Without a well-controlled inventory, it’s likely that most small businesses will quickly begin to experience gaps in stock, delayed orders, and essentially: cash sitting pretty on shelves.
Stemming from poor tracking, ambiguous costs and rashly-made decisions, inventory problems can seriously hinder a business’s daily operations, as well as impact profitability. With help from experienced Coral Springs accountants, however, small businesses can set up a series of simple systems to help them get a clearer picture of what they own, what is being wasted, and what they don’t need to keep buying.
How accounting services can bring order and clarity to messy inventories
Focusing on setting up clean records, properly tracking what’s coming in and what’s going out, and producing simple reports from accurate data, are the three main areas in which an accounting firm brings clarity and structure to a small businesses inventory.
Helping you make choices that are based solely on facts, rather than fear, accounting services will provide you with a precise set of rules for buying, counting and valuing inventory.
Setting up inventory systems
Whether you choose to use bins, boxes, software or a back room, here are a few simple steps for setting up an effective inventory system:
- Create named lists for items that everyone will use in the same way
- To ensure counts match up with invoices, assign codes to items
- Select a method for recording inventory, such as average cost, or first in, first out
An accounting professional can help you select the right method for your needs, as each one has a different impact on profit, tax and pricing.
Accurately tracking costs
It helps to view inventory as money you’ve yet to earn, and knowing the true cost of every item is crucial, from purchase price and shipping, to storage.
With an accountant’s help, each purchase can be recorded to the right item, freight and handling can be spread out in a way that’s fair, and item costs can be updated when prices from vendor’s change. Knowing your true costs means that you can set profitable prices.
The use of data when making inventory decisions
An accountant might set up some straightforward monthly reports to help you see the following key things:
- The speed at which items move
- The amount of cash sitting in stock
- Where margins are being lost
The number of times stock is sold and replaced in a year is a common way to measure turnover of inventory; turnover on the higher side, means less cash sitting around and less waste.
Protecting your cash
The fear of running out of stock can induce business owners to keep buying unnecessarily, leaving them with cash sitting around in stock while the bills keep coming in.
Accounting services can help you stop this from happening with the setting of a few rules:
- Reorder points so purchases are only made when stock hits a certain level
- Limits on purchases to stop one person from overordering
- Regular counts to prevent losses from going undetected
With these guards in place, you can protect your business from silent but deadly leaks, as well as fraud.
Inventory can be difficult to control, and even harder to fix. But by working with professional accounting in Fort Lauderdale, you can gain the support you need to turn disorganized and misleading stock into clear numbers, giving you back control of your time and your cashflow, not to mention lowering your stress levels. So if you’re struggling to manage inventory in a way that supports your business’s bottom line, seek professional accounting help; the sooner, the better.