How do I carry out an Inventory Check or Stock Take?

All the steps you need to take when carrying out an Inventory Check or Rolling Stock Take.

Written By Gerry Mckeown ()

Updated at May 26th, 2018

1.     Introduction:

As mentioned in the companion article “How do I use the Inventory/Stock Management System?” the system operates in conjunction with the Purchase Order Processing System and the Sales Order Processing systems.  Alternatively, you can operate this system without either or both of the Order systems and use it solely in conjunction with the Purchase Ledger and/or the Sales Ledger.  In this latter case the Goods are received into Stock when a Purchase Item Invoice is processed and out of Stock when a Sales Item Invoice is processed - whereas, in the former, the Inventory movements take place at Delivery In or Delivery Out stage.

In addition it’s important to note that the Inventory Management System operates in Base Currency only - mainly because Inventory is valued in based currency regardless of the Currency of the Supplier (Vendor) or Customer.  You can still process Orders and Item Invoices from foreign currency Suppliers (Vendors) and sell to foreign currency Customers.  Indeed you can purchase the same Product in several different Currencies from different Suppliers (Vendors) and process Sales in multiple Currencies as well.  Prices and Costs in the inventory system are maintained in Base Currency.  When a Sales Order or Invoice is processed the Base Currency Price is converted to the Currency of the Customer and presented as the default Price.  Similarly, when a Purchase Order or Invoice is processed, the Last Cost is presented in the Currency of the Supplier (Vendor) as the default.

This program in the Inventory Management System facilitates periodic Inventory Checks (“Stock Takes”) and consequent Inventory Level Amendments.  Inventory Checks can be carried out at any time, since this system is always up to date by way of its entirely Transaction orientation focus - with little or no necessity for cumulative roll-ups or summarisations. 

N.B.  However, it’s very important to be aware that if Inventory has been physically moved into or shipped out of Stock without the requisite Receipt or Issue system transactions having been fully processed, then clearly you will encounter miss-matches between what the system shows as being on-hand versus the physical count.

On the Purchasing front, Inventory is added to the On Hand Quantity when goods are Received by way of “Received Orders” or, in the case of directly purchased Items which are not the subject of Purchase Orders, when the “Purchase Invoice” is processed.  Similarly, in Sales, Inventory is deducted from the On Hand Quantity when “Order Deliveries” are processed or, for Items which do not go through the Sales Order Processing system, when the “Customer Invoice” is raised. Therefore, before carrying out an Inventory Check, you should ensure that such transactions are completed or, at the very least fully understood, so that proper account of them can be taken when reviewing the Stock Count.

2.     Preparing the Inventory Checklist(s):

Go To > Inventory > Items > Stock Take. Because the system is entirely transaction based, the Inventory Count facilitates Stock checking on a rolling basis:  You can carry out an Inventory Check by individual Stock Locations and/or Stock Sub-Locations by specifying these Filters in the Export Stock List Tab.  But, just as it is important to ensure that all inward and outward bound Inventory movements related system transactions are cleared, so too is it important to ensure that physical movements from location to location have been fully recorded before undertaking an Inventory Check.  If there are any such location movements outstanding, you can make these Location Transfers in the “Stock Adjustments” program.

Clicking on “New Stock Take” will bring up the following window;

You can also carry out an Inventory Count for particular Groups of Items and/or Sub-Groups - or indeed any combination of Location and Product Groups by using the Drop Down Filters shown above.

Having selected the Filters you require (if any) you must now enter the Name of the Stock Checker.  You can of course use several Stock Checkers, and allocate them specific Locations and/or Item Groups through subsequent repeated use of this Export Stock List Tab.  When you are ready to create a Stock Check List, click on the “Export” button.

And you should “Save” it (them) in a convenient folder on your Desktop.

