Accurate inventory is crucial if your business relies on the sales of products. The golden rule; 80% of your profit will come from 20% of your inventory. Here are a few tips to help you find the right balance to get you to the 80/20 rule.
Is there a time of year when items don’t move as fast? Make sure you are not overstocking. This can lead to a decrease in cash flow; profits decrease due to discounting items, products expiring, and an increase in some of your overhead costs. You can also see expenses increase and the loss of sales/customers when you don’t have enough product in stock. Run reports from prior years and look for the monthly sales trends. These numbers can help you make the right decision when you are ready to order a product.
Once you have your product, you need to keep track of it. Make sure you find a reliable and user-friendly electronic inventory system. Shop around before you commit. Reading customer reviews or articles online can help you narrow down the choices. Contact the company that manufactures the system and ask if they can give you a demo.
Do a physical count of your products at least once a year. The size of your warehouse and the nature of your business will determine how often you want to do a physical count. You can also hire a company to count your inventory for you. A physical count keeps the numbers accurate and can identify damaged goods and detour employee theft.
If your bookkeeping isn’t delivering that now, give us a call! We’ll help you keep your cash flowing!