Mastering your year-end stocktake: Tips for product businesses

Running a product business means keeping track of your inventory regularly. Stocktakes help you know exactly what you have on hand, and they’re especially important at the end of the year. This process can be confusing, but with some planning, you can make it efficient and accurate. Here’s a breakdown of how to get your year-end stocktake right.

Why stocktaking is important

First, let’s talk about why you should care. For a product business, inventory is your business and understanding your inventory is the key to success. Inventory = Cash. The better you manage your stock, the healthier your business will be. Regular counting helps you catch errors, keeps everything organized and avoids running out of products.

Cycle counting: What is it and how to do it

Instead of doing a huge count only once a year, consider doing cycle counts throughout the year. This means counting certain items more often to keep your inventory accurate.

Here’s how to prioritize your counts:

• High-Value Items: Count these often since they impact your finances the most.
• Items with High Sales Rates: Fast-selling items need regular checks.
• Bottleneck Products: These are items that can slow down your entire operation if they run out.
• High Theft Risk Items: Products that are easy to steal should be counted frequently.

Frequency of Counts:

• Daily: Individual, high-risk products.
• Weekly: Items with high value or bottlenecks.
• Bi-weekly: Larger batches using a mix of methods

Getting ready for year-end stocktake

Preparation is key. Here’s how to set yourself up for success:

1. Organize Your Space: Clear pathways and separate areas for receiving, storing, packing, and shipping. A tidy workspace makes counting faster and easier.
2. Standard Operating Procedures (SOPs): Write down your steps for counting stock. These should be detailed and easy to follow, so anyone on your team can help.
3. Use Technology: Invest in barcode systems and spend time learning how to use it efficiently. Test it with your team so everyone is comfortable with the process.
4. Culture of Excellence: Teach your team that inventory is money. Everyone needs to be on board to make sure things run smoothly. Incentivize teams around this. For example, you could create an incentive where, if the stocktake variance is below 2% of the total stock amount, the team earns a reward—this could be a team lunch, a small bonus, or another perk.
5. Plan for Auditors: If your business is audited, let the auditors know when you’ll be doing your stocktake. 

Checklist before year-end stocktake

Make sure your systems are clean and updated. Here’s what to check:

1. Purchase Orders: All products should be received, invoiced, and their costs updated in the system.
2. Inventory Module: Clear up any pending stock adjustments and ensure all stock transfers are recorded with accurate dates.
3. Production Module: If you manufacture products, make sure all processes are logged correctly.
4. Integrations: If you sell online or use other systems like e-commerce or B2B platforms, fix any errors and sync everything.
5. Sales Orders: Fulfill backorders and clear pending ones if possible.

Communication is key

Inform your customers, suppliers, and your broader team that you’ll be doing a stocktake. Let everyone know that things might slow down on that day. If you work with outside partners like third-party logistics (3PL) or warehouses, they should also be prepared.

The day before stocktake

This day is all about preparation. Here’s what to do:

• Plan Team Assignments: Decide who will count what and make sure they understand the methods.
• Test Equipment: Make sure printers and scanners are working, and set up a master spreadsheet for recording counts.
• Restrict Access: Block off areas where stock should not be moved, like receiving and shipping zones.
• Hold a Team Meeting: Go over the plan and practice the process if necessary.

The day of the stocktake

On stocktake day, be ready to pause normal operations. Follow these steps:

1. Stop Stock Movement: No stock should be moved or processed during the count.
2. Divide and Conquer: Split your team into groups and assign them to count by product type, location, or brand.
3. Track Variances: If the actual count doesn’t match the system count, recount and check for mistakes. The goal is to solve these differences immediately.
4. Log Responsibility: When items are counted, team members should sign off to confirm accuracy.
5. Manager Approval: Once everything is counted, the management team should review and approve the final numbers.

Wrapping up the count

Once the physical counts are done, upload the data to your system. The goal is to complete everything on the same day to keep your records accurate.

Final thoughts

Stocktaking may seem daunting, but with proper planning and processes, it can be smooth and accurate. Remember, inventory is cash. And Cash is King.

Ready to unlock cash through stock management and boost your business? At Fiskal, we specialize in making inventory management easy and accurate for product-based businesses. Our expert team can help you use modern software tools like Cin7 to simplify your operations and make smarter financial decisions. Contact Fiskal today to learn more!