Each Export consists of a single Excel Workbook Sheet containing detailed information regarding the selected Products to be counted and upon which you can record any variances between the Counted Stock and the System held quantity, and any revisions you might want to make to the Average Cost;

You can also record any Notes here which will be subsequently saved in the system (for example Damages, Perished Stock, etc.).  Note that the “Counted Quantity” and the “New Average Cost” are already filled in (for Import purposes) so, if you have modifications, you should overwrite these values on the spreadsheet (which will be subsequently re-imported).

If you wish, you can Hide any unwanted Columns in order to prepare a more Printer friendly version of this Worksheet which you can then Print and give to each Stock Checker for manual counting.  For example, something like this;

N.B.  However, make sure you do not Delete any Columns (or otherwise change any data in any Column other that in the Columns “Counted Quantity”, “New Average Cost” or “Notes”) as otherwise the subsequent Import will not function.  Do not add new Rows to the spreadsheet.  If you “discover” Inventory or if some Inventory has been moved to another location, you must only use the Stock Adjustments Program to record these issues.

3.     Importing the Stock Count(s):

When the printed Stock Count Sheets have been returned any variances to Quantity, Average Cost and Notes need to be recorded on the previously “Saved” Spreadsheet - which should then be uploaded back into the system using the Import Stock Count Tab in the Stock Count program.

Enter a unique Reference Number for the Stock Count and alter the Date if necessary.  Then Browse to the location on your Desktop and select the file to be imported - followed by “Upload”.  You can repeat this action for as many Stock Count sheets as you wish.

If there are errors in the File Upload they will be displayed like this;

Click on the Red Symbol shown to access the detail of the failures which should then be corrected on the Saved Workbook Sheet.  Delete the offending entry from the list above and then re-import the corrected Excel Workbook.

Correct processing will be displayed as follows;

If there are Outstanding Deliveries and Invoices, these need to be dealt with now before “Posting” the imported file into the System proper.   Click on the “Outstanding Deliveries and Invoices” field to download these two reports (which are in the form of Sheets in an Excel Workbook) and print them.

Remember, if you are using Sales Order Processing and/or Purchase Order Processing, Inventory movements take place on foot of Delivery processing. Otherwise the required Inventory adjustments take place during Invoice processing.

Consequently, the Outstanding Order Delivery Item list is just a warning list to remind you that if these Items are subsequently delivered with a Date prior to the Stock Count date then the resulting Inventory Movements will be overwritten by the Stock Count Import Posting (see 4. below).  Best practice would say that you should amend the expected Delivery Dates on these Items.

As regards the Invoice Items Not Posted, again if these are now processed and the transaction date is prior to the Stock Count Date then these Inventory movements will be overwritten by the subsequent Stock Count Import Posting.  You should change the Transaction Date on these Items to be after the Stock Count Date or else adjust the relevant Stock Items afterwards using the Stock Adjustments program. Alternatively, you could process some or all of these Items, delete the relevant Imported Stock Count Sheets (using the “Delete” function under “Action” above), make the necessary alterations to the “Saved” Stock Count Worksheets and then re-import them.

4.     Stock Count Import Posting:

The final action in the Stock Count process is to “Post” the imported Stock Count Sheets in order to effect any variances you have recorded on these Work Sheets.

However, before doing so, you might want to examine the Stock Count Summary Report;

This is a List (in Excel Workbook Format) of the items being adjusted and the consequent new Valuation of those Items – which you can also Save on your Desktop.

On completing the “Post” you will be presented with this Window;

5.     Stock Count History:

At any time, you can call up the Stock Count History and select any previous Stock Count from the Drop Down list.  This will then display all the Imported Stock Count Sheets associated with that Stock Count which you can examine, or print or save.  Be aware, however, if you have processed some items from the “Outstanding Deliveries & Items” Reports and manually adjusted the Stock Levels afterwards using the Stock Adjustments Programs, then these items will not be shown on these reports.  Best to adjust the Transaction Dates (which, in any event will default to today’s date) and process these outstanding Orders and Invoices afterwards.