Warehouse inventory and everything you need to know about it

Warehouse inventory allows you to control inventory effectively and ensures that financial data is consistent with the actual state. Understanding the inventory process and how to carry it out correctly will allow you to keep your finger on the pulse, maintaining operational flow and minimizing losses. Let us walk you through the most critical steps of inventory inventory for the end of the year and beyond. Strictly – how often should it be carried out? What are its stages? What documents are necessary?

Inventory of the warehouse. What is it?

Warehouse inventory is checking the quantity and value of items in the warehouse. What is the purpose of inventories? The primary objective is verifying inventories’ actual state with the data recorded in the accounting system. Thanks to a well-conducted warehouse inventory, you will detect possible problems or differences that may result from human error, theft, damage or expiration of products.

Warehouse inventory – how often should it be carried out?

This largely depends on the specifics of the company’s operations. The absolute minimum is once a year, quarterly inventories are frequent, and in the event of a suspected failure or theft, the so-called ad hoc inventory is carried out.

An inventory at the end of the year is significant because the results are used to prepare the annual financial statements. It is worth noting that the yearly inventory often requires the involvement of external auditors, who will additionally help verify its correctness.

Warehouse inventory – main steps

The warehouse inventory process can be divided into:

1. Inventory preparation. It consists of establishing a schedule, appointing an inventory team and preparing the necessary documents (such as a warehouse inventory report – this form will summarize the results).
2. Counting goods. It is a physical check of the number of products in stock. It requires a lot of focus if you want to avoid mistakes – you need to be aware that the more you automate this process, the more accurate it will be.
3. Drawing up a protocol. It is essential to summarise the warehouse inventory – the protocol, which contains detailed information about the process carried out and any differences, must be drawn up and signed by authorized persons.
4. Comparison of results and next steps. Comparison of the results of the physical inventory of the warehouse with data from the warehouse accounting system. If you find differences, be sure to determine their causes.

Inventory documentation. What will you need?

During the warehouse inventory, you need to keep appropriate documentation, which consists not only of forms for recording the results (most often, you will find them under the keyword “Warehouse inventory” or “inventory sheets”) but also reports or orders. The most important documents are:

• order of the head of the unit on conducting an inventory – this is a document presenting the composition of the inventory committee or the types of assets included in the inventory; 
• inventory schedule and site plan – i.e. who, when and where will carry out the inventory of the warehouse;
• inventory instructions – usually include the manner of performing census activities or the scope of competencies and responsibilities of individual persons;
• inventory sheets (numbered and marked) and summary statements in which inventory data is entered;
• control list of issued and returned inventory sheets – allows you to determine whether all sheets have been completed;
• summary of inventory differences – this is where you can show what differs from the data in the system;
• final (post-census) protocols – These are needed to collect all the critical information and summarize where the changes came from and how they translate into financial results. Some companies additionally use reports.

Warehouse inventory – let’s summarize:

• Warehouse inventory allows you to control and optimize inventory levels.
• It requires proper preparation and preparation of appropriate documentation – not just an inventory report.
• It is worth conducting regular inventories to increase the efficiency of your company and take care of your financial results.
• Implementing automation into inventory activities lets you get the most accurate results. If you need support – see the services of the inventory of merchants.