Stocktaking – How Often Should You Do It?
Dec 08 2017
How often you carry out a stock take depends on how much control over your business you would like. For example, if a particular aspect of your business is under-performing due to shrinkage of stock, you would probably like to know about it on a weekly, or even daily, basis. If you are not too concerned about stock shrinkage, yearly or quarterly may be sufficient.
If you run a business in the hospitality industry, monthly stock takes are common. Food and beverage stock can be controlled and monitored if you run a bar, hotel or restaurant. If there are regular losses in stock then action can be taken straight away.
Retail businesses in the Fast Moving Consumer Goods sector (FMCG, also known as C-Store) undertake their stocktaking between one and four times per year. The business owners who have a once per year stocktake have less control over their margin and if their end of year margin is not what is expected, then the entire year has passed before they make a change to rectify a problem.
The business owners who want more control over margins undertake their stocktakes every quarter. This way, stocktake results are used in conjunction with management accounts and if a problem is occurring, you know it and can then make the necessary changes without delay.
For other retail businesses including clothing, footwear, gift and hardware businesses, it really depends on the type of stock that is on-hand and if it is prone to shrinkage. If live stock is in operation, then there should be more stock control procedures in place. Cycle counts (mini stocktakes of a particular department or product range) assist with keeping stock levels up to date and allowing the retailer to analyse variances. These variances are then investigated and explanations sought. This is good practice for efficiently managing your stock. Note: cycle counts are only effective if a follow-up variance analysis is undertaken.