Generally, hospitality businesses in Ireland and even abroad complete and record a stocktake at the end of each month. However, some businesses may perform stocktake more than once a month. Regardless of the frequency, performing stocktaking during the month is essential for maintaining healthy stock levels and minimizing stock losses in the business. This is especially important for businesses in the retail and food industry who have the option of retail stocktaking and food & beverage stocktaking respectively available to them.
So, how often should you perform stocktaking for your business? Well, this depends on how much control you want to have over your business. What do we mean by that? Here is an example to explain this. Say, a department of your business was running at a loss due to inappropriate control procedures including stock losses or stock shrinkage, poor dispensing or portion control practice and internal and external theft. Now, when would you prefer finding out about it? The year- end? at the end of the month? Quarterly? Weekly? Daily? Once you answer this, you will be in a better position to determine how often you should perform stocktaking.
The Need for a Well-Structured Stocktaking Process
As mentioned earlier, a stocktake is generally performed once a month, at the end of the month. The purpose of a stocktake is providing accurate accounting data and identifying any discrepancies between the stock in the warehouse and the stock reflected in the accounting records. In case of discrepancies, adjustments to the accounting records need to be made to get them to match the stock/inventory in the warehouse. To ensure better accuracy, all stock movements are stopped when preforming a complete stocktake.
It is clear to most businesses that performing stocktaking at least once a month is essential to maintain healthy stock levels, prevent stock losses and ensure the accuracy of inventory/accounting records. However, if not done right, stocktaking can be energy-draining, time-consuming and frustrating. Businesses face the risk of serious human errors such as undercounting or overcounting that could result in losses worth thousands if they don’t devise a clear plan for success.
So, what should businesses do to avoid the above?
They should develop a well-structured stocktaking process that can be followed by managers and employees alike, thereby minimizing the risk of your staff making costly mistakes. To unveil inaccuracies and discrepancies while keeping your staff focused and engaged, a well-structured stocktaking process will ensure your staff keeps working efficiently. So, how do you ensure a well-structured stocktaking process? Following are ten steps to maximize the effectiveness of your stocktaking process:
- Schedule stocktakes to minimize impact on business
- Clean and organize Bars/Kitchen/stock rooms before the stocktake
- Ensure all stocktaking tools are in place
- Ensure that only up-to-date data is used for stocktaking
- Make goals and responsibilities clear to everyone
- Know the stock you’re counting and how you’re counting it
- Count everything, leaving nothing to guesswork
- Appropriately value your stock
- Come up with ways to minimize broken, stolen, or slow-selling stock
- Make improvements to your stocktaking process continually
The Stocktake Options Available to Your Business
With stocktakes, you can keep track of your inventory. Each item in your store is recorded during a stocktake and when this count is submitted, your inventory/accounting records are updated, and you can see any discrepancies between your actual stock and that reflected in the records. A procedure that helps you to identify stock discrepancies faster and stay on top of your inventory movements, stocktaking can be performed in two different ways: full stocktake and cyclic stocktake. Following is a brief look at each:
Full Stocktake
Typically completed at the end of the month, a full stocktake provides businesses with an exact value of their stock/inventory. This type of stocktake records every item of your business, including stocks kept in the storeroom. If you want to get an accurate picture of your stock levels, then it should be performed outside of usual trading hours. A good way to ensure this is taking help from a service that performs stocktaking such as retail stocktaking and food & beverage stocktaking.
Cyclic Stocktake
This type of stocktake is performed regularly, such as once every week, and includes the counting of a warehouse’s smaller manageable parts. To complete a full cycle over a specific time- period, people performing cyclic stocktaking choose a range to count and incrementally work around a warehouse. A new cycle begins after the completion of one full cycle. Unlike full stocktake, cyclic stocktake is not performed once a month to achieve operational benefit. Instead, its focus is on proving the balance sheet.
The Frequency of Stocktaking Depends on Your Needs
In any business—especially retail operations, stock is one of the biggest input costs. To manage stock/inventory efficiently, a stocktake is essential. With a stocktake, businesses can determine several critical things related to operations including:
- Shrinkage levels
- The status of your stock’s asset value i.e. is it real or fantasy
- If your buying processes are based on accurate stock-on hand calculations
In addition to the aforementioned elements, there are several other things that necessitate performing stocktaking during the year. To ensure that every stock of your business is counted at least once a year, you need to perform stocktaking at least once every year. However, depending on the needs of your business, you may perform stocktaking more than once a year including performing it on a daily, weekly, monthly or quarterly basis. If you are still confused about how often you should perform stocktaking for your business, then get in touch with us today to find out!
