Business Tip – Why you need to perform inventory count?

Kabayan,

Kapag ikaw ay may merchandise business like ready-to-wear goods (RTW), bags, shoes, etc. Do you perform inventory count? If not, you should perform now to avoid business losses…Inventory Count

I still remember when I used to count our RTW inventory without understanding the importance of inventory count. I just thought that it was an additional task until I realized that inventory is the raw money of the business.

Here are 7 reasons why you need performed inventory count:

  1. Knowing your actual inventory balance will help you manage your purchases because this will help you forecast the needed inventory for a specified timeline. You will know what inventory type ang mabenta, quantity to order, expected number of days na maibebenta etc…These­­ are important para maintindihan mo ang iyong inventory cycle.
  2. It will help you determine your inventory turnover – Your inventory turnover is important kasi maiintindihan mo kung gaano kabilis maging ­­­ pera ang iyong inventory that will help your business grow faster…
  3. Knowing your inventory balance will help you plan your working capital. In a sense that you can determine the inventory that need to be financed by cash operation (working capital) or credit (mangutang) to support your sales operation.
  4. Prevent obsolete inventory – considering that you can identify the inventory turnover, you can identify which inventories are slow moving and damage. As a result, you might consider of selling these inventories at a Discounted Price as soon as possible than storing these inventories until damage or obsolete. At the end, this will help you save your working capital and save space warehouse.
  5. Lessen possible fraudulent activities by your employees – If you performed inventory count, your employee/s will be aware that you are monitoring your business activities giving perception to them that you are also monitoring their assigned task
  6. Inventory count will help you determine your initial business profit. Simply because you can get information on the cost of your sold inventories
  7. Lastly, performing inventory count is a chance to arrange properly your warehouse or storage according to inventories’ classification, movements, sizes etc… Just like if your inventory is fast moving then it should be easily accessible, small inventories should be separated with larger inventories, same inventories should be in the same place, etc….

Kabayan, you need to spend time performing this business tip because it’s one of the ways to protect your business interest by protecting your inventories – kasi nandiyan ang capital mo at ang magiging profit mo – so PROTECT IT. Performed inventory count periodically, usually monthly, if hindi naman kalakihan ang business – do it daily. For big companies, it interrupts business normal operation and divert employees to performed count but it is must in their business so let’s adopt this best practice into our business.

 

Regards,

The Cristobal

PS. We created an ebook entitled “Bookkeeping Made Easy”. If you have business and you don’t know how if you are doing your bookkeeping correctly, you can grab your copy here. If you planning to set up your business, you should know bookkeeping because bookkeeping is the blood vessel of a business, grab your copy here.

 

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