How do I do a stock take?

What is a stock take?

A stock take is the process of counting and recording the amount and value of stock a business holds. 

The purpose of the checking stock is to ensure that the accounting records that the business keeps align with the stock that is held. It is highly recommended that any business that sells physical stock carries out regular stock takes.

Doing this will: 

• show how much of your cash is tied up in stock
• help you maintain a good cash flow
• give a solid idea of when to order and/or replace stock
• cut down on waste – e.g knowing when use by dates are coming up or minimising damage caused by poor storage.

Download: What records do I need to keep for a stock take?

To be able to carry out a stock take you need to have a method of recording the goods you purchase and the goods you sell.

This could be a simple spreadsheet or could be a complex piece of accounting software. The records you need will typically be determined by two main factors:

1. How many lines of stock do you have?  If you only sell a few products then a simple spreadsheet may do.
2. Do you assemble products from items you buy in? For example, if you buy metal and beads to then make into jewellery, a more complex stock system might be needed.

Once you have decided on a system, this will form the basis of the record you use to check your physical stock.

Download a copy of an editable stock take spreadsheet below. 

How often do I need to do a stock take?

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. Doing it regularly is 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 checks 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
• 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 it went and use the feedback to improve next time.