*The End of the Year… not the Zombie Apocalypse
With 31st March coming soon, it’s that time of year for businesses that sell stuff to count their stuff.
Seems simple – it’s just adding up right? But for many this can be a chaotic and stressful day that causes minor hair loss. However, like anything, planning and preparation is the best way to make things as easy as possible.
So here’s a timely blog on stocktaking to help you keep your hair on.
Hold up. Do I even need to do a stocktake?
- NO: If your stock value is less than $10,000NZD *cost.
- YES: If your stock value is more than $10,000NZD *cost.
- DEBATABLE: If it’s a dollar either side…come at me. I love a good debate.
Now For Some Quick Tips Before You Get Started:
- Your stock is valued at cost price - not recommended retail.
- “Closing stock” is the $ value of the stock you have counted. This will appear as an ‘asset’ on your Statement of Financial Position.
- “Opening stock” is what you started the current financial year with.
- Accuracy is key to points 2 and 3, as they have a direct effect on your profit; and are the basis on which your tax is calculated.
- Count the ghosts… the invisible stuff. It’s in your system, but not physically in the store. E.g on a truck, courier, or in your car boot…
- Don’t count broken or obsolete stock. The market for broken/useless stuff is empty, write it off.
Pro tip: Don’t conduct a stocktake after a staff party. It doesn’t end well.
Prepare For The Count! (Not Dracula)
For a smooth stock count, planning and preparation are your best friends.
- Block out a date for completing stock take.
- Figure out how many assistants you need, set allocated roles and communicate well ahead of time.
- Create a clear system for the assistants to follow.
On the day:
- Cut off purchases and sales during stocktake so this doesn’t mess with your figures.
- Provide stock sheets either from your stock management system or in a standard format for counting stock.
- Count each item of stock in a systematic manner.
- After counting, enter any adjustments to the physical stock count into your stock management system.
Not Recommended: Playing techtronic or death metal music during counting. Sorry, no ‘Sandstorm’ today.
- Provide the value of stock to your accountant for the end of financial year.
Some Things Don’t Add Up!
It happens. Sometimes there will be discrepancies between the final count vs. the inventory system. Possible causes include:
- Previous stocktakes not being accurate.
- Mistakes made in the input or management of the inventory system itself.
- Items not being sold or labelled correctly, so not recorded correctly when sold.
- Stock arrivals not being verified when entering the building (order vs. delivery discrepancies).
- Worst case scenario is unfortunately theft.
This is quite common, but don’t panic. As always, the team at EBS are available to help you sort through these scenarios from an accounting perspective. Take the lessons and make sure to put a plan in place to mitigate the same scenarios for Stock Count 2024!
Happy counting day!