How often should I do a stocktake?
Under New Zealand tax law, stocktakes must be completed and recorded at the end of each financial year. Whether you should do a stocktake more often than required will depend on the amount of stock you hold, the size of your organisation and the industry you operate in.
The case for performing stocktakes more often is that they allow for greater oversight to detect stock obsolescence, theft or damage. Stocktakes also provide the benefit of being able to take a proactive approach to stock management. Regular stocktakes will give you a clearer indication as to what and how much stock needs to be re-ordered.
Valuable insights can also be gained about which stock is turning over slowly, meaning you can adjust purchasing patterns to account for this. This can relieve pressure on working capital, as less cash will be tied up in slow turnover inventory.
Tracking stock levels throughout the year also means your end of year stocktake will be less daunting, as you can approach it with a reasonable idea of what to expect.
The downside is that stocktakes can be costly and time consuming, especially if additional staff and temporary store closures are required, so it is important to weigh the benefits against these drawbacks.
It is worth bearing in mind that there are a number of cloud based solutions available to assist businesses with inventory management and stocktakes. There are also a number of Xero add-ons, such as Vend or Unleashed, which are products aimed at larger organisations with more complex inventory management requirements.
For more assistance with managing your inventory, contact your local BDO adviser.