How to prepare for an asset inventory to make it go smoothly and faster

Inventory is a stress festival for companies. In large warehouses, it can take a month, take up time for employees from different departments, and without proper organization, mistakes occur that cost the company money. To make the inventory run smoothly, you need to plan it well, prepare the documents, and possibly even involve smart technologies. We will go through the preparation of the inventory step by step.

What is an inventory for and for whom is it mandatory?

An inventory is used to determine the actual state of assets and liabilities in a company. All companies that keep accounts must, by law, conduct an inventory at least once a year as part of preparing financial statements.

However, e-shops and companies with a large amount of goods voluntarily conduct inventory several times a year . Thanks to it, they make sure that the "paper" status of goods in the e-shop or in the ERP system corresponds to the real status in stock. Companies that postpone inventories are more likely to face negative customer reviews, for example, because they offer goods in the e-shop that they do not have in stock.

At the same time, inventory reveals whether some of the stock is damaged, expired or obsolete . They find out if some goods have disappeared (for example, because the warehouse worker forgot to record the issue), and often also discover goods that they had no idea they had in stock.

The Accounting Act distinguishes between physical and documentary inventory:

• During a physical inventory, employees personally check the condition of the assets – so they visually verify that the assets are in their place,
• Documentary inventory refers to assets that cannot be verified visually - the inventory is therefore carried out only by checking the accounting books.

In this article, we will discuss preparation for a physical inventory , which concerns mandatory inventories under the Accounting Act as well as voluntary inventories of warehouse stocks.

When to schedule an inventory

The right time to take an inventory is different for every company. It mainly depends on:

• seasonality,
• long-term sales trends,
• quantity of stock.

Ideally, schedule your inventory for a period when you have the least physical inventory . It will take less time and make it easier to detect discrepancies.

For example, for most regular e-shops, the appropriate period is:

• after Christmas or a major sale,
• outside the sales season, when there are fewest orders (for example, in summer),
• or between the delivery of new collections (i.e. before the turn of the seasons).

Inventory schedule

Once you have selected a suitable period, plan the inventory in detail. Estimate how long the inventory will take (will it be a weekend, a week, or a month?), and free up staff capacity or hire temporary workers in advance.

Also, expect that you may have to limit your business operations during this time—for example, suspending shipping or extending order delivery times. If you want to avoid a complete restriction, plan to take inventory of your warehouse in parts.

At this stage, also define exactly which assets the inventory will cover . For example, whether it will only include goods in the warehouse, or also consumables such as cartons, foil and pallets, or all assets including, for example, office equipment.

Method of carrying out inventory

Determine how you will technically conduct the inventory . Most often, employees walk around the property with a printed list . They see the expected quantity of items in it and, one by one, cross them off during the inventory, or write down the actual quantity. However, this option is more time-consuming and more prone to errors.

It is easier for companies that use technologies such as warehouse management system (WMS) . Employees who perform inventory do not know the expected number of items in advance, but simply walk around the assets, read their barcodes using scanners or smartphones , and the data is sent to the system. The WMS continuously alerts you to discrepancies (for example, the wrong number of pieces in a given position) and finally:

• evaluates differential data for items where the number does not match,
• prepares documents for accounting
• and overwrites the quantity of goods in the warehouse according to reality.

A managed warehouse speeds up inventory and, in addition, you can train temporary workers you hire for inventory in just a few minutes. For example, the barefoot shoe e-shop Bosonožka reduced inventory from a month to 2 days thanks to WMS.

Clear rules for employees

Establish clear inventory rules so that all employees perform the inventory in the same way. Companies typically specify in these rules:

• which property to count, measure and weigh,
• which parameters to check during inventory (expiration, serial numbers, batches, etc.),
• in what units of measurement should the property be recorded,
• which employee is entrusted with which part of the warehouse,
• from which direction to count the assets (for example, proceed from the top left corner to the bottom right corner of the shelf)
• or how to mark already counted goods.

Familiarize employees with the rules a few days in advance . Ideally in person, so that you can immediately resolve any questions or ambiguities.

Accounting preparation for inventory

Before the inventory, post all open warehouse documents related to the movement of assets . For example, those that deal with the transfer of goods between branches or warehouses, or documents related to liquidation, damaged or incomplete goods.

Likewise, complete the receipt and issue of all goods from orders. It is important that all goods under your roof are in the system on the day of the inventory. Performing an inventory on incomplete assets would unnecessarily complicate the process and distort the result.

Preparing the inventory site

Simple operational preparation will also make inventory easier. Tidy up the warehouse and other areas where the inventory will take place so that assets are not lying around in the aisles or goods are under the shelves – make sure everything is in its place . It sounds obvious, but it's easy to forget in the rush of pre-inventory.

Also, visibly mark assets that are not part of the inventory . This is especially true for:

• property of foreign companies,
• out-of-stock inventory awaiting delivery to customers,
• goods that customers sent to you for complaints.

Engage technology

If you feel that inventory is too time-consuming for you, even if your preparation is the best, reach for automation technologies. WMS solutions typically shorten inventory from months to days and speed up other warehouse processes such as order picking, receiving, warehouse staff training, or reporting. Contact us and we will help you choose the right solution for your warehouse.