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Tools for Taking Physical Inventory

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The physical inventory menu that appears on your main Inventory Maintenance menu has the tools that you need to take a physical inventory.  You should take a physical inventory at least once a year to make sure that you actually have all the items that are listed in your online store. 

The process of taking a physical inventory works like this:

  1. Decide which warehouse you are going to inventory (if you have only the inventory that's visible to customers, this is very simple because there is only one warehouse!) and use the menu option to print an inventory worksheet for that warehouse.  The inventory worksheet is a list of all the items that you have on your item master where the status is not 'deleted'm 'sold-and-show' or 'sold-and-hide', their names and their cost.  The quantity is not included.  This is deliberate; the purpose of an inventory is to help you find and count everything that you have.

    If you don't have a title defined for your item, the description will be used instead, but it will be highlighted in blue.  In general, its a good idea to use titles on the things in your store because they are used by the search engine and it will raise the probability of a customer (particularly one from offsite) finding your item and buying it.  For your convenience, the item numbers on the worksheet are linked to the inventory maintenance program, so it would be easy to correct this on the spot if you wish to do so.

  2. Using the inventory worksheet, count your inventory and write the amount that you have on your worksheet. It will make it much easier when you are counting if you get some stickers that you can put on the items that are already counted to make sure that you do not count them more than once.

  3. Your inventory will be updated from a CSV (comma separated values) spreadsheet file that you need to fill out.  Click here to get a master copy of the input file in the format that you'll need or select the menu option titled 'Download Input Worksheet.'  Note that the top line contains titles; you may leave this or delete them as you wish.  If they are present, they'll be disregarded by the adjustment program.  You are free to create your own file, but it must be in this format:

  A B    C    D E F G H I
 1 Line item number on-hand quantity Category
Id
price cost title description optional
 2 1

1339

48            
 3 2 750-136 12            
 4 3 grab-box 5

37

2.00 1.00

A Grab-bag of goodies

Who knows what you may find in this super-value box?  Its a combination of the odd and ends that we have in our warehouse.

this was a new item we added during inventory

Do not leave items blank, unless you don't have them any more and want the quantity set to zero!  Zero is a real number and your inventory of any item will be set to zero if that's what's in the spreadsheet.  To keep an item from being updated, delete it from your worksheet!

Note that the upload program will allow you to create new items and add them to your store during your physical inventory.  You'll need to add pictures for these items after the fact, but this is a quick way to add extra items.   If you do not specify a category for your new items, they will be placed in your category that is associated with the system category of 'miscellaneous'; if you have no such category, it will be created.  Items that are added in this manner are placed on 'hide' status so that you can find and update them before your customers see them.

  • When the data is complete and correct, select the option 'Upload Adjustments' from the menu.  You  will have an option to browse for the adjustment file, and to specify the warehouse to which the adjustments are to be applied. 

  • It is a VERY good idea to run a trial balance.  In this case, the program will do everything for you EXCEPT apply the changes to your inventory.  Running a trial balance allows you to preview the effect of the changes you are about to make to your inventory and ensure that they make sense.

  • After you are sure your changes will be correct, select the option to apply your changes.  This process is called 'adjusting your book to your physical inventory'.   When you apply the changes, the new inventory balances will be written to the warehouse you've selected (or if you only have customer-visible inventory, to your main inventory file).  If you find during your inventory that you have items that are missing or have been damaged since your last inventory, you may be able to deduct the cost of these items from the profits of your store.  Please discuss this matter with your accountant.

  • You can print a report that shows your changes and you may wish to do so:

  • If you need to reprint your physical inventory adjustments, select the menu option and do so.

  • The inventory reports have some helpful information that allow you to gauge the accuracy of your inventory maintenance practices.   At the end of the report, you can see the value of your physical inventory before and after the changes.  The variance is also calculated. 

  • For auditing purposes, the inventory reports are permanently stored and can be reprinted at any time.

  • As a general rule of thumb, inventory error of about 2% per annum is considered 'normal' if you are not doing cycle counting or using any other means of maintaining your inventory accuracy.  If your level of error is higher than this, you may want to see about changing your inventory management procedures to improve the accuracy.

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