How To Manage Inventory For Your Small Business

BAS PDX Pro_How To Manage Inventory For Your Small Business

One of the most important tasks to tackle for your Portland business as the end of the year approaches is inventory management. Inventory will, after all, affect how you submit your taxes and how you order product for the new year. Business & Accounting Solutions is eager to offer Portland businesses advice on how to approach this important task.

What Is Inventory Management?

Inventory management is the part of supply chain management that aims to always have the right products in the right quantity for sale, at the right time. When done effectively, you can reduce the costs of carrying excess inventory while maximizing sales for your Portland business. Good inventory management can help you track your inventory in real-time to streamline this process. By effectively managing your inventory you can avoid products being out of stock and funds being tied up in excess stock. You can also ensure your products are sold in time to avoid spoilage or obsolescence or spending too much money on stock that’s taking up space in a warehouse or stockroom.

Inventory Management Techniques

When managing your Portland business’s inventory for the first time, it can be difficult to know where to start. Here are some basic techniques that can help you get on the right track.

1. Hire An Accountant To Help Make The Inventory Process Run Smoothly. A lot of inventory management is linked to your business’s accounting. Having a proper stock of your inventory will help your accountant to keep your business’s finances in order. Make sure you have an accountant hired to help make these processes easier.

2. Fine-Tune Your Forecasting. Accurate forecasting is vital. Your projected sales calculations should be based on factors such as historical sales figures, market trends, predicted growth, the economy, promotions, marketing efforts, etc. Business & Accounting Solutions recommends having an accountant on staff to aid in this process. Your accountant will be tuned in to the sales and history of your business and help you get the most accurate forecasting.

3. Use The FIFO Approach (First In, First Out). Goods should be sold in the same chronological order as they were purchased or created. This is especially important for perishable products like food, flowers, and makeup. With non-perishable goods, items sitting around for too long might become damaged, or otherwise out of date and unsellable. The best way to apply FIFO in a storeroom or warehouse is to add new items from the back so the older products are at the front.

4. Identify Low-Turn Stock. If you have stock that hasn’t sold at all in the last six to 12 months, it’s probably time to stop stocking that item. Your accountant should be able to provide you with the numbers backing up the relative success of each product you stock. Consider different strategies for getting rid of that stock, such as a special discount or promotion. Excess stock wastes space and company capital.

5. Audit your stock. Even with good inventory management software, you still need to periodically count your inventory to make sure what you have in stock matches what your records indicate. Businesses use different techniques, including an annual, year-end physical inventory that counts every single item and ongoing spot-checking, which can be most useful for products that are moving fast or have stocking issues.

Get The Best Outsourced Accounting Services With Business & Accounting Solutions. Business & Accounting Solutions is eager to help Portland businesses succeed. Don’t miss out on the professional advice and accounting services available through Business & Accounting Solutions, including bookkeeping, payroll, cash flow, finance consulting, financial reporting, QuickBooks consulting, and other services. Contact us or call us today at (503) 710-6213.