Stocktakes. Are they really as important as those blimey accountants (us included) say they are?
I know, stocktakes are a lot of effort. Not only do you need to count everything, but you also need to cost it as well.
This week, we investigate:
- Are they really as important as it’s made out to be, and
- How to streamline your stocktake this EOFY
We’ve even made a little template for you to use (if you don’t have a system to help you).
What is a stocktake and why is it important?
Stocktakes are a count of all inventory or consumables on hand. This includes stock in your warehouse and your trade vehicles.
They are important for several reasons:
a) Stock on hand balance at year end can have a big effect your profit for the year (we take stock on hand off your purchases balance for the year)
b) Stock on hand shows banks and other key stakeholders how much trading stock you have available for the future
c) Stock on hand balances reflect the true nature of your business
How can you streamline the process, and take the pain out of it?
Step 1: Get organised
Many people put off stock purchases towards the last few weeks of June – this helps reduce the volume of stock on hand to count.
In the leadup to end of financial year (EOFY) you’ll want to start organising your stock so that you’re counting all the same types of fixtures, fittings and items so that you can do it in sequential order.
This makes it easier for you to count in sequential order, and also, to eliminate the possibility of missing stock volumes.
Once you’ve organised your stock, making stock count lists will be easier (if you are using a manual system).
You can download our our template below.
Step 2: Batch your counting
For example, in a plumbing business, you’ll want to count all the elbows in the various measurement sizes, and the t-connectors in the various measurement sizes in one go. This helps to ensure you don’t miss anything. Make sure your stock is in those areas.
Step 3: Leave as much unpacked as possible
If you do buy stock before end of financial year, leave as much as possible in the full boxes – that way you know how many items are in each box, and makes individual counting less cumbersome.
Step 4: Count when you close the doors
This year’s EOFY is a FriYAY.
If you don’t have a lot of stock, this step is the quickest / simplest method of stock take.
Either come in on Saturday 1st (if you’re closed) and count everything on hand, or do a quick count at the end of Friday after you’ve closed the door to customers.
This will mean the volume of stock you had at the end of the day was counted and you won’t have to amend for anything sold during the day when you did the count.
Step 5: Amend stock sold during stocktake
If you don’t have the luxury of a small stock volume or being closed on the 1st July this year, then you’ll have to perform your stock take whilst you are also operating.
This adds complexity, because you’ll have to adjust your numbers of stock counted for items sold during the stock take.
This is particularly messy if you don’t have a system to help you.
Step 6: Calculate the cost of stock on hand
The value of stock on hand is equal to the total sum of all items volume on hand x stock cost. This is usually calculated on a per item basis.
If you are using a system to track your stock, it is important to made any adjustments (eg damaged stock / lost stock) in the system so that your stock on hand value is correct.
You’ll also need to make note of any adjustments required in Step 5 above.
So that’s it! Stock takes done again for another year!
Remember, if you have a small