Effective inventory management is crucial to a company’s growth and survival. Not only does it save you money, but it also improves your cash flow in different ways. Thus, it’s important to have an inventory that can aid in the organization of company assets and resources.
Manage your inventory with ease by referring to the templates and guidelines presented in this article.
The basic elements included in an inventory are as follows:
1. Date: The date as to when the items in your inventory were accounted for must be stated correctly in your inventory sheet. This may be used as a reference to settle possible inconsistencies in your business reports later on. This can also be useful for drawing comparisons between the balance of the beginning inventory and the balance of the ending inventory.
2. List Headers: Most inventory lists are enclosed in a table or spreadsheet for quick and easy management. In such cases, using an appropriate header for each column on your inventory must be observed. This typically consists of the item number, name, cost, quantity, and net value. The description of each item on your list would depend on the required data of the business. It’s best to keep your headers as specific as possible to ensure clarity.
3. Assets: Inventory assets refer to the actual items listed in your inventory, which solely depends on the nature of the business you are running. This may fall under the category of manufacturing, merchandising, or service businesses. So if your company specializes in the production of goods to be distributed by wholesalers and sold by retailers, your inventory will likely include raw materials, WIP, and finished goods.
4. Signature: Only a few people in your workforce will have the authority to access your inventory. This is a crucial job that must be taken seriously by those assigned. This is why it’s important to note down the name and/or signature of the person responsible for taking inventory at that particular period. This shall hold the individual accountable for any discrepancies or errors found in the record.
An inventory helps your business keep track of the items that you use or sell. This will make you aware of what you already have, what you need, and how you can make the most out of the resources and assets available. But because doing inventory can be challenging to most individuals, it’s important to come up with an inventory that will smoothen your work flow. Listed below is a step-by-step guide to help you create one:
1. Identify your needs: For effective inventory management, you need to consider what it is that your business needs. Small businesses are likely to carry less items on their inventory compared to large corporations. In such case, the latter would need a more specific and detailed inventory to track and control what goes in and out of their warehouse.
2. Download a template: Look for a template that you can use as a base for your inventory. You can browse through a collection of templates to find a format that best suits your purpose. What’s convenient about a template is how they are already designed to meet standard industry requirements so you won’t have to worry about building your inventory sheet from scratch. You may also see accounting inventory examples.
3. Develop an outline of the document: It’s a good idea to begin with a checklist of items to be included in the document. This includes general information about your goods including the name of the item, its product number or code, cost, stock quantity, and net value. You can include more details that are necessary to how your inventory will be used.
4. Input your entries: Now that you have an outline for your inventory, it’s time to input all the information to the document. Make sure that your paper inventory matches the entries and flow of your electronic record. Having an inventory database along with a printed document will make it easy for you to assess whether your records are accurate. Remember to secure a backup copy of each file as well. You may also see inventory list examples.
5. Keep it updated: Your inventory changes each time you purchase, sell, or use an item. Thus, you need to keep a close eye on the goods and other materials in your inventory to make sure it stays up to date.
Keeping track of your inventory offers many economical benefits to your company. Not only does it provide valuable information about your in-store stocks and available supplies, but it also helps ensure that your business is capable of meeting the demands of your consumer market. With that said, here are five tips to help you run your inventory more smoothly:
There are various types of inventories that business owners and managers need to be familiar with to better manage, plan, and budget the assets and resources of a company. This will also help you supply to the demands of consumers in the marketplace. Each of which serves a vital purpose to the success of a business’s operation.
1. Raw Materials: The raw materials of your inventory refer to the resources used to produce goods for your business. To operate a lemonade business, for instance, you need lemon, water, and sugar as your main ingredients. Without such, you won’t be able to satisfy your thirsty customers. Without an inventory system to monitor the supply of your raw materials, it would be impossible to forecast what you’ll be able to produce over the next quarter or so.
2. Work-in-Progress: A WIP refers to the materials, components, assemblies, and subassemblies that are being processed in a system. These partially finished goods are necessary for the completion and eventual sale of these products.
3. Finished Goods: As the name suggests, this includes any products that have already been completed and are ready to be marketed and sold. If your food stall makes pre-packaged, all-organic treats, for instance, a pack of dried fruits would be a part of your finished goods inventory. You may also see landlord inventory examples.
4. MRO Goods: These are the maintenance, repair, and operating supplies needed to maintain the tasks involved in the processing of goods. Although they are not directly a part of the finished product, they still play a major role in its production.
5. Services: This involves the monitoring and management of all the other inventory types in the production process. One example would be a scheduling system to help you control and monitor the work schedules of your employees with ease. This will allow you to simplify your daily operations for a successful overall performance.
6. Transportation: Businesses that need to transport materials or goods from one location to another must have a transit inventory to stay on track. One of the reasons why some businesses struggle to meet the demands of their customers is because of the lack of supply. Mismanagement in transit vehicles carrying these goods might have lead to this problem, which is bad business for both parties involved.
An inventory is an accounting term that refers to goods that are in the process of being made ready for sale. This includes raw materials, items that are a work in progress, and finished goods. This is the largest current asset that a company is known to have. But to make sure that a company’s accounting records are updated and accurate, employees are tasked to take a manual inventory count at the end of a given period, which can be daily, quarterly, or annually.
Although the terms inventory and stock have often been used interchangeably, each has a distinctive meaning that separates one from the other. This subtle difference can be crucial to your business from an accounting standpoint. For one, an inventory is comprised of anything that goes into the production of the items sold by your business. This includes the sale products as well as the goods and materials used to create them. Stocks, on the other hand, refer to the finished product sold by the business as part of its daily operation. This affects the amount of revenue the business is capable of generating within a particular time period. You may also see retail inventory examples.
Inventory control is an accounting system essential for a business to safeguard assets. Not only will this help maintain the right balance of stock in a warehouse, but this can also help you assess current assets, balance accounts, and provide financial reporting for the company’s day-to-day operations. Having proper control over your inventory enables you to cater to the needs of your customers in the most efficient way possible.
Given the crucial role that inventories play in the success of your operations, details in your inventory must be complete and free of any formatting errors that may affect the effectiveness of the record’s intent. With the help of the guidelines and templates provided in this article, you should be able to manage your inventory more efficiently.