Businesses that want to be vigilant about efficient inventory management prefer periodic stocktaking. Periodic stocktaking is the process of physically counting and verifying the inventory levels at regular intervals to ensure that the recorded inventory levels match the actual inventory levels. This helps identify the discrepancies and prevent losses due to theft, damage or other issues. It can help improve accuracy and prevents stock outs. This system ultimately leverages better decision-making and cost savings for the business.
How Does A Periodic Inventory System Work?
Using the periodic inventory system, businesses record inventory levels at specific intervals (usually at the end of an accounting period). During these intervals, they take a physical account of inventory and adjust the inventory balance accordingly. While this system is less accurate than a perpetual inventory system, it may be more practical for small businesses with lower sales volumes.
What are the benefits of periodic stocktaking?
- It is less expensive – Since the physical counting of merchandise inventory under this system does not require dedicated manpower, it reduces business expenses.
- It is suitable for all business organizations, large or small.
- Since this system schedules stocktaking at the end of a period under this system, it does not hamper the business operations.
- The stock records are more reliable since the stocktaking of merchandise happens on fixed dates.
What are the Challenges of Periodic Inventory?
Some challenges of periodic inventory include the risk of stock outs, inaccurate inventory counts due to human error, and the potential for theft or loss of merchandise. Additionally, this process requires more time and resources for physical counting and record-keeping compared to perpetual inventory systems.
For large or growing businesses, operating with a periodic inventory system is insufficient since it does not give the complete picture of the inventory until the end of the period.Scaling a business with the periodic system can become more time-consuming and tedious as product inventory expands.
Managing a proper inventory for your business is very important since it can make or break a business. It is essential to have an accurate track of the stock of your products and that too promptly. At Scribe, we offer the right tools required for your business’s inventory management so your business can run efficiently and smoothly. Scribe Counters offer a variety of tools for tracking inventory, asset taggingand stock counting solutions in Dubai. To know more contact us at https://www.scribecounters.com/contact-us/
