QuickBooks Point-of-sale users maybe asking you if they should be conducting a physical inventory about now. If they have never been through this process before they maybe looking to you, as their local ProAdvisor to give them some guidance on the process and their options. Thanks to our resident QuickBooks Point-of-sale Guru, Will English, we have an article outlining....
Best Practices for taking a Physical Inventory
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If the three principles of real estate are location, location, location; then the three principles for your physical count process is planning, planning, and more planning. Some of the questions you should ask yourself include:
Who will be helping me count the store? Is the staff experienced in the process? How much supervision will they need?
- Investing your time and effort in this phase will pay off big later in the quality of the count.
How familiar with the inventory are the people taking physical count?
- Unless you are planning to have a service come in, having some familiarity with not only speed up the count but improves the value of the data collected.
How much inventory is there to count?
- Normally, January is not only the slowest time of the year for most of my retailers it is also the moment when inventory is the lowest.
- I won't even mention the tax man and his part in the timing process.
- Please allow enough time to get a good count.
Are you going to count a section at a time? Who is going to count each section?
- Make sure that, if you divide the store or the warehouse, it is clearly defined and understood by all who is responsible for what! Also, make sure all the areas are defined.
- Don't forget the backroom, the bathroom in the warehouse, and the three trucks where they throw stuff!
- Define every area and assign someone to count that area.
Are you counting multiple warehouses, stores, or locations?
- Please allow enough time at each location to get a good count.
- This is not a rule, but definitely a best practice.
How will I keep track of what has already been counted during the process?
- Make sure you notate the sections or items being counted. There is nothing worse than trying to figure out if something has been counted.
So you are probably asking about now if you should count the entire store at one time. Well, that depends.
Let's look at the pros of doing a full store count at one shot. Many customers favor counting their entire store in one day - although it's usually one long day and a longer night. Because you are counting everything at once, you may get a better count because everything was looked at and accounted for in a single effort. On the downside, you may get a poor count if, because of trying to get everything done in one day, the quality of the count was lacking. Again, review your planning steps; they are the key!
Counting everything at one time really depends on if you can actually count the entire store at one time. I have often been asked, "Should I close my business to take a physical inventory?" I often answer the question with another question, "Can you close your business for a day to take physical count?" If you can close the store without harm, then the answer to this question is "Yes." However, if the answer is "No," then review the planning stage of your physical count process carefully. If you are going to count while operating you do need to account for the items sold during your count. Fortunately, QB-POS makes it easy to note the start of a physical inventory and flags items that have changed during the count.
You should definitely use a Portable Data Collector.
QuickBooks Point-of-sale supports either a Metrologic or Ciperlab handheld computer to take inventory. These devices are not barcode scanners even though they contain a barcode reader; they have memory and don’t need to be connected to your QB-POS station to work.
Use of the data collector will speed-up the inventory process by allowing you to scan a barcode or key the item number and then type the quantity counted, or accept the default value of one. These devices also allow QB-POS to aggregate the counts of the same item from different sections of the store/warehouse etc.
(Note: While QB-POS offers the ability to integrate with compatible portable data collectors without the need of other software programs, QuickBooks (desktop or online) products Do Not offer this capability. Even QuickBooks Enterprise with Advanced Inventory does not offer this functionality. Some some software manufacturers do offer add-on/in programs that extend this capability to other QuickBooks products.)
Summary
It is important for every retailer to take inventory. Without taking a physical inventory at least yearly, it is almost impossible to get a true costing for the products sold and would allow employees or customer to steal the store blind.
We hope this article helps you to prepare your retailer for this process. If you would like more information on how use a data collector or how to ensure your client is properly starting the inventory process in QB-POS, contact us.