inventory

Y-Negocios

2022

We explain what an inventory is, its usefulness, classification and how to do it. Also, its advantages, disadvantages and various examples.

The relationship between inventory and accounting is the central core of commerce.

What is an inventory?

An inventory is the detailed classification of movable and immovable property that make up the commercial flow of a person or a business. Inventories are carried out in a specified period ofweather.

With the inventory, large and small companies keep an exhaustive control of merchandise and sales that are made while the commercial period elapses. At the end of this period, the company obtains the final balance sheet and compares it with that of other years to obtainconclusions and take commercial actions based on the result.

What is an inventory for?

The inventory is used in companies as a system of control and registration ofProfits since it providesinformation summarized and concrete on the actions of purchase and sale of goods or services.

The direct relationship between inventory andaccounting is the central nucleus ofCommerceThat is why companies must have a tenacious control in their operations without fail. Through the inventory you can know the current status of the company and from there take decisions that allow to administer and manage it in a profitable way.

Know her demand of a product It is important to make purchases of raw materials or wholesale supplies and lower the price costs, which allows maintaining a constant production without missing inputs.

Inventory types

There are different types of inventories that vary according to the size or particularity of each company and the type of production.

According to its shape:

  • Inventory products finished. Formed by manufactured products that will be or are put up for sale.
  • Inventory raw Materials. Formed by elements that once processed will be a product.
  • Product inventory inprocess manufacturing. Formed by products that are in an intermediate process, they are not raw material or a finished product, that is, they are being carried out or formed.

According to the moment:

  • Initial inventory. Carried out before the start of operations in a company.
  • Final inventory. Carried out by the company at the end of each accounting period.

According to the periodicity:

  • Perpetual inventory. It is managed in a technological way through a software from database. The data they are updated instantly on each input or output of a product.
  • Periodic inventory. It is carried out by means of a physical count of merchandise each a certain period of time.

According to logistics:

  • Reserve inventory. Formed by that production surplus that is used in case of an increase in demand or failures in the productive process.
  • Inventory in transit. Formed by those products that have not yet reached the company since they are in the hands of suppliers or transport.
  • Cycle inventory. Formed by merchandise or raw materials that are bought in surplus to reduce the cost per unit of purchase.
  • Forecast inventory. Formed by surplus merchandise that is produced in periods of low demand to supply periods of high demand.
  • Decoupling inventory. It is used between two processes whose rate of productivity it is not synchronized.

How to put together a periodic inventory?

  • Delimit the products to be inventoried. It is important to establish which products are going to be inventoried to withdraw them and isolate them so that they do not mix with the rest of the merchandise. You can have a shelf or special room to do the inventory.
  • Choose a date. Many companies carry out this work on a quarterly or semi-annual basis and some incorporated a perpetual inventory (after making an initial inventory and uploading the information to a software, the entry and exit of merchandise is updated automatically). It is advisable to choose a day when the store is closed to the public. Keep in mind that the process may take more hours or days than stipulated.
  • Hire people if you need it. The inventory process is usually a long and tedious job, depending on the number of parts to inventory can be contracted workforce outside the company or business to carry out the work. This must be taken into account when making the budget.
  • Have office supplies. Stationery (labels, pens, sheets) are essential for a neat and orderly work. Labels can be used to label the products or group of products already inventoried.
  • Establish a code to classify the different types of merchandise. It is advisable to assign a code to each product, this will allow in the future to find the products within the worksheet in a simpler way.
  • Choose a spreadsheet or software to enter the data. As the merchandise is counted, the data is entered in pencil on a spreadsheet or an online spreadsheet or software is used to consult them in the future simply and quickly.

Advantages and disadvantages of inventory

Advantages:

  • It works as a mechanism of order and control.
  • It is used to detect losses or theft.
  • It allows to know the production levels.
  • It helps to know the value of a company.
  • It allows to know the demand curve and face it.

Disadvantages:

  • It requires a large amount of manpower to carry out the process.
  • It involves a great storage cost.
  • It takes a great deal of time.

Inventory example

 

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