How To Avoid Having To Make Inventory Adjustments

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The leading cause of order cancellations is inaccurate inventory counts. Manually making inventory adjustments to bring your inventory count to an accurate level is one solution, but with inventory control software and a few other tips, you don’t need to worry about                               having to make those adjustments. And keeping better inventory of your stock is the best way to prevent future discrepancies force inventory adjustments to correct.

There are plenty of reasons for inventory control. Inventory is considered an asset for businesses and is counted towards the company’s equity. This means that inventory is potential collateral, an important thing to have if a company is looking to attract lenders. Businesses can even use this inventory as leverage to obtain a loan or line of credit. However, there are some downsides to carrying too much inventory. There are costs associated with storing all that inventory, and if it sits too long it may be prone to becoming out of date or damaged in some way. Making inventory adjustments to balance these two considerations is important both materially and on paper. Ideally, you want new inventory to replace existing inventory as it is on its way to the customer, so there is never an excess.

Some common reasons for inventory adjustments can be prevented. They are usually the result of incorrect handling, which can lead to missing material, too much product, damaged inventory, or product that has become damaged or outdated. If material is missing, it could be that it is being confused for a different product or is the result of an incorrect substitution. Damaged material indicates a need to change receiving practices and a need to examine general warehouse behavior. Outdated and obsolete product can often be a avoided by buying smaller amounts and maintaining diligence toward identifying and liquidating such inventory. Whatever your inventory problem is, identifying what is really going on is the first step toward avoiding inventory adjustments.

While it may take some time to figured out a rhythm of inventory in and out, inventory control software takes the worry out of adjusting inventory on paper manually. More accurate counts will also reduce the need to make additional and time consuming inventory adjustments.  Inventory adjustments are automatically made whenever an order is placed and sent out. Some software even sends out an automatic order when stock runs low.

Inventory adjustments cost time and money for your small business. The best way to solve the problem is to prevent it from happening in the first place.