounting for inventory is a must if you want to maximize profits and generate high return.
Brigade Bookkeeping helps companies maximize profits by keeping their books in order. That’s why we care about inventory or when to order and how many orders to place.
If you hold too much inventory, you incur storage and insurance costs. If your inventory is too low, you could run out of stock. This not only results in more communication and transportation costs for additional orders, but it could result in losing sales and customers if you’re out of product. Here are some ways to help with your operating and accounting procedures to manage your inventory:
- MAINTAIN BALANCE – The key to inventory control is keeping just the right amount of inventory to satisfy your customers while maximizing profit. Make sure your company places orders frequently in small lot sizes rather than large orders.
- PROPER DATA ENTRY – Make sure that all customer order invoices for orders placed are up to date. The same should happen for all vendor bills when inventory is received. Having these numbers inputted daily will keep your inventory current.
- ELECTRONIC INVENTORY TRACKING – You can take your data entry a step further by using an electronic tracking system, such as bar code scanners. Bar code scanning allows you to compare inventory to the actual count. For example, you can choose a couple of your best selling items a day and compare the inventory record to the actual account.
- ACCOUNTING SOFTWARE – If your company sells a product, make sure your accountant or bookkeeper is using accounting software that offers an inventory module. There are many programs out there, including: QuickBooks Pro, QuickBooks Premier, Peachtree by Sage Pro Accounting and MYOB AccountEdge. You can set these programs to alert you when stock levels are low.
- CUSTOMIZE REPORTS – Your accountant should be able to create custom reports of sales within your accounting software to pinpoint which items are hot sellers and which are not. These reports can offer important projections, such as identifying which items are moving quickly or slowly, so you can decide to increase re-orders or decrease items that are not as popular with your customers.
Inventory control is a key component of business profits for companies selling a product. Deciding when to re-order inventory is important to good inventory accounting. If the inventory re-order is low it could interfere with production. If the re-order is too high, you could have a bottleneck in production and a lag in getting those orders to customers on time.
Make sure to talk to your accountant or bookkeeper about all of these issues. If you get a strange look or inventory isn’t being properly managed, call me or email me. My team and I at Brigade Bookkeeping are here to help you through the inventory and bookkeeping process.
Have a great week everyone!
