This article will give you an understanding of what a stock take is, whether your business needs to carry one out and the steps needed to complete one.
What is a stock take?
A stock check is the process of counting and recording the amount and value of stock a business holds.
The purpose of the stock take is to check that the accounting records that the business keeps agree to the stock that is held. It is highly recommended that any business that sells physical stock carries out regular stock takes.
You should always carry out a stock take at the end of the year at the very least. This will give you an accurate record of how much stock you are carrying at the year-end and will be needed to prepare your year-end accounts.
You should also think about holding a stocktake more often.Regular stock takes are beneficial because:
It’s always a good idea to ensure that you have the stock you think you have – if a big order comes in you want to be confident that you can fulfil it.
In businesses where stock moves quickly, it can be easy to make a mistake when recording stock movements. Regular stock takes will pick up any discrepancies.
In some businesses, stock can become obsolete very quickly; regular stocktakes will help to identify these items.
Unfortunately physical stock can sometimes be less than the amount shown in the stock record due to theft. A system of regular stock taking ensures that employees are aware that controls are strong and can reduce the risk of theft.
Practical advice for stock takes
Follow this advice to help keep your stocktakes as stress-free as possible:
preparation is key to a smooth stock take
make sure everyone knows the dates and timings of the count; choose a time when you are at your quietest (which might mean when the business is shut)
make sure everyone has sufficient copies of the records they are checking
ensure the environment is quiet and will allow people to concentrate
you may want to build in a process for stock to be checked more than once if there are large volumes to count
don’t be tempted to guess! And always remember to look inside boxes, not just assume the correct amount is in them
and finally a great tip is to review how the stock take went and use the feedback to improve next time.