7 Key Steps For End Of Financial Year Stocktake
Are you ready to perform a stocktake at the end of this financial year? If your business produces or purchases stock you’ll likely need to do at least one stocktake at the end of the financial year for tax purposes. A well-planned stocktake should result in minimal disruption and deliver accurate data for the maintenance of your inventory records. So what are the key steps for a successful end of financial year stocktake?
When performing your stocktake, you must count each item of trading stock, making a “reasonable estimate” of the value of each item at financial year’s beginning and close, using cost price, market value, or replacement value.
You also need to update your stock and financial records post-stocktake, describing each item of stock, its value, who valued the stock, and the basis of the valuation.
7 key steps for a successful stocktake
Pick a time outside of normal operating hours
You should do your stocktake as close to the end of the financial year as practical.
Consider a non-business day such as a Sunday, or do your stocktake before opening or after closing. If this is not possible then pick a quiet time where business is slower.
While the stocktake is underway, try not to add any new stock item into the inventory or record any sales transactions. Where manually stocktaking, also hold off on making any updates in your accounting system until the stock count is complete.
Identify stock to be counted and where it is located
Ensure your warehouses, stockrooms and stores are tidy and inventory items are clearly laid out. Separate out stock received, but not yet recorded in the books and also any stock that’s been invoiced to a customer, but is not yet shipped. This should not be included. However, make sure you include stock held at different locations.
Attach labels to shelves to identify different stock by category and clearly label inventory not to be counted.
Use a system
If stock is in multiple locations, determine which location will be counted first. If you have the resources, have staff members counting in each location, preferably two – one to count and one to record the count. For manual counts, it may be wise to have another person recount the stock. Where there are discrepancies between the two numbers, then get the stock counted a third time.
Stock items that have been counted should be clearly identified. Any stock item that is damaged should be put in a separate location for repair or disposal.
Provide guidance to your stock counters
Give your stock counters clear guidance on the way you want them to count. Where to start, what direction to move through your lay-out and even whether you need them to count from top or bottom of the shelves.
Make sure that they have the right information and equipment. Stock sheets (lists) should be organised by location and quantity. Have all your pens, clipboards and barcode scanners ready.
Also consider bringing in extra staff for stocktaking. It’s a lot more efficient and means less pain and stress for everyone.
You must count every item of your inventory. Do not assume current inventory data is correct or try to estimate – only a full stocktake will tell you what is on hand. This means opening boxes to ensure they are as labelled. Make sure staff check the condition of the inventory as they are counted.
Also be sure to check stockrooms and other storage areas for items that may have been forgotten about in the hustle-and-bustle of normal business hours.
Don’t forget manufacturers’ returns, items reserved for customers in hold cupboards, and products which have been sold on lay-by. These all need to be checked in your count.
Update your records
Once the stocktake has been finalised, the physical count needs to be checked against accounting records and discrepancies rechecked.
As stock sheets are completed, the sheet is handed to the person doing the data entry into your accounting solution. Make sure the sheets that have been entered are clearly marked so that they don’t get entered again.
- Use technology to streamline the process
Increasingly businesses are using barcode scanners to help them with their stocktake counts. Scanned data can be delivered wirelessly straight into their ERP software, allowing for real-time updates of the quantity of stock in hand. In addition, items that are assigned to a particular location in the store or warehouse can be searched for using the system or an app loaded onto a mobile device.
This process can significantly increase the speed of the counting process allowing for more regular stocktakes. The process is also more accurate and information is more up-to-date.
A stocktake doesn’t need to disrupt your business and will give you the information you need to make better decisions. Acacia Consulting Services can assist in the streamlining of your stocktaking process, and have recently launched Stocktake Web App for MYOB Exo that allows stocktaking to be performed using a mobile device and optional barcode scanner. For more information please contact us and we will be happy to discuss.