With owning inventory comes also the responsibility to confirm its existence and obviously also the fact if everything in storage is also accounted for on the balance sheet. The way to do it is to perform stock counts every now and then. Depending on the stock level (i.e. how many items there are) and also the turnover and nature of the goods, it may be that stock counts are done on monthly basis or only once a year.

Normally in large production companies with thousands of items on their stock listing the stock counts are done more frequently than in companies with minimal stock. Also the lower the stock turnover the less frequent are stock counts obviously. As a general rule, the stock count needs to be done at least once a year and close to the end of the financial year.

The reason behind this is that you want to be sure of the stock levels on your annual financial statements so hence the closest date you pick to the financial year end, the better.

So when you have your date picked, the very next thing you need to do is make sure you have the people ready and trained for stock count procedures. The best means for it is to have written guidance people can make themselves familiar with before.

In your guidance, make sure you approach everything and have people aware of every situation. Good knowing of procedures in stock count is crucial as in some parts it’s like a house of cards – if you fail at some point, everything else may simply shatter to pieces.

In summary, plan your stock count wisely and with care. Think through who are the people doing it, the date and day it’s done, the things people need watch out for (depending the type of stock – measuring methods, counting units etc) and also bits of extra you may find necessary (i.e. dealing with damaged goods).